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Divergence in Server Strategy

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On the heels of Dell’s decision last month to abandon the high-end server market, IBM Tuesday introduced a sales program designed to lure away existing Dell infrastructure customers and migrate them to IBM’s Intel Xeon-based eServer x440 systems, an 8-way processing system in the top of Big Blue’s xSeries product line.

As Dell refocuses on low-end, entry-level servers, IBM unleashes a campaign to help high-end Dell customers migrate to its eServer x440 systems.

The Armonk, NY-based computing giant plans to unleash a team of technical and sales specialists that will target existing Dell infrastructure customers in the hopes of migrating them onto a number of pre-configured eServer systems that scale up to 16 Intel processors or scale out with blade servers that should result in projected cost savings of up to 15 percent.

The move illustrates how two of the world’s leading server vendors are coping with the new economies prevalent in the current IT world.

Back in July, Dell said it would scrap development of an 8-way Xeon-based server to concentrate on entry-level commodity whiteboxes. But the Round Rock, Texas-based hardware company wasn’t retrenching; it was merely refocusing on its core compentency, analysts said.

“Dell really wants to be seen as an enterprise server vendor. They’ve done quite well at the low end. But when you get into the 8-way boxes, you get into an area that requires a great deal of research and development expense to make it work right,” said Charles King, research director at Sageza Group. “It’s just not in their DNA.”

But that said, the latest quarterly revenue numbers serve to validate not only Dell’s business model, but also its execution on that model. According to its fiscal second quarter results, Dell’s enterprise business revenue grew 21 percent to about $1.8 billion, while unit shipments rose 21 percent. Dell’s success in the server market can, of course, be attributed to execution but is also, in part, attributable to the growing popularity and power of clustering smaller systems, which have become sophisticated enough that they can take on the workload of stand-alone boxes with multiple processors, King told

“The argument is you can make two 4-way servers or four 2-way servers do everything that an 8-way server does,” the analyst explained.

In turn, IBM said it has already shipped more than 10,000 eServer x440 systems since it was announced last year. The company also claims its Intel server revenue has grown faster than Dell in each of the past four quarters. That’s because customers understand that symetrical multi-processing (SMP) technology (as opposed to clustered) offers less latency and more predictable response times for computing intensive applications like a SQL server or Microsoft Exchange.

“Any database scales up better than it scales out,” said Jay Bretzmann, manager of IBM’s xSeries offerings.

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