Michael Dell is preaching again. On stage delivering a keynote at OracleWorld in San Francisco, he explained to the assembled masses how Dell, with the help of Oracle, will become a dominant player in the enterprise datacentre.
As words like “commoditisation”’ and “standardisation” flew over the crowd, one couldn’t help experiencing déjà vu. It was only 19 years ago when the same man argued that his company would revolutionise the consumer PC industry through low-cost commodity components and a super-efficient, just-in-time manufacturing process.
Back to reality, and Dell has changed the PC industry. Chasing a publicly stated goal of becoming a $US60 billion company over the coming years, Dell is looking for a boost by applying the same commodity-driven approach to the enterprise datacentre.
“The IT market is diverging between custom- and standards-focused,” Dell said on stage. “People betting on proprietary strategies will drain their budgets.”
He said all signs point to IT departments adopting commodity products.
The question this time around is whether enterprises are ready to embrace commodity-based products in their core IT infrastructure.
Much of Dell’s enterprise strategy hangs on the acceptance of clustered servers as an alternative to multi-processor servers. The company is armed with a line of Intel Itanium 2-based servers, clustering technology from Oracle, in-house grid software, and a professional services organization currently generating annual revenue of $3 billion.
Dell also has a moniker for its strategy: “scale out computing”. Under this model, Dell is working to convince the enterprise that datacentres should be powered by a large array of interconnected smaller servers based on open standards. And Dell is so confident it has the right approach that it stated in July it would not continue working with Intel on an eight-processor server that was being designed to run datacentre-like applications.
Rather than build a high-end server, Dell decided it would continue to push its two- and four-way servers, such as the PowerEdge 3250, a 2U-high server with two Intel Itanium 2 processors.
The company said a few of these servers coupled with grid computing software, cobbled together with a smattering of open source and Linux software, can replicate the performance of a high-end server.
It’s a strategy designed to deliberately counter what Dell calls the “scale up” high-end multiprocessor server approach employed by IBM, HP, and Sun. Naturally enough, Dell’s strategy has its detractors. Namely the big three server vendors: HP, IBM and Sun. In fact, both Sun Microsystems and HP executives attacked Dell during OracleWorld.
Sun’s president and chief executive officer (CEO), Scott McNealy, argued during a press Q&A that there was no mystique about “no R&D, no innovation” commodity products.
“Dell doesn’t make the computer, Intel does,” he said, further rejecting the notion that Dell was a serious high-end competitor. In fact, McNealy argues Dell’s piecemeal approach to selling servers is not what enterprise customers want: “Stop buying this in pieces, we’ll integrate it for you.”
HP’s CEO, Carly Fiorina, used her OracleWorld keynote to criticise Dell, without specifically naming the company, for its lack of innovation, and defended the notion that R&D was over-rated.
The only people who believed Moore’s Law didn’t matter were “those who don’t want to keep up or can’t keep up,” she said.
IBM’s director of eSeries products, Jay Bretzmann, agreed with the sentiment.
“If you don’t have any technology to bring to the table then you have to go with the ‘scale out’ approach,” Bretzmann said. “We have history, investment, experience. We use lots of what we’ve learned in the past.”
However, Bretzmann isn’t entirely critical of the model.
“Scale out offers good reliability, but not good enough for some applications,” he said.
Others agree. Software strategy manager for Advanced Micro Devices’ server and workstation marketing division, Margaret Lewis, said clustering was optimal for some applications but for others it just wouldn’t do.
“Rendering film is great for clusters, but if an application is sharing the same database, then the added latency of clustering will pose a problem,” Lewis said. “You can’t live in a world when you say either clustering or multi-processor servers. There is always a need for both.”
On that note, IBM’s Bretzmann agreed.
“Transaction and database queries with ‘scale up’ provide you a consistent response time,” he said. “There will always be some latency in ‘scale out’.”
Numbers Speak Volumes
Michael Dell’s response is to point to his factory floor and talk market share.
Nobody sold more servers in the US then Dell, he said.
High-volume economics were having significant impact on the development of enterprise-class systems, Dell argued.
“For some of the vendors that are still trying to live the old way, [I have] to tell you: I believe it’s a high-volume, low-margin business,” he said. “I don’t think it’s going to go back to the old way.”
The Center for Imaging Science at John Hopkins University in Maryland, is one customer that believes Dell’s story.
A cluster of low-cost Intel-based servers running Linux was a viable alternative to using a multiprocessor server, director of IT at the centre, Anthony Kolasny, said.
Kolasny explained he had purchased an eight-node cluster of Dell servers that the center would use in its lab to study, compare, and process medical images of subcortical brain structures.
The Dell cluster was chosen for its cost-effectiveness and its support for 64-bit processing.
“Clustering and grid technology has been around for seven years; [enterprises] just hadn’t heard of it,” Kolasny said. “It is now starting to become a cookie-cutter solution.”
Rudimentary monitoring and process batch software was all that was needed to run a clustered solution.
However, that might be oversimplifying the issue. Director of Server Market Research at IDC, Mark Melenovsky, observed that a key issue faced when coupling Intel-based servers was management.
“When you have 100 servers, you need to manage it more efficiently,” he said.
“Dell has been successful in the small and medium business market alone, but [to be successful] in the enterprise, partnerships with software and service partners are key,” Melenovsky said.
One of Dell’s most high-profile friends is Oracle.
Dell said Oracle’s 9i Real Application Cluster (RAC) database software made it possible to run a business application across a number of Intel/Linux servers strung together to replicate the performance of a high-end multi-processor server.
Dell also gains much-needed management capabilities from Oracle. Thanks to September’s launch of 10g — a grid-enabled version of Oracle’s database and application server — Dell is starting to fill out the management story.
Partners aside, the other significant component Dell brings to the table is its relatively quiet services division.
“What we choose to do is real simple and straightforward,” vice-president and general manager of Dell Professional Services, Gary Cotshott, said.
“Our strategy in services is very tightly tied to our core business. We’re not in the business of being in the service business.”
Cotshott said Dell was attempting to make professional services as standardised and commoditised as the rest of its business.
He said Dell aimed to take away the mystique and cost associated with consulting engagements. To that end, Dell Professional Services concentrated on helping its enterprise customers design an infrastructure based upon commodity components, namely the Linux OS and Intel-based servers.
In operation for more than a year, Dell Professional Services and Dell Managed Services currently account for 10 per cent of the company’s revenue.
They include a customer support group and a custom solution development team, where custom integration of third-party products occurs in a Dell manufacturing plant.
Messaging, consolidation, migration and Microsoft are the organisation’s primary focuses.
Cotshott said this “early-stage business” handled all facets of assessing, designing, architecting, integrating and implementing the infrastructure for enterprise applications.
He called it a complete lifecycle of services.
If you think it all sounds a little ad-hoc, Cotshott is quick to defend, arguing Dell is developing a standard set of practices that it could apply over and over again in a services framework for other clients.
The approach was radically different from the competition’s less transparent approach to solving enterprise technology issues, he said.
But questions remained about how deeply enterprises would buy into Dell’s approach. For Michael Dell, it’s a case of counting on the continued shift away from proprietary technologies toward industry standard architectures.
“We are the epitome of mass customisation; that’s what Dell does,” Dell said. “I think we do that better than anybody else in the industry.”
— Mark Jones contributed to this report