Dell's High-End Rackmount Servers - Challenging Compaq's Wintel Dominance

Product Description

Dell's high-end Intel (four CPU) rackmountable servers, the PowerEdge 6300 and 6350, are generally used for larger installations, such as data centers/warehouses, and by large companies wanting to minimize the floor space their computers use. Rackmount servers provide the ability to put a large number of CPUs in a small footprint, or to combine CPUs with a large number of peripherals (usually disk drive subsystems). These servers compete primarily in the enterprise computing market space. Dell's (~15% WW market share, Q2) largest competitors are Compaq (~33%) , HP(~12%), and IBM (~16%) [Source:IDC]. The rackmount market is growing, partly due to server market growth in general, and partly due to a shift from pedestal/floor-standing/"tower" servers. We estimate that rackmount servers will account for 60% of the general server market within 1-2 years (vs. 30-40% 2-3 years ago), and greater than 80% of the high-end Intel server market (85% probability).

Product Strengths

• Entry Pricing: In a "stripped" configuration, the 6350 lists for ~$1000 less (~$7500 vs. ~$8500) than a similar configuration of Compaq's ProLiant 6400R. In terms of general technology, Dell focuses on standardized components (e.g. main logic boards), which reduces the development cost (which eventually is passed on to the customer).

• Delivery: Dell has set the pace for delivery/logistics/ordering, with almost everyone trying to match it. Dell's manufacturing flow is such that its server inventory turns an estimated 60+ times per year: this translates to any given piece being in Dell's stockroom for about four days before being put in a system and shipped to a customer.

• Reliability: Dell's reliability (and customer satisfaction) is evidenced by its high scores in industry lab tests. Higher reliability generally leads to lower long-term service cost for the customer: components and systems fail less, so less service calls are required, which translates into reduced warranty cost. There is also a direct relationship between system reliability and customer satisfaction.

• Functionality: The 6350 provides four CPUs in a 4U-high enclosure. Presently, its only competition in this area is Compaq's 6400R. This high density server allows up to 40 CPUs in a 42U rack, which is a strong feature for installations handling compute-intensive applications. (Note: Dell's present 42U rack will not fit through a standard height [80"] doorway without being tipped over, although it will fit through a seven-foot high door.)

Product Challenges

• Serviceability: Dell needs to work on serviceability issues. The necessity of sliding the unit at least partially out of the rack to remove power supplies (vs. the ProLiant 6400R's front-removal) is a deficiency. Additionally, removing hot-swap fans as a unit, even with the published warning not to exceed two minutes of "no fan" condition, is a deficiency when compared to Compaq's "one-at-a-time" fan swappability - it places a greater burden on the customer/user.

• Features: Although the 6350 is a feature-dense unit, Dell could improve its feature set. Although it provides customers with a solid set of features, it only surpasses competitors Compaq and HP in the I/O slot total for its 4U system, the 6350. In the 6300 its key features (e.g. max. qty of HDDs) are, at best, on a par with the competition.

• Price/Performance: Compaq's 5500R is superior at the high end (TPC-published results show that Dell's 6300 costs ~12% more [per tpmC] than the 5500R, for only a 5% performance increase). This does not mean the scores are poor - in fact they're among the top price/performance scores - only that Dell should look at improving them. Also note that these figures come from a system costing approx. $375K, so the basic server cost accounts for a relatively small portion of price/performance.

Vendor Recommendations

• PowerEdge 6350: For the next iteration of the 6350, Dell should improve the system's serviceability. Front-access hot swap power supplies are preferable to top-access, and ungrouping the hot-swap fans will give the customer greater flexibility. In addition, an increase in the number of hot-swap HDDs will allow greater flexibility for customers who want in-system RAID.

• PowerEdge 6300: The 6300 is a solid product, but needs more HDD space to compete more effectively with Compaq. In addition, serviceability, although better than in the 6350, could be improved, particularly regarding fan replacement. Its performance, although good (re: TPC-C tests), is >$40K more expensive than Compaq's similar system. Although Dell's entry price is very good, it should work on reducing the high-end system cost, perhaps through performance tuning.

User Recommendations

• Customers who want significant CPU power in a small box will find the 6350 a good choice. The 6300 is better suited to high-performance and general-purpose computing, although its price/performance numbers need to improve. Dell consistently receives high reliability marks from industry surveys, which is good, since their customer service strategy is less clear than Compaq's.

• Because the 6300 "maxes out" at only eight 1.0" HDDs, the customer should consider using this point as a bargaining tool when considering Compaq as the alternate vendor. When considering the HP LXr8000 as the alternative, the user should highlight HP's greater I/O (10 slots vs. 7).

• These products are not appropriate for users looking for workgroup/department server solutions, especially if the extra $1500+ for the rack is an issue.

Long Term Outlook

• We expect Dell to continue its aggressive pursuit of market share in the Intel-based server market. Given the growth expected in rackmount server segment, Dell will continue to focus on delivering competitive, reliable solutions. The high density of the 6350 indicates that Dell will continue to try to push the limits on the high end. Presently this particular competition is between Dell and Compaq; it is not yet clear whether HP and IBM will attempt to respond.

• Dell continues to deliver quality products with good feature mix. Combine this with their history of very satisfied customers, and Dell becomes a serious threat to Compaq's dominant position. Dell has already grabbed a firm hold on the #2 position in US market share - its share is almost double that of the #3 position, IBM, and it's gaining on Compaq. We expect Dell's WW market share to reach 20% within two years (70% probability).