Industry

IDC put out a news release recently about its Q4 External Disk Storage Systems report. The headline was a bit gloomy to say the least and drove some media and blogging coverage here, here and here.

Let me give you my take on it.

Dell’s strategic investments over the last few years have been closely tied to our vision of simplifying IT – making storage simple, capable and affordable for our customers. It’s clear to me from this release that customers are voting with their wallets and that they agree with us.

From the IDC release, let me pull out a few bullet points:

• Among the top five suppliers, Dell was one of only two companies that posted strong year-over-year revenue growth during the fourth quarter of CY2008, with 10.0 percent growth;
• The iSCSI SAN market continues to show strong momentum, posting 61.6 percent revenue growth compared to the prior year's quarter. Dell led the market with 35.3 percent revenue share, followed by EMC with 16.8 percent;
• From my vantage point it appears that the slowest growing portion of the market is at the high-end of the market – the entry-level space is growing just fine.

Obviously, a lot of this success is tied to our EqualLogic acquisition (Note that IDC began reporting Dell and EqualLogic as a combined entity in the first quarter of CY2008). It’s also tied to the fact that our line of Dell PowerVault products also addresses a lot of the issues that customers are still spending their IT dollars to solve.

However, there’s much more to it than just that. Dell’s storage strategy has been about investing in areas that provide the greatest value for our customers. You’ve seen this with our long-time focus on iSCSI as a technology that lowers acquisition and deployment costs of SANs. The EqualLogic acquisition itself was a strong statement of our belief that enterprise class capabilities should be easy to deploy, but more importantly easy to manage a grow.

I see three factors converging:

First, current economic realities are causing customers to re-evaluate ALL purchases, and storage is no exception. With that, we are seeing an increased migration to iSCSI arrays.  Customers are looking to save money and iSCSI allows them to do that with little or no performance trade-off. In fact with EqualLogic’s unique scaling architecture, we are seeing even higher performance than many competing Fibre Channel arrays!  iSCSI has proven itself from the entry to the higher end of the enterprise. It’s available on all Dell primary storage offerings:  PowerVault, Dell/EMC and EqualLogic.

Second, customers are looking for the highest value products – products that save not just on acquisition cost, but importantly on-going management costs. It’s not all about value, simplicity and capability. With EqualLogic we offer all-inclusive software capabilities that allow us to come in at a fraction of competing solutions when comparing equivalent capabilities (like thin provisioning, asynchronous replication and snapshot integration with many popular applications).  Recently we announced our unique approach to de-duplication, which allows customers to save money by eliminating duplicate copies of data.

Third, customers continue to look to vendors with the broadest possible portfolios.  We recently expanded our agreement with EMC to include Celerra and enhanced our professional services.

So, as dire as the IDC headline initially reads, we think there’s some goodness buried deep in the release that needs to be discussed – one that we think is good for customers.

AMD has done some fantastic things of late, especially in terms of helping Dell increase our virtualization performance on PowerEdge servers and blades. I follow our friends at AMD regularly and came across a blog called “A Socket Full of Growth.”

In his post, John Fruehe, director of business development for server and workstations at AMD, claims makes the case that it is more time and cost effective to replace a processor than to buy new servers. He says, “Here's a little secret for you: the real hero is the person that figures out how to get more performance out of their servers without having to tear those servers out of the racks.”

In deference to our partners AMD and Mr. Fruehe, there are times when it makes sense to upgrade a processor for investment protection. And Dell fully supports the PIN compatible AMD Opteron processors in our servers. But that’s not the full story.

Here's a little secret for you, Mr. Fruehe: the real hero is the person that figures out how to get the most useful IT work out of each server, not just power.

I have the opportunity to spend a lot of with customers (as a matter of fact I’m in Sweden right now on a customer tour) talking about how the current model of managing data center productivity and efficiency is just not sustainable. Utilization is the key to accessing the full potential of a data center. Just swapping out a chip and increasing the compute power of a server will not solve the issue of utilization. It will exaggerate the initial problem: under-utilized CPUs.

According to a recent server utilization study (from a Dell Labs study done in Nov. 2008, entitled "Production Server Utilization Study") businesses are actually taking less advantage of gains in compute power in each new generation of server. The same study found that approximately one-quarter of servers handle the majority of actual work in the data center. This means that an unbelievable amount of server capacity is essentially wasted.

So, if this is the reality, making an underutilized server more powerful with a chip upgrade is not doing much good.

Dell is committed to helping companies compute more and consume less with our “Reveal your Hidden Data Center” strategy. We help companies take a holistic approach to improve data center productivity and energy efficiency by evaluating server virtualization and consolidation, refreshing legacy systems, raising the data center temperature, using containment and moving cooling closer to IT. By doing this we were able to reduce our own IT costs by more than $29 million. You won’t get that by simply swapping a processor.

Imagine you are the manager of the bus system in a major city and you notice that you are losing money hand over fist. When you look at the data, you notice that the buses are older and use a lot of gas. But, you also notice that each bus running has an average of only five passengers. So, is the right solution to swap out the old bus engines for more powerful and efficient engines? Or is the right solution to reevaluate your bus routes to maximize passenger traffic (and, of course, put some money into marketing)?

I say the latter.

The post below comes to us from Kirstan Ryan, Enterprise Communications Specialist.

There is a lot of hype surrounding “cloud computing.” Unfortunately, most vendors are using this hype to sell existing products under a fancy new cloud moniker.

Take the announcement by IBM yesterday. When I read it, I thought wow this is just another way to spin the need for expensive professional services. It appears I am not the only one to draw that conclusion, according to James Urquhart’s blog post on Cnet yesterday:

"Rather than working to increase usability and self-manageability of the tools in the new world of self-service clouds, IBM seems to be digging in and reinforcing IBM-as-a-Service and the service-oriented (as in "requires professional services") nature of their software products. I'm not sure IBM is capable of surprising us with beautiful, simple data center system software anymore."

I agree with James, one of the most compelling reasons to move to a cloud-based architecture, and leverage software-as-a-service applications, is to help ease application management and automate labor intensive tasks. It seems to me that if you are pulling in a ton of consultants to manage your cloud-based initiatives for 3, 5 or 10 years – aren’t you just paying a lot of money to postpone your problem?

My view on the cloud-based initiatives is that they should help you immediately simplify your IT management. Consultants should come in for shorter engagements measured in weeks, not years. And they should be measured in time-to-value. It is like when you first have a baby, and your in-laws come to visit, they are incredibly helpful and you can’t imagine life without them – but you don’t want them or need them to move in forever.

Today saw more intrigue from IBM on the allegedly IBM "screwed up"  (their words, not ours) execution of their System X business.

Ashlee Vance at the New York Times posted an interesting blog post about IBM trying to squash rumors that it is killing its x86 server line. According to the article, IBM sent notes to partners specifically to dispel the rumors ignited by recent earnings and share losses for its x86 server lines, as well as licensing deals giving up proprietary tech to Lenovo and Rackable Systems. Of note was the statement (or is it a desperate plea?) by Adalio Sanchez, the general manager of I.B.M.’s System x server business- “Don’t let ANYONE get away with ANY attempts to dilute IBM’s rock solid commitment to the System x business”. At least this time the soft expletives were replaced by CAPS.

Expletives and CAPS aside, I think we all remember reading Hamlet in high school. One of my favorite exchanges was between Hamlet and the Queen and relates to if the Queen made any vows not to remarry. It spawned the often misquoted line by the Queen, “The lady doth protest too much, methinks.”

So with regard to IBM’s x86 servers strategy, is this a case of “doth protests too much” or a legitimate attempt to set the record straight to assuage concerns in the market? Only time will tell.

As I mentioned in a previous post, the industry has experienced x86 server shipment growth and we see continued room for innovation in the segment. The economic conditions may make it a challenging market, but there are business applications that benefit from these standards-based servers. 

The rumors persist, but the question remains, just what are IBM’s plans for its x86 server lines? Feel free to share your thoughts in the comment section below.

While this post is not directly related to IT or IT-related issues, I know many of you have children that are in college or universities, which makes it VERY relevant. (My kids are busy with elementary school science projects but will ready for this in just a few years :)).

Dell just launched the Dell Social Innovation Competition site, a place where university students from around the globe can make a difference in the world by putting great ideas into action. The winner of the competition will be awarded $50,000 to start a business and put their idea into action.

Note that the deadline for entry is Feb. 20, 2009, just a few weeks away.

Go take a look at Direct2Dell for more details and short vlog describing the competition.