The ultra-competitive server market
Sun pushes server strategy to gain enterprise market share
Special to SunWorld Online by Jean S. Bozman, IDC research manager, Unix and Server Operating Environments
It's something Sun had to do. It had to swap out the aging SuperSPARC RISC engines and turn up the speed of its three-year-old Unix server line's I/O systems to handle large database workloads for enterprise commercial servers.
Sun's new Ultra Enterprise servers do all that, delivering 64-bit UltraSPARC chips and high-speed system connectors running at 1.3 to 2.6 gigabytes per second. But they must do more than deliver high throughput: They must help Sun Microsystems to boost its server sales relative to its workstation sales in order to maintain Sun's growth path in the late 1990s.
Sun is a $7 billion company that must compete head-on with $30 billion Hewlett-Packard and $70 billion IBM for both Unix workstation and Unix enterprise server sales.
And Sun can't keep growing profits -- and its stock price -- by basing its entire business on workstations alone, even though it sold more than 250,000 of them last year. Servers -- any vendor's servers -- carry higher prices and margins than workstations.
That's not because the component parts are more expensive, but because the entire server package, including high I/O, big cache memory, system buses, and support services cost more.
To grow profits from its Unix server sales, Sun must keep its manufacturing costs as low as possible. To that end, Sun's Ultra Enterprise server line is based on system components that can be used in the firm's high-volume-sale workstations and can also be plugged into its new high-margin server products.
Further, system components used in low-end Ultra servers can be swapped out for those in mid-range and high-end Ultra servers, allowing users to upgrade by buying new rack-mounted frames and re-using parts they already own.
Sun's server strategy is forced by the fact that profit margins on its workstation lines will be under intense pressure from Windows NT-based Intel PCs and Intel workstations this year and next. These PC platforms are beginning to take on more of the 2-D graphics and CAD applications that were born on Unix RISC machines.
At the same time, there is intense price/performance competition among the major Unix RISC workstation vendors, including Hewlett-Packard, Silicon Graphics, Digital Equipment, and IBM. With the exception of SGI, all of these systems vendors also sell volume lines of PCs and PC servers running Windows and Windows NT. And a new generation of scalable Intel-based Unix servers from Unisys, NCR, Data General, and others is emerging. These systems will run UnixWare 2.1 on SMP servers of up to 16 processors -- and in some cases more than that -- and will compete with Sun's mid-range Unix servers.
Packaging hardware into modular systems has long been a strong point of Sun's product line. The three-year-old SPARCserver 1000, which can be upgraded by adding more boards to the same cabinet, and Sun's snap-in board upgrades for SPARCstations proved that.
Now, Sun has applied that expertise to big-ticket items, with prices ranging from $40,000 to more than $2 million, depending on server configuration. This will allow users to swap out power units, CPU boards, I/O boards and memory -- and lets Sun aggressively price these servers against those from HP, IBM, Digital Equipment and SGI.
Basic building blocks for the Ultra workstations and for the Ultra Enterprise servers include the 64-bit UltraSPARC chips, memory boards, I/O boards, and the workstations' Ultra Port Architecture (UPA) high-speed switches.
To these common parts, the Ultra Enterprise server line adds the Gigaplane 2.6-gigabytes per second centerplane. The Gigaplane replaces the older Sun servers' XDBus, which runs at 400 megabytes per second. The SPARCserver 1000 had one XDBus; the SPARCcenter 2000 had two XDBus system buses. Both the SPARCserver 1000 and SPARCcenter 2000 systems will be sold for some time, Sun said, offering users the choice of staying with 32-bit hardware.
The processor and I/O technical improvements in the Ultra servers were noted by some of Sun's largest user sites, which already own the previous generation of SPARCserver 1000s and SPARCcenter 2000s.
"We were concerned about the technology curve and what Sun was going to do," said Dennis Courtney, vice president of logistics and information systems at Dunlop Tire Corp.'s U.S. headquarters near Buffalo, N.Y. "This announcement reinforces our belief that they are technical leaders."
Courtney said his site uses six SPARCserver 1000s running database applications, and just added one new Ultra Enterprise 2 server for an Internet-based EDI application that links the firm with retailers selling Dunlop tires.
A changing picture
For the moment, Sun is offering high server performance and SMP system throughput at competitive prices -- and its own benchmarks show it outpaces most rivals. But the market picture could change, and soon. Sun's move in servers will not go unanswered.
HP is expected to retool its HP 9000 RISC servers, which now top out at 14 processors, by replacing 32-bit PA-RISC 7200 chips with 64-bit PA-RISC 8000 chips. The 8000s are believed to have faster performance that the current crop of UltraSPARCs, according to some preliminary SPEC benchmarks.
And IBM, which has delayed the upgrade of PowerPC 601 chips in its IBM RS/6000 SMP Unix machines to more powerful PowerPC 604 processors for roughly a year, may soon fix that problem. That would affect its eight-way J30 and R30 SMP server machines.
IBM is also expected to announce its choice of a 64-bit RISC chip for enterprise Unix servers -- either the delayed PowerPC 620 or a version of the PowerPC AS, now used in IBM AS/400 machines. The latter chip is a modified version of the AS/400 chipset code-named "Apache" which IBM is evaluating for use in Unix systems.
Service & support
Hardware performance alone will not ensure success in commercial Unix server sales, however. Just one year ago, Sun trailed HP and IBM in commercial server sales worldwide, and is still playing catch-up with these two large enterprise suppliers. In 1994, HP had 16 percent of Unix commercial server revenues worldwide, IBM had 15 percent, and Sun had 9 percent, according to International Data Corp. reports. Other competitors, including Digital with its AlphaServers and SGI with its Challenge servers, had lower annual revenues from overall commercial Unix server sales.
Largely because HP and IBM are so well-established in Fortune 500 accounts and in providing service globally, Sun must continue to pay attention to service and support to gain market share. Sun strengthened service last year by adding about 1,000 field service employees in the last year worldwide.
Sun management has openly acknowledged that support was a traditional weakness for Sun, and used to be provided mostly by third-party firms as little as three years ago. That had been a sore point with some of the big enterprise server accounts, and users voiced their displeasure at user meetings in recent years. Now, some large users say things have improved, and some of the biggest accounts have full-time, onsite engineering support.
Finally, Sun's servers can be expected to sell well if users perceive their value as engines to run off-the-shelf software. Many IS organizations are downsizing, and turning to packaged applications and database software. For all the high-tech talk Sun offers about the importance of Java and the Internet in boosting server sales, it is server performance on these meat-and-potatoes applications that will allow Sun to prove itself in users' tests and evaluations.
To play into the packaged software trend, the Sun servers are designed to run such workloads on symmetrical multiprocessor (SMP) systems, under one copy of the Solaris operating system.
That is in contrast to a massively parallel processor (MPP) like IBM's SP2, which has each processor running a separate copy of the operating system. However, Sun's new servers do not yet support clustering -- an area where IBM, HP, and Digital excel. Sun Ultras will support clustering later this summer, Sun officials say.
One beta-test site with an installed base of SPARCcenter 2000s is pleased with the Ultra system's balance. "The throughput is very good," said Fred True, a technical manager at AT&T's World Class Database Initiative center in Piscataway, NJ. After testing with the "Stream" benchmark that stresses I/O subsystems, he said. "We managed to get results that went all the way up to the bandwidth of the Gigaplane." The center works on optimizing data warehouse applications and data decision applications.
True said Sun learned from its previous generation of servers that large systems with fast microprocessors can flood system buses, if those buses aren't fast enough. In the SPARCcenter 2000s, the problem was fixed by adding cache memory around the SuperSPARC processors. Now, the high-speed Gigaplane provides a better balance between fast processors and I/O, he said.
About the author
Jean S. Bozman is research manager, Unix and Server Operating Environments, at International Data Corp. in Mountain View, CA. Reach Jean at firstname.lastname@example.org.
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