November 1, 2004 4:00 AM PST

Dell takes new stab at blade design

ROUND ROCK, Texas--Competitors criticize Dell for a lack of engineering expertise, but the company said one significant computer due to launch in November is its own design: its second-generation blade server, the PowerEdge 1855.

The PowerEdge 1855--and a successor, the 1955, due in February--is expected to use a chassis 12.25 inches tall that can accommodate 10 dual-processor blades, according to sources familiar with the design. With Dell's blades, 60 servers can fit in a single rack, which can accommodate only 42 of today's conventional dual-processor servers.

Though Dell says it's unashamed of its low development expenses and its reliance on partners' computing engineers, when it comes to servers, the company also touts its own research investments.

News.context

What's new:
Dell is making its second try at selling blade servers and is touting its own research and development in the product's design.

Bottom line:
The fact that Dell is highlighting its server R&D work could indicate that the company recognizes customers really are looking for expertise from a server maker--and not just a bargain. Some, however, say there's evidence that Dell can't take full credit for the design of its new blade.

More stories on blade servers

"We still spend probably 60 percent of our research and development budget on enterprise (products), and (they bring in) 20 percent of the revenue," said Chief Executive Kevin Rollins, in a meeting with CNET News.com editors here. "As we come out with new products, whether they be blades, whether they be superthin architectures, whether they be new multicore processors from Intel, we have to do that R&D ourselves. These aren't cookies--they don't just pop out of a bag."

Dell speaks proudly about its work on the forthcoming blade server. "I designed my own product, and I'm pretty excited about it," said Jeff Clarke, senior vice president of Dell's product group. The systems are derived from Dell's eighth-generation servers, which debuted in August, along with Intel's newest "Nocona" version of the Xeon processor, he said.

The fact that Dell is highlighting its server research and development work could indicate that the company recognizes customers really are looking for expertise from a server maker, and not just a bargain. "Implicit...is that there's a very high bar in this marketplace, and price alone won't be able to compensate for that," said Sageza Group analyst Clay Ryder.

But Clarke's comment aside, it's not clear exactly how much of the product the computing powerhouse really engineered: The system strongly resembles a blade server Fujitsu sells, some familiar with the designs say, raising the possibility that the companies derived their products from the same original design firm or contract manufacturer.

It is possible that Dell relied partly on outside engineers, said Charles King, principal analyst for Pund-IT Research. "With a server environment as complex as blades are, a good way to get around product development costs is to go with an original design manufacturer," he said.

Counter Intel
An obvious partner to jump-start Dell's blade business would have been Intel, which designed the Itanium servers Dell sells. But Dell spurned an Intel-IBM blade alliance.

Dell executives would like a blade standard but disagree with IBM and Intel that their alliance sets it. "If we thought that was the case, we probably would have done it," Clarke said.

Regardless of whose engineers are involved in Dell's blade servers, the company has shown an ability to profit from the growing maturity of Intel server technology. It's currently the No. 2 seller of servers based on x86 chips such as Intel's Xeon or Advanced Micro Devices' Opteron.

"I think there is strong evidence, as seen by the encroachment of x86 servers throughout the entire market, that Dell's model is on-target and poised to continue to move up the food chain," said Technology Business Research analyst Brooks Gray.

Blade servers--thin systems that slide into a chassis and share power supplies and network switches--are a fast-growing part of the server market. The 1855 is Dell's second attempt to compete in the blade arena after a short-lived foray with its 1655MC systems in 2002.

In the second quarter of 2004, IBM had 44 percent of the $233 million blade market, while HP had 32 percent, and Dell held 3 percent, according to IDC. Blades are expected to be increasingly important, with one forecast saying they'll account for 29 percent of server shipments by 2008.

PowerEdge illuminated
Dell has been cagey about its coming blade design, revealing only that it plans an aggressively low price and that about 50 percent more Dell servers will fit into a rack.

But details are emerging.

Each blade will have a USB port in front for management purposes and dual SCSI hard drives that can be replaced from the front without shutting down the system, according to one source.

Those details are among the similarities in size and construction between the PowerEdge 1855 and Fujitsu's Primergy BX600 blade servers.

The systems' chassis look the same, down to screw placement and bezel widths. But the blades themselves have at least one difference: the chipset--components that connect processors to memory, storage and networks. Dell said its blades use an Intel chipset, whereas the current Fujitsu system uses a ServerWorks chipset from Broadcom.

Where does the similarity come from? Fujitsu and Dell don't have a blade partnership, said Jon Rodriguez, Primergy's senior product manager. Analysts speculated that it's possible both computer makers relied on the same third-party source. A host of design companies, many in Taiwan, develop laptops, servers and other products that eventually sport a better-known company's brand name.

"They may very well take an offering from a third-party contract manufacturer that designed 80 percent and allowed customization," Ryder said.

And Fujitsu allowed that a significant amount of its blade servers could come from elsewhere. "Usually we don't talk about where (our designs) come from," Rodriguez said. "There's a significant amount of (Fujitsu) intellectual property in our blade server design."

Gartner analyst John Enck says Dell is eating competitors' lunch in the low end of the server market.

Fujitsu plans to release a new blade soon that will use Intel's Nocona version of Xeon, Rodriguez said. It would probably use the Intel chipset, like the rest of Fujitsu's Nocona servers.

IBM plays it cool
IBM said it doubts Dell has the engineering ability to make good blades, the dense configurations of which make them more susceptible to overheating problems. "They're not going to have the skills to do the development," said Jeff Benck, vice president of Big Blue's blade unit.

IBM has taken measures to defend its blade server lead, introducing a lower-price version of its BladeCenter and new small SCSI hard drives that now mean 14 blades will fit in a chassis the same height as Dell's. "We don't think they'll win anything over us," Benck said.

But Dell says its designs will address 90 percent of the blade market, and it has succeeded in carving lower-end server market share from competitors. "Dell is eating their lunch in the 1-way and 2-way market," said Gartner analyst John Enck.

Blades do present new hurdles for Dell, though. "I think their biggest weakness is in the software stack. If you look at what IBM is fielding for a software stack around its blades, or what HP is fielding, it's pretty powerful stuff. Dell is going to be seriously challenged to provide that," Enck said.

 

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