November 25, 2002
(Computerworld)
Dell Computer Corp. announced today that it has started shipping blade servers priced to drastically undercut similar products already on the market from IBM and Hewlett-Packard Co.
Dell priced its entry-level PowerEdge 1655MC blade server with a single Intel Corp. 1.26-GHz Pentium III processor at $1,499. That compares with $1,879 for an IBM blade with a more powerful Xeon processor and $2,539 for an HP blade server running on a 1.4-GHz Pentium III.
Blade servers pack all the functionality of a traditional rack-mounted server onto a tightly packed board, which is then slotted into a chassis housed in standard six-foot-tall racks. IDC, a market research firm in Framingham, Mass., has estimated blade server sales totaling about $120 million this year, with the market growing to $3.7 billion in 2006.
Russ Ray, senior product manager for Dell's PowerEdge server line, said that besides offering the lowest-priced blade servers on the market, Dell also has a competitive edge with its chassis, which is not only priced lower than the competition but also fits into standard 19-inch tracks. That's a key factor that could affect total cost of ownership for companies, he said.
David Freund, an analyst at Illuminata Inc. in Nashua, N.H., said that Dell "has drawn a line in the sand" with its aggressive pricing for blade servers. Although the company has successfully commoditized a wide range of computer products, from desktop PCs to traditional servers, Freund questioned if it can do the same with blades -- which require an extensive suite of management tools in order to be successfully incorporated into an enterprise data center.
Hardware costs for blades are just a small slice of ownership costs, said Freund, who added that management software -- which handles load balancing and automated software loads -- could become a key product differentiator for IBM and HP.
Tim Dougherty, director of blade server strategy at IBM's server group, agreed, saying that price alone isn't the key determinant in the selection of blades. He said customers could achieve significant savings through use of the company's IBM Director software, which includes automatic setup and configuration wizards to deploy and maintain hundreds of blades. Dougherty said he wasn't surprised that Dell was able to low-ball prices of its blade server chassis, "since they can fit only six blades in theirs, and we put 14 in ours."
Although Dell offers software to manage server loads, Freund said he believes enterprises will also need to use third-party software from companies such as Altiris Inc. in Lindon, Utah, to maximize the potential of the Dell blade servers.
Hugh Jenkins, vice president for marketing at HP's industry standard server group, said he believes his company still has an edge with the breadth of its products line, which next year will include blades with Xeon processors as well as quad processor blades. HP has already captured 55% of the emerging blade market, according to Jenkins.
Dell also introduced a dual-processor blade today.