The meteoric growth of the server market is creating new opportunities for those interested in box moving to sell, upsell and service at all levels of the market.
According to IDC Australia, the PC market has grown by some 50 per cent in the last quarter. This staggering growth rate is due to a number of factors, such as price reductions in the processor market, creative bundling, strategic pricing and the buoyancy of the Australian economy, according to Logan Ringland and Rupinder Toor, the IDC analysts who compiled the report.
However, if you think this is a staggering growth rate, reports from several industry analysts are claiming that the PC server market has grown by 70 per cent in the same time frame. That is a huge number of servers. What is going on here?
Most PC servers are going into the small and medium enterprise (SME) market, where they are used as the primary platform to control the business function. Larger corporates also consume their share of PC servers but they tend to use them for departmental support or as sidekicks to bigger servers, where they assign some dedicated function such as a firewall or e-mail store, or some kind of gateway to external services such as fax or Internet.
There is obviously the Y2K factor to consider in this rapid deployment of technology. PC servers have a longer life expectancy than desktop PCs. SMEs can usually be convinced to buy slightly bigger, slightly faster machines for the role of a server than they currently need. The logic of this is based on their experience of the level of disruption and the number of hours involved in a new server installation. Buying beyond the current needs provides some level of insurance against too many painful upgrades in the near future. A new server can shut down the whole network while it is being commissioned, even if done expertly and professionally.
This situation guarantees that in most SMEs the oldest purchase in the IT asset register is likely to be the server. And therefore the server is the most likely to be in real need of Y2K remedial work. Even if the hardware makes the grade, it is likely that new accounting software, or an upgrade to the latest release, will hog more memory and more disk space and will also want more CPU cycles more often. If the Y2K issue has driven the SME into a new back-end software platform, and the existing server is a bit long in the tooth, resellers are finding it easier to provide a new server for the new software. This also results in less down time for the SME. The whole new software/hardware combination can be brought up to speed and tested before anything happens to disrupt the existing systems.
If the increased sales numbers of PC servers are only due to Y2K worries, then we should see a corresponding slump in the same quarter next year. By then business will either by Y2K compliant or destined to remain forever a 20th century company. However, analysts don't believe that this is the whole story. It seems that e-commerce is becoming the new-age panacea for all things that are holding back a business. Even though very few have fully embraced e-commerce, and even fewer have managed to make a profit with the new technology, nobody wants to be the last kid on the block to get the new technology. And you can't do much e-commerce without a server.
Even if an SME has decided to outsource the e-commerce side of things to some virtual server at an ISP, they invariably need a shadow of their online data inside the building. This provides both a staging platform before publishing the live data, and a fast in-house access point so that their staff know what their customers now know. Regardless of the brand of PC server being installed it appears once again that the biggest winner is Microsoft with its Windows NT server line-up. Novell has reported increased sales of its stalwart NetWare offering, but analysts claim they are mostly preaching to the converted in the form of upgrades to existing sites and increased sales of ancillary software such as Border Manager proxy and firewall solutions.
There is also a small but growing market in Linux servers, particularly since Red Hat and others have managed to provide a more turnkey product. Most, if not all, SMEs are already familiar with Windows on the desktop, making Windows NT an easier sell than competing server platforms, regardless of any real or perceived benefits. Both Microsoft and Novell have targeted the SME market with their "small business server" (SBS) offerings which bundle the basic server software with other essential services such as e-mail, Internet access and database back ends. Novell has gone further than most by offering the first five users free to any SME that asks. They have correctly identified that the first server is usually not the last server purchased and that the software changes less often than the hardware it runs on. Reminds you of the old days when banks actually wanted customers and offered savings accounts to school children hoping that they'd grow up to be mortgagees.
These new server software offerings have reduced the total cost to SMEs of a PC server solution by up to 30 per cent. The hardware hasn't reduced in price by anywhere near this level, but you do get a lot more "bang for your buck" these days, and "small business" now means that up to 50 users, rather than the original 25 users, can now get cheaper software to run on their PC servers. And there are significant discounts when an SME needs to trade up to the "real" Windows NT or NetWare from the SBS entry point. Unfortunately, a lot of SMEs are being sold a turkey disguised as a server.
Big-name vendors such as Compaq, HP, Dell and IBM have shouted long and hard that there is a difference between a desktop PC and a server, and asked you to pay the difference. The white-box opposition claims that there is no difference - just put your desktop PC in a bigger box so you can have a few more disk drives. The truth lies somewhere in between, as usual. The mere fact that NT will run on most PCs if you shovel enough RAM inside, doesn't necessarily make the PC a good server. The additional fact that such systems work and have been working for some time in many SME environments doesn't advance the case for using fat PCs as servers. It just provides the illusion.
SMEs require the same level of reliability as the big enterprises, and sometimes they need even more. Often an SME will only have one PC server doing a lot of different tasks and they can't afford to have any down time at all. The stress level generated in an office with 25 idle staff while you feverishly hammer away in the bowels of their server has to be experienced to be believed. I'm sure you've all been there. Starting from the inane questions such as "How long will it take to fix it?" to the snide remarks such as "I thought you knew what you were doing" and the inevitable well-meaning "What exactly went wrong (as if I'd understand anyway)?" Your support staff are under the gun the moment they walk in the door. What seemed like a good idea six months earlier, selling them a fat PC and writing "server" on the front with a marker pen, now seems like a vision of Dante's inferno.
Resellers who only supply brand-name servers still find themselves playing out the above soap opera. Maybe not as frequently as their no-name competitors, but it still happens. For starters, regardless of the hardware brand, you can't do anything about the bugs included with NT and NetWare at no extra cost. Given the right combination of software and certain phases of the moon, almost any PC server can be reduced to a quivering shell of its former self. You can only watch the BIOS memory self-test so many times before the customer starts to get wise to the gravity of the situation. When this happens the only sure way of getting back on air quickly is to have an identical server in the cupboard with the client's software already loaded. This never happens, unless your client is a bank or an airline.
However, there is a lot you can do, and a lot your sales force needs to do, to prevent on-site disasters from becoming total catastrophes. It requires you to sell PC servers that have a chance of being reliable, and you do that by the choices you present to your clients. Even if you are a brand-name reseller, you can't just sell the entire range of servers on offer. The low-end servers from Compaq, Dell, HP et al, don't really have much of an edge on white-box servers. Being generous, perhaps they have a 10 per cent higher reliability factor. Why? Because they use virtually the same components but spend more on testing. So the early failures due to manufacturing errors are filtered out of the supply chain. You usually do the filtering yourself on white-box servers. Some resellers let the customer do it for them. Regardless of the brand you sell you'll get more sleep if you choose a server that won't collapse at the first sign of real work, and you'll get more referrals from happy customers.
Reasons for the recent growth of the server marketPrice reductions. A result of increased competition in the processor market, particularly between Intel and AMD.
Creative bundling and strategic pricing. This quarter has been notable for the imaginative strategies put in place by both vendors and channel players, including the "Chameleon PC" and "easy finance" (no deposit, interest free) deals for the commercial sector.
A spike in small business purchasing. Driven by the aggressive target marketing of vendors and resellers concerned that Y2K issues may create a lockdown in their more traditional large business and government market spaces.
Small business' pursuit of the e-dollar. Small business is emerging as a strong cyber force with more and more seeking long-term infrastructure savings via e-commerce and the Internet.
Seasonal factors. The end of the fiscal year traditionally accelerates PC purchasing as businesses seek to soak up remaining budget resources.
Strong performance by non-branded PCs. This year's second quarter saw a significant rise in non-branded PC sales.
Buoyant Australian economy. With the Treasurer declaring inflation a dead horse not worth flogging, consumer confidence is sky high and jobless rates are at record lows for the decade - the mood is perfect for the innovative marketeer.
Must-have features for a PC server
Easy access case for fast on-site repairs and upgradesDual hot-swap power supplies so you can do the repair without panicDual CPUs, not for performance but to keep on keeping onECC memory for the same reasonDual (or more) hot-swap hard disks for the same reason - RAID is good and it is affordableDual network cards with the smarts to load balance until one diesUninterruptible power supplyTape backup system that provides for emergency restoration of the entire system to a new server - handy for fire and water damaged serversModem with dial-up remote control software - to supplement the same access via the InternetMaking the time to visit regularly and actually look at the system logs - they usually tell you what is dying or sick but nobody looks at them until there is a deathTraining. Insist that someone at the customer's site has basic administration skillsLinux shows growth in server appliancesBy Jack McCarthyLinux server appliances will account for almost 24 per cent, or $US3.8 billion, of worldwide server appliance revenue by the year 2003, according to a new study released last week.
The sales will represent about 14 per cent of all server appliance shipments, or 1.1 million units, according to the study released by Dataquest, a unit of GartnerGroup.
While Linux is booming in the market for server appliances, which are used primarily by small offices and workgroups for Internet access, Linux acceptance will go slower in the traditional server market, the market research firm predicted. In 2003, Linux servers will represent 3.4 per cent of worldwide traditional server revenue, or $1.9 billion, and 8.1 per cent of traditional server shipments, or 450,000 units, the study predicts.
Linux, the open-source operating system whose source code is available for modification and public distribution, has gained increasing acceptance from vendors. IBM offers database and other products that run on Linux, and Hewlett-Packard sells a variety of server-based applications that run on Linux.
Additionally, firms such as Caldera Systems and SuSe Holding AG distribute and support Linux software.
Linux is becoming "a credible and favourite" operating system in the appliance server market, Kimball Brown, Dataquest's chief analyst for the Emerging Server Technologies Worldwide program, said in a statement.
Server appliance vendors are using Linux because it is free and because its open-source method of development promotes support and continuous public upgrading that saves vendors time in supporting the operating system, Brown said.
What's new from . . . NEC
Following recent company restructuring, NEC now uses a 100 per cent channel model for its server distribution. Targeting all levels of the market, the company's NEC Express 5800 series consists of seven different servers, most of which come bundled with NEC's ESMPRO management software and ExpressBuilder product for easy installation with optional RAID disk technology. The Express 5800 PC servers range from sub-entry servers for small and medium business and cheaper entry-level products to enterprise-strength servers for the top end of the market.
NEC Express 5800/100Sc server
Sub-entry server targeted at small and medium businessesBased on Intel Pentium II 400MHz or Pentium III 500MHz processorStandard 64MB memory expandable to 768MB2MB VRAM memory54GB of hard-disk storage32-speed CD-ROM driveFloppy driveTwo serial, one parallel, two USB ports100BASW-TX LAN interfacePrice: $2623 (PII 400MHz) or $3605 (PIII 500MHz)Distributor: personal product group http://ppgwww.nec.com.au/entry.htmNEC131 632What's new from . . . CompaqDescribed by Compaq as a server for growing business, the Compaq ProLiant 400 server is an expandable and upgradeable solution for all office needs, including file and print, communication and Internet and small database storage. According to Compaq, ProLiant 400's easy manageability features make it an ideal solution for a growing business due to the simplicity of server setup and management, as well as high fault tolerance.
Intel 82440BX PCI chipset
Pentium II processor
100MHz GTL + front side bus
64MB memory expandable to 384MB
32-speed CD-ROM drive
Integrated SCSI controller, two internal and three external drive baysSix total expansion slots (PCI, ISA, PCI/ISA and AGP)Automatic Server Recovery (ASR) featurePriced from $2935Compaq1300 368 369What's new from . . . AppleMac OS X server represents the company's first serious foray into the corporate server market. Apple hopes the product will become a major player in the market for hardware/ software server configurations.
Mac OS X Server includes Apple-modified versions of the Mach 2.5 microkernel - a Unix-based OS core originally developed at Carnegie-Mellon University - and the Berkeley Systems Distribution (BSD) 4.4 version of Unix, a popular variant of the Unix operating system. Mach and BSD 4.4, along with the Apache Web server and such Apple technologies as AppleTalk and HFS+, form the basis for Darwin, which Apple is giving away to developers under an open-source strategy.
Beyond the components in Darwin, Mac OS X Server also includes Apple file services; WebObjects 4.01, Apple's high-end Web production software; and NetBoot, which allows client Macs to boot off the server. Apple's targeted customers include small businesses that are hoping to establish a cost-effective Web presence and educate customers looking for an inexpensive and easy way to administer Mac-based networks. Mac OS Server is priced at $795.
Macintosh Server G3
400MHz G3/1MB L2 cache
9GB Ultra2 SCSI drive
Ultra2 SCSI PCI card
AppleShare Solution Kit
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