Product
Background
IBM's
high-end Intel (four CPU) rackmount servers, the Netfinity 5500 M20 and 7000
M10, 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 compete primarily in the enterprise computing market
space. IBM's market share) largest competitors are Compaq, Dell, and HP. (Market
share figures for Intel servers is shown in Table 1 and Graph 1.) 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 believe that
rackmount servers will be about 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 within the same time period.
Fig.
1
Table
1: Intel Server Market Share 2Q '99
|
:
|
WW
|
US
|
|
Compaq
|
32.7
|
36
|
|
Dell
|
14.7
|
23.3
|
|
IBM
|
15.7
|
12.6
|
|
HP
|
11.8
|
9.5
|
|
Others
|
25.1
|
18.6
|
Product
Strategy and Trajectory
IBM
is positioning the Netfinity 5500 M20 and 7000 M10 servers as high performance
and high reliability systems, with the focus on web serving. IBM highlights
its performance figures for various web-focused benchmarks (see below), which
are generally higher than the competition. IBM does not highlight cost, as these
systems tend to cost more than the competition (especially in a price/performance
context). We expect IBM will reduce cost over the next 3-5 years, to ensure
that it wins more bids than just replacing "legacy systems" and IBM-only customers.
HP
focuses more on breadth of functionality than depth. In the next three to five
years, the positioning of these products will change from high-end to mid-range,
consistent with the general trend in Intel servers.
Product
Strengths
5500
M20:
Performance:
IBM's published results indicate the Netfinity 5500 M20 performs well in both
the SPECweb96 and WebBench tests. Naturally, this focuses the 5500 on being
a web server.
Reliability
Features: The 5500 has reliability features such as hot-plug power, fans,
and PCI slots. In addition, IBM's Predictive Failure Analysis (PFA) provides
diagnostic assistance.
7000
M10:
Performance:
The Netfinity 7000 posts good numbers for tpmC (23,640, among the best four-CPU
marks) and SPECweb96 (14,729, the present leader for four-CPU systems) benchmarks.
Reliability
Features: IBM builds in numerous reliability and availability features,
such as Predictive Failure Analysis, and Hot-Plug PCI for Windows NT 4.0.
I/O
Features: The 7000 provides 12 Hot-Plug PCI slots, the most in its class.
Also, these slots can run under Windows NT 4.0 now it is not necessary to
wait for Windows 2000 for this functionality.
General:
Corporate:
IBM's corporate strength and stability are very good, and (with HP and possibly
Compaq) is one of the few companies that offers a full set of products, from
notebooks (and PDAs) through mainframes.
Serviceability:IBM's
systems are reliable, and the "Light-Path Diagnostic" panel provides useful
information to both the user and service tech, leading to better and faster
fault isolation and faster problem resolution. In summary, we believe the Netfinity
series is reliable and serviceable.
Product
Challenges
5500
M20:
Size:
The Netfinity 5500 M20 is larger than its competitors eight rack units (8U)
high vs. 7U for Dell's and Compaq's competing models. Given the marketplace
focus on rack density, the additional 1.75" in height is a negative factor.
Storage:
The 5500 M20 has fewer available drive bays (3x1.6"/6x1.0") than competitors
(at least 5x1.6"/7x1.0" for Dell and Compaq), a negative.
7000
M10:
Size:
The 7000 is a very large box 11U high. This means a customer can get only
12 CPUs in a 42U-high rack, as compared to 24 CPUs for Dell's/Compaq's larger
(7U) boxes, and 40 CPUs for their smaller (4U) boxes.
Storage:
Other than the "removable media" area (for DATs or a DLT), the 7000 can only
support two 1.6" or four 1.0" hard disk drives significantly less than that
offered in competitors' units. Even the larger units, such as Compaq's ProLiant
7000, provide more disk capability - 21 x 1.0" drives in a 14U-high chassis.
(This equates to 5X disks vs. 1.3X height.) We question the wisdom of providing
so little storage capacity in a unit so large.
Price/Performance:
The 7000's cost, measured in $/tpmC, is about 50% more than that of Dell and
Compaq for similar tpmC scores. This translates into a price tag approximately
$200K higher for an IBM system which can deliver around 23,000 tpmC (the current
four-CPU high-end mark). [Note: the reader should understand that the baseline
server price is only about 5% of the cost of a system which delivers this level
of performance.]
General:
Price:
IBM's servers typically cost more than the competition a Netfinity 7000 M10
baseline server costs ~$2000 more than a comparably equipped Dell PowerEdge
6300 system.
Product
Set: IBM presently has nothing to compete with Compaq's and Dell's 4U-high,
four CPU systems its smallest four CPU system is twice the size of those products.
Customers who need a lot of CPUs in a small space will find this a negative.
Vendor
Recommendations
5500
M20:
The
5500 M20 is a fairly standard, middle-of-the-road system, with the exception
of its unusual size. IBM should consider reducing the system chassis to 7U.
Since it takes a year or so to redesign a chassis, IBM should play up the performance
aspects of the 5500 (in the meantime), an area where it seems to excel. However,
IBM needs to keep an eye on its price point to ensure the $/tpmC figure does
not move out of range for a typical customer.
7000
M10:
IBM
should consider redesigning the box to make it smaller. At its present 11U height,
it is a difficult sell against a Dell 6350 or Compaq 6400R, especially in applications
requiring high CPU density.
Furthermore,
IBM should look at designing in more disk storage. Requiring a customer to buy
the rackable storage expander (IBM Model EXP15) to get more than four drives
is counter-intuitive for a unit so large.
General:
IBM's
message regarding the 5500 and 7000 appears focused on web serving applications.
Because this is a growing market, IBM should continue with this strategy, but
should take the necessary steps to expand into other areas. In addition, IBM
needs to reduce its $/tpmC figure the world is moving closer to the server-as-commodity
model, and the resulting price pressures will require IBM either to reduce prices,
or be left behind.
IBM's
Netfinity design team is purportedly drawn from the ranks of the RS/6000 and
AS400 groups. Although that will bring some reliability and serviceability focus
to the Netfinity designs, it also means that the designers may not be as focused
on cost-effective solutions/designs.
User
Recommendations
Customers
who need a reliable and serviceable system will find the Netfinity series a
strong performer. However, this reliability and serviceability comes at a price,
both in terms of actual dollars and the hidden cost of a system taking up more
space than necessary. (Since one of the drivers for moving to a rackmount solution
is to save floor space, then it seems contradictory to choose an excessively
large system.)
Customers
should use Compaq's and Dell's superior price and price/performance figures
as negotiating tools. In addition, customers can use Dell's better reliability
as an additional lever.
Long
Term Outlook
Although
Compaq and Dell are consolidating their hold on the #1-2 positions in the Intel
server market, IBM will not disappear as a player. IBM's future will be tied
to whether it can deliver products which are fully-featured and provide good
value. Raw performance is no longer a big differentiator in the Intel market,
so IBM will need to look at other ways to set itself apart from Compaq, Dell,
and HP.