Cisco’s UCS B-Series is an exemplary modern blade system

Blade servers are easily recognized in the data centers, trade shows, and product catalogs of today: They’re the ones that nestle together in an enclosure, sharing some resources rather than standing on their own in a rack or on the floor. But what is the essential element that separates a blade from any other kind of server?

Let’s consider some defining characteristics of the blade server species:

1. Physically, a rack-mounted blade enclosure contains a number of server blades. Each blade is smaller than a 19″ rack, allowing more to be packed into the same space. This contrasts with larger, self-enclosed tower or rack-mount servers.
2. Server blades rely on the blade enclosure for critical supporting functions like power, cooling, and I/O ports, so they cannot stand alone. This further improves density and efficiency. Stand-alone servers, on the other hand, include these functions in their case.
3. Blade systems include some sort of management device that monitors the blades and can control some of their functions. Conventional servers do not always have this kind of consolidated management.
4. The blade chassis includes consolidated and shared I/O channels, ranging from keyboard, video, and mouse (KVM) to networking and storage (usually Ethernet and Fibre Channel). These add flexibility, since external ports can be shared by multiple blades and reconfigured without disruption.
5. Blade systems are optimized for high availability, with hot-swap components everywhere from power to fans to the blades themselves. Since these are shared, it is more efficient to purchase redundant parts for a blade system than for each server individually.

HP’s blade systems (like this loaded c3000) make up half the market today

To me, these five elements are key to a modern blade system. Without them, a blade solution cannot meet the expectations of buyers (or the promises of vendors!) And what are these benefits? I took a look at the marketing materials for the leading companies in the space (HP, Dell, IBM, and Cisco), and this is what they promise:

1. Efficiency – More processing power in a smaller footprint (physical size, power consumption, cooling, and weight)
2. Manageability – Simpler and cheaper systems management
3. Reliability – High availability thanks to redundant components
4. Performance – Improved I/O performance thanks to shared network and storage features
5. Flexibility – Simplified cabling that can be reconfigured in software

© Stephen Foskett for Gestalt IT, 2012. | What Is a Blade Server?
Read more posts categorized as Cloud Computing, Featured, Server Virtualization

How could a company as mighty and diverse as HP have had so many issues with executive management?

HP stumbled mightily in 2011, and it had nothing to do with product or people. Even sales remained strong, though the PC business is changing. HP’s mighty stumble was a crisis of confidence due to a chain of shenanigans at the very top. This culminated with the short reign of Léo Apotheker, leaving HP to reassure the market of its strategy.

HP And the Enterprise IT Industry

Sometimes, it’s hard to get a sense of scale when talking about very large things. How big is the solar system? How far away is the nearest star? The same is true of earthly things, exemplified by popular misconceptions about the global financial crisis. It’s difficult for people to understand just how much money a trillion dollars is.

In my little world of enterprise storage, it’s difficult to reconcile “big storage” players like EMC and NetApp with “big storage and everything else” players like HP, Dell, Oracle and IBM. Sure, EMC and NetApp lead the pack in terms of market share, but they’re nowhere near as large as the integrated players. HP has more than 7 times the revenue of EMC, which makes 3 times more than NetApp.

This old slide might need updating, but you get the picture…

HP is an incredibly diverse company, dominant in the PC, printing, and blade server market and top 5 just about everywhere else, including networking, services, and enterprise storage. And HP has nearly 325,000 employees, all working to move the company forward in one direction or another.

NetApp is a motorcycle, with one drive wheel pushing it forward at high speed; HP is more like NASA’s shuttle crawler-transporter, a 16 motor mammoth. Single-purpose companies can be agile, but they can also be derailed by market downturn or technological shift. Storage specialists like NetApp continually try to innovate and acquire to keep themselves vital, while larger companies like Cisco and EMC try to diversify while maintaining market leadership. HP doesn’t need to try; it is diverse.

HP Is a Very Large Thing

I watched HP's rise in the server market of the 1990's

HP has long been synonymous with innovation, high-technology, and silicon Valley. I have been an HP customer as long as I have been in IT, and watched as they integrated technology from Apollo and Convex in the 1990’ s. The server products that resulted became the dominant UNIX platform, but HP’ s innovative storage concepts didn’ t take the market by storm.

After HP merged with Compaq (which brought Tandem and Digital Equipment Corporation), the company vaulted ahead in the Wintel market and also gained valuable storage expertise. Throughout the last decade, HP was firing on all cylinders and dominant in nearly every arena. The company owns half the blade server market, is tied for first in servers, leads in PCs and printers, and is a contender in networking and storage. It’s simply impossible to say what HP is in a single sentence.

HP storage has an extremely broad product range, which management is working to reconcile. Acquisitions of LeftHand, Ibrix, and 3PAR gave HP storage shot in the arm to be sure. An injection of startup mojo has energized the marketing and product groups within HP just when the company needed it. HP’ s market share has grown somewhat as a result, though not as much as the hyper-focused NetApp. HP networking similarly took on 3Com, bedeviling Cisco in the Ethernet switch market.

The Executive Soap Opera

It takes a lot to bring a mammoth to its knees, but a shot between the eyes usually does the trick. While the many engines of HP push it forward, the company’s upper management has seemed, at times, suicidal. Business schools could design an entire curriculum around the folly of Patricia “I spy” Dunn and Mark “penny-pinching” Hurd. Who would think that HP management could top this?

From August 2010 through September 2011, HP dominated IT headlines in completely the wrong way. The board wanted a change, and selected Léo Apotheker to transform HP. But it was a soap opera from the very start, with Oracle hiring Mark Hurd and sending Apotheker into hiding among accusations of corporate espionage while at SAP.

The new CEO didn’t seem to understand HP at all, though he was intent on steering it in a new direction. Apotheker set about dismantling HP’s consumer and end-user businesses, killing Palm/WebOS and threatening to sell off the PC business. The company was to focus instead on enterprise computing, but these drastic moves spooked the entire industry.

It wasn’t long before HP’s board struck again, with a shake up at the hands of Ray Lane and former eBay CEO Meg Whitman brought in to replace Apotheker. The first order of business for the new HP executive team appears to be reassuring the entire world that management has not gone completely insane.

Stephen’s Stance

To an outsider like me, the most disappointing thing about HP’s mighty stumble is that it has nothing to do with the people who really make the company what it is. I have met many creative, hard-working individuals in HP’s storage, server, networking, and printer groups, and they could not be more different from the executive soap opera. I only hope that this new board and CEO will bring some stability and let HP cruise forward once again.

Disclaimer: HP has sponsored the Tech Field Day events which I organize, and has on occasion invited me to attend events at their expense.  But I do similar work with nearly every company in the IT industry, and this piece is my own opinion.

© sfoskett for Stephen Foskett, Pack Rat, 2012. |
HP’s Mighty Stumble


This post was categorized as Computer History, Enterprise storage, Gestalt IT. Each of my categories has its own feed if you’d like to filter out or focus on posts like this.

© Stephen Foskett for Gestalt IT, 2012. | HP’s Mighty Stumble
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I Promise Not To Quote That Old Annoying Dell PC Slogan

I’ve been buying Dell computers for decades, but not really because I loved them. Sure, my XPS laptop was awesome, but it burned out its motherboard and I never really touched the RMA replacement, having bought a MacBook Pro in the meantime. Enterprise buyers seem to have the same ambivalence about Dell. They buy it, but I’m not sure they really “buy” the company as an IT partner.

I’m sure you’ve heard the same comments as me: “Dell just assembles off-the-shelf components and sells them in volume” or “Dell’s a follower, not an innovator.” There seems to be a great deal of respect for Dell’s ability to produce competitive products and sell them at reasonable cost. Truly, most of their competitors would love to have this kind of reputation. But most of their competitors also have a reputation for partnership, innovation, and solution selling.

Dell Is Making An Effort

It seems clear that Dell would like to change this attitude, and they are investing serious resources to make it happen. While acquisitions like Compellent and Force10 raised eyebrows in storage and networking, it is the activity I see behind the scenes that paints the clearest picture. Dell isn’t just buying into new markets, they’re investing to change the company.

When Dell acquired EqualLogic in 2008, many assumed it was a tactical investment to increase margins over the (resold) EMC storage equipment the company was then pushing. Pundits were similarly dismissive of the acquisition of Perot Systems in 2009, calling it a “me too” effort after HP acquired rival EDS. Regardless of the motivations, however, Dell was becoming more of a serious challenger to HP and IBM every day.

After failing to acquire 3PAR in 2010, then picking up Compllent shortly after, accusations that Dell was “mini me” to HP were rampant. But HP stumbled mightily in 2011, and many in IT quickly lost confidence in that company’s management. All the while, Dell moved forward, increasing in-house IP and expanding enterprise offerings.

What Is The Result?

Today, one sees a very different landscape than just last year. Dell’s acquisitions focused on some of the ripest spots in storage and networking, and no one would disagree that the company has the ability strongly to push these products. Compellent and Force10 went from interesting startups to serious contenders overnight.

Dell really pulled out all the stops to tell us they are "Fluid by Design"

More importantly, Dell has retained much of the innovation these companies offered, from employees to support programs. Last week, I attended the Dell Storage Forum in London, an event initiated by Compellent prior to the acquisition. At the event, I talked to many Dell employees who came to the company through acquisition but had now been given power to challenge the status quo in their respective areas.

If Dell really intended only to push product, why retain marketing personnel? Why invest in the Dell Storage Forum? Why continue Compellent’s beloved Co-Pilot support program?

Then there are the products. Dell leveraged its investment in Ocarina Networks to create a deduplicating backup appliance, the new DR4000. They salvaged file system startup ExaNet and are beginning to bring scale out technology to market. The latest revision of the Compellent software finally brings it to parity in terms of VMware support. And Dell is really working to sell their DX Object Store.

This is the sort of activity one would expect from a contender, not a “box pusher”.

Stephen’s Stance

In the words of Malcolm Reynolds, my days of not taking Dell seriously are certainly coming to a middle. Dell is investing in product IP, innovative marketing and PR events, customer support, and personnel. This does not mean that Dell is instantly a player in the enterprise storage and networking markets, or that all this work will pay off. But I don’t laugh when I hear Dell boast that they intend to be a “top three” enterprise storage company in a few years. It could happen.

Disclaimer: Dell sponsored two Tech Field Day events in 2011, paid me as a speaker at two DX events, and paid for my trip to Dell Storage Forum in London. But no one can buy a post on this site, and I did similar business with IBM, HP, Cisco, and many other companies. This is my opinion.

© sfoskett for Stephen Foskett, Pack Rat, 2012. |
Why Should Anyone Take Dell Seriously in Enterprise Storage?


This post was categorized as Computer History, Enterprise storage, Gestalt IT, Virtual Storage. Each of my categories has its own feed if you’d like to filter out or focus on posts like this.

© Stephen Foskett for Gestalt IT, 2012. | Why Should Anyone Take Dell Seriously in Enterprise Storage?
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One of the amusing aspects of being self-employed is watching all the giants battle it out. Every company is gunning for someone, but the amazing thing is that they rarely point their sights directly at each other: NetApp is gunning for EMC who’s more focused on HP who wants to knock off Oracle who’s fixated on IBM. It sounds very “high school romance” but this is deadly-serious business.

The Enterprise IT Ladder: Dell, HP, Oracle, and IBM

Dell -> HP

No question about it: Dell wants to beat HP. It was bad enough back when PCs were king, with Dell constantly undercutting HP on price and supply chain efficiency. Dell went to retail, elbowing HP aside on the shelves at Staples, and even introduced a line of printers. But the enterprise data center has taken things to a whole new level. Dell’s plays in blade servers and storage are drawn from the same playbook, only there’s more in-house IP and R&D involved this time. Dell arguably got the iSCSI prize in EqualLogic but couldn’t seal the deal for 3PAR, settling on Compellent instead. They’re working hard in the professional services market; Could networking be next?

HP -> Oracle

For the longest time, HP wanted to be IBM. Then Oracle stomped on their servers with Sun and started flaunting their software-heavy profit margins. Appointing Leo Apothiker as CEO sends an unambiguous signal: HP’s gunning for Oracle. The printers, PC’s, servers, storage and networking gear isn’t going anywhere (HP’s got fights picked in each area), but software and services are the only way to make shares of HPQ perk up. Watch for some startling acquisitions and more bizarre rear-guard antics from Ellison and company.

Oracle -> IBM

Although Oracle is clearly enjoying poking sharp sticks in HP’s direction, they’re focused forward. Larry Ellison has seen the future, and it looks an awful lot like IBM: Massive services revenue, a “we do it all” executive sales pitch, and “hate to love us” handcuffs on the C-level executives at the largest global corporations. It’s worked so far: ORCL shares have risen steadily since the end of the last recession.

IBM -> IBM

IBM has seemed aimless for a decade. Armonk has won every enterprise IT war it’s fought, leaving it nowhere to turn. Spinning out the printer and PC businesses sent a signal that IBM was a different kind of company, and Wall Street is singing the chorus. In many ways, the middle-aged IBM of the 1980′s is the enemy of the new, with the company dreaming of a return to the “Mad Men” Big Blue of yore. Although this is much exactly what HP and Oracle are aiming for as well, IBM is the aloof valedictorian who just needs to keep his grades up until graduation.

Tag Team: EMC and Cisco -> HP

Cisco is like a mini IBM: All of their historical rivals are dead and buried, forcing them to look outside their traditional market for growth. Cisco seems loathe to climb the HP/Oracle/IBM ladder, seeking instead to take enough of their market to maintain solid revenue growth and profitability. Their blade servers smacked HP, which responded with a challenge in the networking space. Realizing they needed help, Cisco looked around for an “enemy of my enemy” to mount a serious IT infrastructure challenge.

What happens when you combine the market leaders in enterprise IT verticals like SAN storage, encryption and authentication, server virtualization, backup, and records management? You get EMC Corporation, the biggest company most “regular people” have never heard of. Something about “information.” Wall Street seems to have a hard time making sense of this company, too.

EMC seems overly concerned about smaller competitors (NetApp, Symantec, cloud providers), but the combination of EMC and Cisco is formidable indeed. The two and their joint venture, known as VCE, have the sales muscle to go head-to-head with Dell, HP, and IBM in the enterprise data center, and their control of key components make them a hard team to ignore.

The Wolves: NetApp and Juniper

NetApp -> EMC

Back in the 1980′s, Honda decimated the American carmakers with just a few models; They sold millions of Accords and Civics while GM watch whole brands disappear. That’s NetApp in the enterprise storage space. They pull in top-tier revenue quarter after quarter with essentially a single product line, taking on dozens of storage devices from HP, HDS, IBM, and EMC. Especially EMC. Talk to NetApp insiders and you’ll hear those three letters frequently, with precious little attention paid to anyone else. Data Domain might have made them a broader play, but NTAP shares have risen steadily since losing that takeover battle with EMC. Now NetApp is stripped down and running hard to close the revenue gap, too.

Juniper -> Cisco

Cisco is vulnerable in their core networking markets, and Juniper is ready to take them on. Since their $4 Billion acquisition of NetScreen in 2004, Juniper has been cherry-picking up-and-coming technologies in every market Cisco dominates, from the WAN to wireless. Though JNPR shares have taken their lumps, this is every bit a “Dell” to Cisco’s “HP”. The various networking sub-markets include many agile competitors, but Juniper is like NetApp: Insiders have a single-minded focus on the market leader.

Stephen’s Stance

The enterprise IT game is getting serious. Emerging from their historical strongholds, Dell, HP, and Oracle are each undermining the other, and everyone is chipping away at IBM. They each realize that they must focus upward for real growth rather than fighting a rear-guard against smaller and newer competitors. The challenge for HP and Oracle will be to expand rapidly enough to keep Wall Street from noticing the erosion from below.

Meanwhile, Cisco and EMC have joined forces out of necessity to grown both revenue and share price, while their own bases are chipped away by Juniper and NetApp. The upstarts can flourish within the verticals of networking and storage, but the VCE team is seems tenuous and uncertain. The joint venture can challenge the full-line players on a customer-by-customer basis, but history shows that only an integrated vendor can rock the enterprise IT world.

Although the information economy is growing, it will not be enough for everyone to survive. These competitors are too cut-throat to allow a smaller challenger to live, and each faces a real threat himself. The largest have a strong base to draw on, while the wolves will always find something to eat. It is those in the middle that face the most serious threat.

© Stephen Foskett for Gestalt IT, 2010. | Every Company Is Gunning For Someone Else
Read more posts categorized as All, Featured, Networking, Server Virtualization, Storage

A Compelling Product

At its core, Compellent is a storage software company. Their Storage Center software creates a “virtual storage array” from standard building blocks. The resulting storage product is one of the most flexible and (excuse the pun) compelling midrange storage systems on the market. Consider the following roundtable discussion from our recent Tech Field Day event in Seattle, which includes a discussion of Compellent’s products and technologies by independent voices in the industry:

Podcast: Play in new window | Download (Duration: 8:59 — 102.7MB)

Compellent’s Storage Center scales up, adding additional storage capacity to existing arrays without disruption and integrating this added bandwidth and capacity seamlessly. Compellent also has an impressive tiered storage and thin provisioning story, since data blocks are virtualized and can be moved between tiers dynamically. Full-featured integrated snapshot technology completes the picture, adding data protection credentials.

Compellent’s scale-out story is impressive as well, but is more about replication and virtualization than the clustering technology used by others, including Dell’s EqualLogic. Compellent’s newly-introduced Live Volume can be thought of as a volume manager for virtual servers, allowing their storage to exist simultaneously on two different storage arrays. Supporting VMware vSphere, Microsoft Hyper-V, and Citrix XenServer, Compellent claims that Live Volume enables a “grid of Compellent arrays”, but it’s not the sort of scale-out grid one would get from EMC’s recently purchased Isilon, HP’s LeftHand, Dell’s Compellent, or NAS specialist Panasas. It’s more of an active-active mirror of storage than a true cluster. Learn more about Live Volume in the following video by Rodos:

Let’s also take a moment to consider the hardware Compellent currently uses: They deploy and sell this software on SuperMicro servers with Xyratex disk enclosures, and Seagate hard disk drives, and connect everything with QLogic, Emulex, and Brocade storage networking gear. This is all pretty much standard-issue for storage vendors: Most no longer produce their own controllers or disk enclosures, and the standard components Compellent uses can be swapped from other sources if needed.

Compellent’s Mid-Market Strategy

Compellent has not traditionally competed in the stratosphere of enterprise storage dominated by EMC’s Symmetrix V-Max, the HDS/HP USP/VSP, and (to a lesser extend) the HP 3PAR InServ. Instead, the Minneapolis-based company has been happy to sell into the fat middle of the market, and has gained a loyal following in smaller-but-still-impressive enterprises. Nowhere is this more evident than at Compellent’s annual “C-Drive” customer conference: It’s amazing, really, for a smallish storage company to have such a devoted user base!

Although they offer two NAS front-ends, Compellent is a block storage player through and through. Their “Storage Center with NAS” offering is decidedly low-end, employing Windows Storage Server 2008 on a 1U server for SMB and NFS connectivity. The newer and more-impressive zNAS is based on the OpenSolaris operating system, including ZFS a friendly interface “co-developed” with Nexenta. Neither product is an in-house Compellent design, nor are they competitive in the high-end “big data” market touted by NAS leaders EMC, NetApp, and BlueArc.

Compellent’s Fit Within Dell

Assuming the acquisition goes through, attention will turn to the fit for Compellent’s Storage Center technology and marketing within Dell. What will Dell get for three quarters of a billion dollars? What will it mean to the enterprise storage market as a whole?

Dell’s EqualLogic acquisition, though expensive, is now widely seen as a success. The Round Rock management team allowed EqualLogic the freedom to develop and compete, while bolstering their hardware and manufacturing story with commodity components. The combination has become a dominant plater in the mid-market iSCSI storage space, and Dell is likely to attempt a repeat of that strategy here. It was widely rumored that 3PAR management preferred Dell’s to HP’s offering based on a promise of similar autonomy.

We assume Dell would replace the EMC-sourced CLARiiON with Compellent in their midrange storage arsenal, replacing the SuperMicro servers. Although Compellent would likely be allowed to develop and grow within the Dell umbrella, there is substantial overlap with the existing EqualLogic line. One would expect Compellent to focus more on Fibre Channel and FCoE (which they recently delivered), though iSCSI support is unlikely to be dropped. A longer-term strategy would see EqualLogic and Compellent combining their midrange storage IP and management team within Dell.

Considering their success selling CLARiiON block storage, Dell’s acquisition would strap a rocket to Compellent’s sales. Once the Dell hardware is grafted in, profits will grow substantially as well. This is a major win for Dell, which needs the kind of margins that only in-house IP can drive. The price is right, the market is ready, and the fit is solid.

What Comes Next

Some are suggesting that this is the end of the storage acquisition parade, but many holes remain. Dell still lacks enterprise NAS, data deduplication, and cloud storage success, and companies like Oracle have only just begun to bulk up their storage strategies. Dell’s acquisitions of Ocarina and Exanet have yet to pay dividends, likely driven by the immaturity of those products. One would not be at all surprised if they continued shopping in the storage space: Panasas, BlueArc, Sepaton, FalconStor, and Overland all look ripe for purchase. Although Compellent is a win for Dell, it is not likely to be their last acquisition.

Disclosure: Compellent sponsored and presented at Gestalt IT’s Tech Field Day 3.

© Stephen Foskett for Gestalt IT, 2010. | Thoughts On A Dell Acquisition Of Compellent
Read more posts categorized as Exclusive, Featured, Storage, Top Story

You may not know Caringo, but you have probably heard of cloud storage, EMC Centera, and Dell DX. Read on to learn the link!

Now that the hype of “cloud everything” is subsiding, organizations are getting down to work deploying cloud storage to do actual useful tasks. The march from CAS to cloud to object storage has seen high-profile high-end flare-ups (think EMC Centera and Atmos) but the bulk of work is done by more pedestrian (think lower-cost) hardware and software. Through it all, Paul Carpentier has been at the forefront. Now his company, Caringo, is back in the news, delivering much-needed storage service features like multi-tenancy, named objects, and dynamic caching.

For essential background, check out my article, From CAS to Cloud: Revolutionary Storage

The Back-Story of Caringo

The “Caringo” company name refers to its three founders, CTO Paul Carpentier, President Jonathan Ring, and CEO Mark Goros. Carpentier is the man behind CAS pioneer FilePool, which EMC acquired and markets as Centera. The three formed Caringo and launched the CAStor product in 2006 as a software alternative to Centera.

Although you may not have heard of Caringo, you may have encountered their product in the form of the Dell DX object storage system. Many were puzzled when Dell, known for its EMC-powered storage offerings, embraced Caringo for object storage, but those familiar with the products weren’t surprised. Caringo’s approach is much more in line with Dell’s image of affordability, simplicity, and commodity products, and their relationship with EMC is increasingly shaky due to their recent acquisition strategy.

Caringo’s CAStor is a software product that transforms commodity servers into a scale-out object repository. It is all-inclusive, with compliance, tiering, spin-down, and replication part of the total package. Like most CAS and cloud storage solutions, CAStor uses a simple HTTP interface for client access, with “gateways” available for NAS along with some native support from applications.

What’s New in CAStor 5?

Caringo has set a course for the service provider market, adding essential features like multi-tenancy and flexible permissions to version 5 of CAStor. Although still pitched as an object store, CAStor 5 is close enough to be thought of as a cloud storage platform.

The ability to support and segregate multiple “tenants” is a holy grail for service provider storage systems and a key ingredient of cloud storage solutions. CAStor 5 can be segmented into multiple domains, each with its own security and authentication and each subdivided into “buckets” for different applications. This would be useful both for a public service provider and an internal-only solution, since segmenting applications is relevant in the enterprise as well.

CAStor 5 no longer clings to system-assigned names for objects, allowing users to assign their own names for public consumption. This is a huge advancement for CAS, and was one of the key differentiators of cloud solutions which often directly serve content to web clients. Another “ripped from the cloud” feature is dynamic caching, allowing high performance access to popular content, again useful for direct client access.

Stephen’s Stance

Caringo seems reluctant to wear the “cloud storage” mantle, but their product has been steadily moving in that direction. CAStor 5, with its multi-tenancy, segmented security and authentication, named objects, and caching, looks an awful lot like Amazon S3 and the rest. But the hype around “cloud storage” is dying away. Businesses looking for functionality rather than marketing labels will find a lot to like in CAStor.

© Stephen Foskett for Gestalt IT, 2010. | Caringo Bulks Up CAStor For Cloud Services
Read more posts categorized as All, Cloud Computing, Storage

The players are lining up for the biggest acquisition game enterprise IT has witnessed in a while

Today is the (a?) day of reckoning in the 3Par saga, with Dell widely expected to make a counter-offer higher than HP’s bid. But this mega deal, like the Data Domain war before it, sends a strong signal to the enterprise IT world: It’s open season on data storage companies! But the rising superpowers are also likely looking at networking as an area of expansion. The game is afoot!

The Competitors

The simple fact is, enterprise IT prefers to buy from large, established names like HP and IBM rather than smaller and less-familiar companies with names like Ocarina, EqualLogic, or even 3Par. The acceleration of sales by enterprise providers is what makes these big acquisitions so successful and why others involving less-powerful players often fail to deliver the same results.

Full-line “superpowers” like IBM, HP and now Dell and the new Oracle can influence purchasing decisions across a broad spectrum of hardware and software. Many large organizations are tightly coupled to one of these vendors, and will give their products stronger consideration even when they are new or unfamiliar. HP is already flexing their muscle selling their broadened network lineup, and Dell found that it could do this in data storage.

Software vendors like Microsoft, Citrix, and Oracle adamantly maintained a neutral stance toward hardware, but Ellison and company seem serious about changing this. Oracle’s success in selling Sun hardware will likely dictate further software acquisitions for Dell and HP, though IBM already has strength there. Then there is Intel, the wild card who just got wilder with their acquisition of McAfee.

Companies with narrower focus like Cisco, EMC, NetApp, Juniper, and Brocade have the same power within their sphere of influence but cannot pull in wholly-distinct products. Cisco is in the midst of this fight with their technically-excellent UCS blade servers: Although they were certainly a strategic CIO-level vendor in the largest organizations, “blades from a networking company” isn’t the as easy a decision as “networking gear from a full-line company.”

The Game

Then one must consider the market in contention. The enterprise IT space is not expanding, especially in the United States. This is very close to a zero-sum game, with Oracle’s or Dell’s wins being HP’s or IBM’s losses and vice-versa. There is massive money in play, and flexibility enough for it to swing between the competitors, but growth is not unlimited.

Enterprise storage and data center and campus networking are two areas where smaller companies retain enviably-large slices of the pie, explaining the interest in these spaces among the superpowers. These verticals still have room for sales to grow without displacing a fierce full-line foe, and the superpowers have lately been weak here. Storage and networking are enticing opportunities, but each slice is similarly dominated by “vertical superpowers” and partners EMC and Cisco.

So this is the game: Four full-line enterprise superpowers battling each other for datacenter dominance and coveting the extra profits of a few verticals. HP clearly believes they can chip away at EMC and Cisco in storage and networking; Dell and IBM have so far focused mainly on storage; and Oracle hasn’t made a move in either direction, instead challenging the other three in the core server and software space.

Pawns or Knights?

So where does this leave the smaller players? Are they merely pawns in the game, waiting to be sacrificed, or are they knights who can wield power across the field? The largest (Cisco and EMC especially) appear to have ambitions of their own as well as the financial and technical strength to shake up the game. They are unlikely to be acquired by the superpowers. Brocade, too, has broad strength in storage and networking but maintains relationships across the board that make an acquisition difficult.

Strong vertical players like Juniper, NetApp, Riverbed, and Compellent are ripe for acquisition, as were Foundry, 3Com, Data Domain, and 3Par. IBM, Dell, and Oracle are all likely buyers of the networking players, though HP may consider filling in where 3Com was found lacking. All four will likely take a strong look at the remaining storage players as well, with the loser in the battle for 3Par likely to be hungry indeed.

One should also consider the potential impact of smaller acquisitions. Although they would not immediately “move the needle” for a massive superpower, there are many excellent technology companies that could be bought low and pushed strongly. The enterprise-class technology at Sepaton, Pillar Data, Xiotech, BlueArc, Extreme Networks, Force10, Blue Coat, Isilon, CommVault, FalconStor, and many others should not be overlooked. If a superpower can drive a larger acquisition to succeed, imagine what they can do with strong but inexpensive technology from one of these!

Stephen’s Stance

This game is nowhere near finished. The 3Par acquisition will not only generate revenue, it will shake up the ranking of data storage array dominance. This is very likely to kick off additional acquisition in the data storage space, spurring either Dell or HP to pick up additional technology and perhaps causing IBM or Oracle to engage as well. With no easy alternatives to 3Par, I expect Compellent, Xiotech, and Pillar to get closer looks, but Sepaton and BlueArc are just as ripe. NetApp may be too expensive at this point, but would be a nice match for Oracle’s strategy.

HP’s acquisition of 3Com could also signal a race to integrate datacenter and campus networking technology into the stack. Many are suggesting a Brocade acquisition, and it would be much cheaper than Juniper, but OEM ties make it a difficult purchase for any of the superpowers. Extreme and Force10 would be excellent and less-expensive alternatives.

We should also keep our eyes outside the superpower space. Intel showed that they can make big moves, and Microsoft might consider a diversification into hardware as well. One should also look to the East, where Huawei could try to enter the Western market with a merger or joint-venture to cast off the China stigma. Although I would love to see a rebel alliance rise (imagine Juniper, NetApp, and Symantec joining forces!) this is not a likely scenario.

Image credit: Chess Board by mosdave

© Stephen Foskett for Gestalt IT, 2010. | The Enterprise IT Acquisition Game
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This may seem like a bold statement to make, however we need to look forward to where the industry is headed.  First of all, vendors want us to buy their unified hardware stacks; it represents that move back to a consolidated architecture that kept one vendor dominant in the mainframe days – IBM.  “No-one gets fired for buying IBM” the saying goes (or used to go), demonstrating how IBM was seen as the data centre supplier for all things computing in the 70’s and 80’s.  Of course we know that politics within organisations and the cost of IBM hardware eventually broke the monopoly, but the status quo worked well for many companies for many years.

Now, Cisco, EMC, VMware, HP, Oracle and potentially many others want to own your data centre.  They want you bought into their computing stack.  Over time, I suspect many of those same companies want to move you to their cloud infrastructure offerings, even if they don’t offer them today.  This will be both directly and indirectly.  There will be the direct model, where the vendor offers cloud services to you under their name; there will be the indirect model where their technology powers the cloud provider, or is offered as a service.  It’s at this point the 3Par acquisition becomes much more interesting.

3Par already have many customers in the cloud services sector.  In fact they sell their hardware on the virtues of multi-tenancy, reduced cost through thin provisioning, tight integration with virtual hypervisors and so on.  In this growth sector of the industry, cost is a key driver and no end user or company will pay more than they need for storage.  This means Enterprise arrays like those from Hitachi and EMC won’t play a central role in this future, but rather storage devices which provide the highest efficiency will.  Where do all the major players stand?

• EMC have entered the market with a brand new platform – Atmos.  Although withdrawn as a direct service, Atmos continues to be available from partners.  EMC have chosen to use their own technology as the foundation for cloud.  In addition, VPLEX provides the ability to virtualise the storage layer, including federation features that fit well with VMware.
• HP have a strong blade server offering for their cloud infrastructure.  Matrix provides orchestration for the server, network and some parts of the storage layer, however this work is incomplete and doesn’t fit well with the high end XP arrays.  Slotting 3Par into the storage layer would provide a storage platform well suited to HPs unified computing infrastructure.  It means EVA can be quietly dropped and XP can be retained (in whatever future guise) for high end customers (including mainframe) and if required, gradually dropped.
• Cisco have chosen to partner with EMC rather than acquire storage technology itself.  In fact, looking and both EMC and Cisco, they need each other; EMC have no server platform, Cisco have no storage; it’s a mutually beneficial arrangement, a bit like Jack Sprat and his wife.  At this stage, Cisco could have purchased 3Par and provided and end-to-end solution, but clearly that would be a big step and would require kicking EMC to the kerb, something they obviously don’t want to do (yet).
• Hitachi have server and storage offerings, however Blade Symphony is mainly sold in domestic Japan and not widely advertised globally.  They do have the potential to provide an end-to-end offering as Hitachi also sell networking equipment.  Key for Hitachi will be credibility in a market they don’t currently play in.
• IBM should have all the components of a consolidated infrastructure but there doesn’t appear to be a lot of discussion about their offerings.  They appear to have two strategies – Dynamic Infrastructure and Cloud Computing but their offerings aren’t clear.
• Dell clearly wanted 3Par to fit into their medium to high-end storage offerings.  Today Equallogic has successfully met their SMB requirements, but they OEM technology from EMC (CLARiiON and Symmetrix) for the rest.  Acquiring 3Par would remove that dependency and allow Dell to offer end-to-end technology as their own products.
• Netapp have a self-proclaimed unified architecture that does fit well with virtualisation from VMware.  However they don’t own any other parts of the technology stack and so must partner to deliver unified offerings.  Netapp are covering all bases by offering solutions with VMware, Microsoft and Citrix, but none of these could be described as the unified stack other vendors have.
• Oracle already provide an integrated infrastructure based around their Exadata acquisitions and of course all of the Sun Microsystems technology, however I’m not sure many companies would see the Oracle offerings as other than tied directly to their database platform and not for virtualisation.

Overall, 3Par fit the requirements of HP & Dell to provide integrated technology offerings.  The move to the cloud will require leaner and efficient storage products, plus tight integration and orchestration.  It’s all about positioning today for bigger returns tomorrow.

© Chris for Gestalt IT, 2010. | 3Par Acquisition: The Future For The Storage Industry
Read more posts categorized as Featured, Server Virtualization, Storage

Who will power the enterprise? The smart money is betting on a few superpowers taking over.

After years spent focusing on personal technology, businesses are increasingly turning back to the enterprise. There are many reasons for this, but the biggest one is the poor economy. Individuals simply have less free cash to spend on gadgets and software, and the meagre profits are increasingly going into the pockets of a single company: Apple.

The corporate IT market is much more dynamic and competitive, with a few very large “superpower” companies discovering their power to drive purchasing decisions. If a supplier can create an integrated “stack” of hardware and software, they can push product purchases that might otherwise be overlooked or postponed. This is the main reason that enterprise IT acquisitions work so well: Where a small company must fight to sell their product, a large one can hitch it to a much more strategic sale and have it pulled along.

The old IBM model is the prototype, with that company once selling everything from office equipment to datacenter gear as well as the consulting and integration services to make it all work.

HP has spent almost two decades bulking up to become the new IBM, buying their way into open systems laptops, desktops, and servers (Compaq), networking (3Com), services (EDS), and storage (Compaq, LeftHand, Ibrix, and perhaps 3Par). HP has been remarkably proficient at executing on this enterprise plan: In talking to enterprise IT folks, I often hear IBM-esque sentiments regarding the new HP. They tell me they’re willing to give HP the benefit of the doubt when it comes to new technologies and products, buying on basis of the company’s reputation and ability to make everything work. This bodes well for the company’s post-Hurd future, and HP has the most-complete “enterprise stack” in the business.

But HP has a target on its back, pinned there by Dell. The folks from Round Rock believe they can be more efficient (and thus profitable) than HP in the same markets, and have been making moves to fortify their enterprise offerings. Dell was always more of a manufacturing than R&D business, but they have shown a desire to broaden their focus. Intrigued by the high-margin mid-enterprise storage business built from their EqualLogic acquisition and their success selling EMC storage, Dell is moving into the enterprise. They matched HP/EDS by purchasing Perot and have made smaller buys in storage (Ocarina, Exanet) as well as the big move for 3Par.

The next big emerging stack player is Oracle. The acquisition of Sun gave Oracle a strong hardware base to complement their command of enterprise software, and many expect further acquisitions. But Oracle is playing a different game than HP and Dell, focusing on the high-margin enterprise space and ignoring more competitive outlying areas. Many suspect the company might make a play in the network space (Brocade, Juniper, and F5 have been mentioned) but storage is possible as well. CEO Larry Ellison is a major investor in Pillar Data Systems, so many expect a spin-in here. But Oracle has the appetite for something much bigger, even EMC or NetApp.

Then there is Cisco, who have attempted to parlay their data center networking strength into a broader position. But Cisco’s halting moves into storage (Fibre Channel switching and SAN extension) did not displace the market leaders, and their server products (UCS) have not made much of a dent on HP, IBM, and Dell either. A solid partnership with EMC has delayed further forays into the enterprise storage market, and Cisco seems puzzlingly interested in low-margin access businesses (Linksys, Flip) and their Cius tablet.

There are other players in the enterprise space as well. EMC has diversified under CEO Joe Tucci, taking a dominant position in server virtualization (VMware) and making a strong enterprise security acquisition (RSA). But the many faces of enterprise storage remains EMC’s strength, and they seem content to partner with Cisco for a stack sale. Hitachi, NEC, and Fujitsu also offer varying enterprise hardware and software stacks, but their comparatively small sales presence in the US market limits their ability to execute. In the final analysis, only IBM, HP, Dell, and perhaps Oracle can claim to be enterprise IT superpowers at this point.

Image credit: Steam Engine by Stuck in Customs

© Stephen Foskett for Gestalt IT, 2010. | Meet the Enterprise IT Superpowers
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But there’s an amazing short-term win to be had for whoever acquires 3Par. According to IDC, the race for number two in external disk storage system sales is a bitter fight. IBM, NetApp, HP, and Dell are all within striking distance of each other, pulling in between $500 and $579 million dollars while big daddy EMC makes more than any two of them. The battle between HP and Dell in storage arrays is a dead heat, with just $6 million separating the two.

The 3Par acquisition creates a massive market-share shift!

It’s no wonder HP and Dell are fighting over 3Par! That acquisition is good for an easy $50 million in quarterly revenue, and a strong sales push could make this $60 million. This extra revenue cements the buyer ahead of his rival and makes him a challenger to IBM and NetApp. It wouldn’t be all that surprising to see the winner vault into the number 2 spot within a year.

This is a huge win for HP or Dell and a serious egg-on-the-face moment for NetApp, IBM and the loser. Sure, $1.7 billion is a lot to pay for $250 million in revenue, but the winner gets immediate bragging rights and a serious prospect of breaking free of the second-place pack. 3Par’s technology is unique in being a real tier-1 threat. This was an issue for the company as a startup, but becomes a serious asset in the hands of HP or Dell (or, dare I suggest, Oracle or NetApp). A well-executed transition and sales execution will cement HP or Dell as the most-credible competitor to EMC within a few years.

Stephen’s Stance

The 3Par acquisition makes so much sense, one wonders why it didn’t happen sooner. Dell clearly sees this as a higher-end repeat of their success with EqualLogic and gives them a chance to earn some additional enterprise credibility. An HP acquisition makes just as much sense, giving them fresh SAN technology and letting them pull ahead of Dell once again. A big deal like this also gives HP’s Dave Donatelli some internal clout in the aftermath of the Hurd fiasco. I expect a counter-offer or two before this is done, but 3Par remains attractive at even a billion more.

Will anyone else join the fray? IBM seems happy with XIV, though the market doesn’t see that product as tier-1. I expect them to stand pat. Oracle should jump in, given the souring of their Sun-era Hitachi OEM deal. Passing on 3Par leaves them with no enterprise SAN chair when the music stops, but they might not feel that they need this kind of hardware. Cisco could use the 3Par technology to reject EMC, but they might not be ready for that move. Another idea is perennial second-place storage company NetApp, who might be able to afford to play this game and could really use a new product line.

What’s left for the loser? Not much. There isn’t another startup with credible tier-1 SAN intentions. Compellent is a great alternative in the midrange SAN market, and Xiotech has great SAN technology here, too. Everyone assumes Oracle will pick up Pillar, and then there’s BlueArc and Isilon waiting in the NAS space. But none of these are a slam-dunk in terms of market share, and the value question looms large when it comes to any high-P/E acquisition. Expect more acquisitions in the coming quarters, but the 3Par game looks like a highlight.

© Stephen Foskett for Gestalt IT, 2010. | Everyone Loves 3Par – Here’s Why!
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