Server Snapshots: Spotlight on Gateway

Since our last Spotlight on Gateway, not a whole lot has changed about the vendor's the server lines, at least in terms of the details. A few new NAS boxes were released in 2007, along with a tower server, and, as would be expected, the company followed the trend set by its competition and announced a line of quad-core AMD Opteron-based servers.

The Gateway brand may soon be no more, but its products will live on. What steps should server customers take before its acquisition is complete?

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But looking at the big picture, Gateway servers are forever about to change. Acer (Taiwan) is acquiring the company for $710 million. The acquisition is expected to close in fourth quarter.

So this marks what is most likely our last-ever Gateway snapshot. Acer, of course, has its own servers, which are scheduled to be featured in a Server Snapshot on ServerWatch next month. Its main interest in Gateway is its consumer market.

"The Acer-Gateway combo is expected to be largely consumer in the United States," said Roger Kay, president of analyst firm Endpoint Technologies Associates located in Massachusetts. "Acer has its own commercial business in North America, which will operate separately from Gateway. There may or may not be some combination of the Gateway and Acer consumer operations and brands."

As a result, Gateway is off-loading its U.S.-based professional business, primarily focused on education, government and business partners, to MPC (Nampa, Idaho) and will exit all these businesses. MPC will operate the Gateway Pro business, using the Gateway name for a year and assuming all liabilities and warranties.

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"The combined entity will likely have sales of more than $1 billion, and MPC will take on the product teams, Nashville configuration center, support and related overhead," said Kay. "The Gateway Pro DNA will live on in the MPC line."

He said he believes MPC is likely to keep the Gateway servers, as they are a solid line and are complementary to its offerings Over time, MPC will probably consolidate the server products to some extent.

Gateway Servers

Meanwhile, Gateway's most newsworthy upgrade is the upcoming incorporation of quad-core into its line-up. The latest Opteron processors are being added to all of its rackmount servers. A quad-core makeover is being performed on the E-9232T tower, which was released earlier this year.

"The Gateway E-9232T features a low price point and compelling technologies, making it an affordable, yet powerful server that can help small- and medium-sized businesses run efficiently and securely," said Tim Diefenthaler, Gateway senior director of professional product management.

This tower server incorporates Gateway Lights Out (GLO) system management, functionality that allows customers to remotely shut down and restart their server regardless of power condition. An optional low-cost remote control K/V/M with media redirect features enables IT managers to take remote control of a server. In addition, it has integrated RAID support and optional hot-swappable redundant power supplies. According to Gateway, the server is particularly suited to Microsoft Small Business Server (SBS) as well as e-mail, file and print sharing, and financial or database programs.

"Even with the appeal of the latest network technology, the lack of full-time IT staff can make it hard for smaller companies to step up to the investment," said Ray Boggs, an analyst with IDC (Framingham, Mass). "The availability and affordability of new servers like the E-9232T can provide a powerful alternative to desktop approaches, letting smaller firms gain access to network capabilities for the first time."

The rack servers with quad-core processors will be the E-9722R, E-9522R and E-9422R rackmount servers (3U, 2U and 1U, respectively). They include features similar to those found on the new tower model. They also support both SAS and SATA II hard drives in the same system.

"Gateway servers are designed for a range of workloads for small and midmarket commercial customers," said Endpoint's Kay. "Up to 4P, the Gateway line pretty much covers the waterfront with scalable options at each level, a full range of accessories (including storage), and robust service offerings. The company doesn't play above 4P."

Kay said Gateway is strongest in the education market, where it has won many state and local bids. It also has some accounts in federal, state, and local governments, as well as some SMB customers. This amounts to more than $750 million in annual revenue.

Although many see Gateway as a strong SMB player, IDC analyst Justin Jaffe feels Gateway has definite weaknesses in its SMB products.

"The company's server products have very modest penetration among small businesses but considerably larger penetration (roughly 8 percent) among firms with between 100 and 999 employees," said Jaffe. "As you'd expect, Dell and HP are the runaway leaders in the SMB server market."

Customer Action

Understandably, Acer's move to gobble up Gateway may have some existing customers worried. So what should Gateway's professional customers do while the acquisition goes through? Mikako Kitagawa, an analyst at Gartner (Stamford, Conn.) advises fast action.

"If your organization is a public-sector customer with a multiyear contract, identify how to either renegotiate or protect yourself from exposure to an inability to continue receiving products and services via Gateway," he said. "Develop or reassess current relationships with alternative secondary hardware suppliers."

But with the MPC deal going through, Gateway server customers can have some expectation of stability moving forward.

Gateway Close Up

Server Chassis Processors Operating System Base Price
E-9232-T Tower, 5U rack option Quad-core and dual-core Opteron, or a single-core AMD Athlon 64 processor Windows Small Business Server (SBS) 2003 $659
E-9520-T Tower One to two Intel Xeon dual-core or quad-core processors Various versions of Microsoft Windows 2003 Server and Windows SBS 2003, or no operating system Starting at $1,799
E-9422-R 1U high efficiency Up to two high-efficiency dual-core AMD Opteron 2000 series processors Various versions of Microsoft Windows 2003 Server and Windows SBS 2003, or no operating system Starting at $1,699
E-9425R 1U rackmount, high availability Up to two dual-core Intel Xeon 5100 Series or quad core 5300 Series processors Various versions of Microsoft Windows 2003 Server and SBS 2003, or no operating system Starting at $1,799
E-9522R 2U rackmount Up to two AMD dual-core Opteron 2000 Series Various versions of Microsoft Windows 2003 Server and SBS 2003, or no operating system Starting at $1,799
E-9525R 2U rackmount Up to two dual-core or quad-core Xeon processors Various versions of Windows Server 2003 and SBS 2003, or no operating system Starting at $1,849
E-9722R 3U rackmount Up to four dual-core AMD Opteron 8000 series processors Various versions of Windows 2003 Server and SBS 2003, or no operating system Starting at $4,999

This article was originally published on Sep 28, 2007
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