May, 2009

Server sales tank as folks stretch hardware life cycles

According to IDC’s recent server report, server sales are plummeting due to the slumping global economy. According to IDC, this is the lowest quarterly server revenue since the analyst firm began tracking the server market on a quarterly basis 12 years ago.

The commodity server market took a big hit in general, while Dell specifically had a bad start to 2009. Dell’s server revenue declined 31.2% year over year. Even blade servers slumped, for the first time since IDC had tracked blades.

According to our 2009 data center economy survey, IT pros are stretching stretching server life cycles, putting off buying new hardware.

Servers are typically replaced every three years. Two-thirds of IT shops have extended the production life of server deployments in 2009. More than 35% say they’ll keep servers in production for six months to a year longer, 34% say they’ll extend server life cycles by two years.

Quest for power efficient servers leads vendors to PC chips

What was once a battle over who could offer the fastest, most powerful server has turned into a competition over which servers can operate on the fewest watts, leading vendors to put PC chips in x86 systems.

"I just can't do it captain, I don't have the power!"

This trend is the result of data center power constraints; IT folks simply don’t have abundant quantities of power to supply their servers any more, but still need to add more compute capacity somehow.

So, server vendors are on the hook to offer systems that operate on very little power, and every vendor wants the right to say they offer “the worlds most efficient” server. But it appears they hit the limit with the level of efficiency today’s x86 server chips can offer, so some vendors have moved on to PC chips.

For example, last week, Dell launched new servers with Taiwan-based Via Technologies Via Nano processors, which the companies say offer the best power efficiency of any processor on the market today. Prior to that, Intel’s Atom processors for notebook computers were launched in SuperMicro servers.

My response was, really? PC chips in servers? Sounds great if you only plan to run Tetris on your servers, because when you choose lower watt chips, you trade off performance.

But it appears certain markets are willing to make that compromise. According to Dell, their new Via Nano-based systems are designed for “hyper-scale customers in the search engine and Web hosting businesses…who typically choose general purpose 1U servers or low-end tower servers, and make compromises around the density, power, and/or manageability aspects associated with these alternatives.”

It will be interesting to see how far these PC-chip servers go, who adopts them and how Intel and AMD respond to the Via Nano, product-wise. Will Intel and AMD try to leapfrog Via’s Nano chip with something that consumes even less power? I’m going to take a guess and say, hell yeah. But really, how low can they go?

Forty-foot Unix history poster will dominate your office

For a mere $340, you can send a major message to your office-mates about how much you love Unix. A new poster from Leighton Jones at Calgary-based Floating Point Digital Images depicts Eric Levenez’s diagram of the Unix operating system with fractal art by Alan Tenant. You can download the Unix history chart for free here.

Photo by Floating Point Digital Images.

Why buy this tear and weather-resistant 10lb poster? According to the purveyors, “it could be as simple as the desire to wrap yourself several times in its informational goodness that documents the history of 1000+ versions of more than 150 different Unixes.”

Found this link at The Register.

Shocking news of the day: Intel delays Itanium again

Here’s a release I got over email:

Here is an update to the Tukwila Itanium® schedule.  As you know, end users choose Itanium-based servers for their most mission-critical environments, where application scalability is paramount.  During final system-level testing, we identified an opportunity to further enhance application scalability.  As a result, the Tukwila processor will now ship to OEMs in Q1 2010.

In addition to better meeting the needs of our current Itanium customers, this change will allow Tukwila systems a greater opportunity to gain share versus proprietary RISC solutions including SPARC and IBM POWER.  Tukwila is tracking to 2X performance versus its predecessor chip. This change is about delivering even further application scalability for mission-critical workloads.  IDC recently reported that Itanium continues to be the fastest-growing processor in the RISC/Mainframe market segment.

Illuminata analyst Gordon Haff has some details on the history of Itanium delays (yes, just Itanium delays have a history all their own) and some analysis.

Intel breaks another record; biggest anti-trust fine ever

Intel just broke another record - this time for getting the largest anti-trust fine ever.

The European Commission (EC) slapped Intel with a $1.45 billion fine for violating EC Treaty antitrust rules against engaging anti-competitive practices that excludes competitors from the market.

The European Commissioner for Competition Policy stated throughout the period covered by the decision, Intel held at least 70% of the worldwide market in x86 server CPUs, and used anti-competitive practices to hold that position.

“The fact that Intel had such a large market share is not a problem in itself. What is a problem is that Intel abused its dominant position. Specifically, Intel used illegal anti-competitive practices to exclude essentially its only competitor, and thus reduce consumer choice, in the worldwide market for x86 chips,” the commissioner, Neelie Kroes, told press. “Given that Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for over five years, the size of the fine should come as no surprise.”

The EC found that Intel gave rebate to computer manufacturers who bought all, or almost all, of their x86 CPUs from Intel. Intel also made direct payments to a major retailer on the condition that it only sell computers with Intel x86 CPUs.

Intel also paid computer manufacturers to halt or delay the launch of specific products containing competitors’ x86 CPUs and to limit the sales channels available to these products, according to the EC.

Intel also faces another anti-trust lawsuit, filed by AMD for similar anti-competitive practices in the U.S. The court date for that trial is in February 2010.

As expected, Intel’s CEO Paul Ottellini denied any wrongdoing and is appealing the decision. In a statement, Ottellini said, “As we go through the appeals process we plan to work with the Commission to ensure we’re in compliance with their decision… there should be no doubt whatsoever that Intel will continue to invest in the products and technologies that provide Europe and the rest of the world the industry’s best performing processors at lower prices.”

And some U.S. based legal pros issued statements today saying the EU’s fine was far too harsh.

“The EC’s use of huge fines against market-leading firms - fines calculated from a firm’s world-wide sales, not from harm to European consumers - discourages aggressive competition that benefits consumers,”  Ronald A. Cass, Chairman, Center for the Rule of Law, said in a statement. “Consumer harm should be the concern for competition law, and here instead consumers saw sharp declines in cost and increases in product quality - even Intel’s complaining rival, AMD, enjoyed historic success during the period it claims Intel’s actions foreclosed competition.”

But the manufacturers concerned by Intel’s conduct in the EC case - Acer, Dell, HP, Lenovo and NEC - aren’t playing the violin for Intel right now, and reports say Intel’s closest competitor, AMD, is celebrating the EC’s decision.

And the EC’s commissioner doesn’t seem to feel bad about the massive fine either. In his closing statement to the press, he drew attention to Intel’s latest global advertising campaign, “Sponsors of Tomorrow,” in which Intel invites visitors to add their ‘vision of tomorrow’ to their website.

“Well, I can give my vision of tomorrow for Intel here and now: “obey the law,” Kroes said.

As large a fine as $1.45 billion is, it’s really a drop in the bucket for Intel; they reported $7.1 billion in revenue for the first quarter of 2009 alone,  so I doubt this will have any affect on their ability to churn out CPUs on the tick-tock cycle. The real issues for Intel is the tarnish the EC’s decision puts on them and that it takes the focus away from their technology - two side effects that are sure to help the competition gain some ground in the CPU market.

Rackable acquires Silicon Graphics, takes SGI name

Rackable Systems completed its acquisition of Silicon Graphics, Inc. on Monday and oddly enough, Rackable will adopt SGI as its global name and brand, instead of the other way around.

Rackable closed the transaction to acquire the debt-ridden Silicon Graphics (SGI) for $42.5 million in cash on May 8 and the company said it will change its name to Silicon Graphics International - or SGI - but will keep the Rackable Systems product line and ticker symbol (RACK) the same.

I wonder if abandoning the Rackable brand in favor of SGI is a good idea. Sure, SGI was hugely successful in the 1980’s and is still a more recognizable brand than Rackable because of its legacy, but SGI is also a failing brand that filed Chapter 11 bankruptcy in 2006 and again in April 2009 due to unmanageable amounts of debt.

In fact, I liken SGI to the captain of the high school football team; you know the type - a leader in its time, popular, and admired by all, but 20-some years later? Balding, broke, and holding desperately to what used to be.

Maybe I’m being too critical of SGI’s brand, but others question Rackable’s decision to take the SGI name as well. SGI is “Well known, sure. But more than a bit tarnished and not descriptive of Rackable’s business,” said Illuminata Analyst Gordon Haff.

Coincidentally, Sun Microsystems Inc. was founded the same year as SGI - 1982 - and they, too, are being acquired this year, by Oracle Corp. (Oracle won’t be dropping its name for Sun Microsystems though. )

Either way, Rackable now has a much larger portfolio of high performance computing products, with SGI’s x86 cluster offerings, shared memory clustered compute products, scalable data center and storage technologies, modular data centers, data management software, HPC tools and visualization technologies.

SGI will maintain its corporate headquarters in its current Fremont, California facility, with offices around the world, and the new management team will have senior executives from Rackable Systems and the former SGI.