Competition hots up in Unix midrange

Vendors are vying for the midrange Unix server market with IBM, HP and Sun all releasing new products.

Last month's launch of the Sun Fire 12k server and the IBM p670 saw the two vendors vying with each other for the top end of the midrange Unix market. Can these swish new boxes help resellers clinch new deals and weather the sluggish trading conditions?

Patrick Mangan, marketing director at IBM partner TBC, certainly thinks so. He believes that IBM's p670 has changed the state of the industry and is just what the market needs at a time when customers are counting every penny.

"The p670 is a very exciting development," he said. "It brings high-end technology and mainframe functionality to the midrange for the first time. It has logical-partitioning and self-healing features. It is also positioned quite cheaply at around £250,000, which is crucial. Return on investment is critical in the current economic climate."

Resellers across the country have reported that customers are making do with the kit they have already got and are putting off purchases until the last minute. Projects that promise savings in the distant future are out while immediate cash savings are in.

Mark Lewis, Sun's data centre server product marketing manager, said: "There is still growth in the sub-£15,000 market because it is easier to get sign-off for smaller projects. The slowdown is most marked in the midrange - systems that cost £100,000 to £500,000 - because they have a lengthy sign-off process.

"In the data centre, however, where systems cost more than £500,000, we are still seeing growth. At the high end it is easier to demonstrate cost-of-ownership savings." Lewis positions the Sun Fire 12k as a data centre server at a midrange price.

So how do you pitch one of these new Unix boxes to your customers? According to Mangan, like this: "This machine will get your house in order. Gartner has billed this year as the gap year. It is time to focus on dull things such as security, infrastructure and making sure applications work cohesively with each other."

Pick and mix

Most companies have heterogeneous environments with 'pick and mix' hardware platforms and operating systems (OSs). Pulling applications together onto one box will reduce the number of variables and could make the environment easier to manage. Mangan advocates installing a single p670 to run all of a company's applications.

"If a customer is thinking of upgrading multiple devices that are scattered through the company, it could work out as an expensive exercise, especially if they have not got the latest CPU. Having all applications on one machine reduces the time and effort needed to manage them," he explained.

Sun Microsystems is also recommending consolidation. "You can run what would have been multiple boxes on a single, large, highly available box with all the associated cost-of-ownership savings," said Lewis.

In heterogeneous networks, each extra hardware platform adds 10 per cent in complexity. That means higher people, management and system administration costs. And then there is each additional OS. The drive is towards fewer OSs and fewer platforms.

Running several applications on one box means they can share resources, such as processors, memory and disk space. This means firms may be able to economise, according to Lewis. "You can move resources, such as memory and disk, to one application as it peaks then, once the peak is over, divert resources back to another application," he said.

Big and small

And what works with big customers could also work with smaller ones.

"There is undoubtedly a big opportunity in the midrange," said Lewis. "Resellers can work with SMEs to consolidate their sprawling networks into one midrange server. There is significant untapped potential to migrate servers, desktops and storage as well."

Computacenter, which sells services around both Sun and IBM machines, is taking the consolidation message and running with it. "We are doing a large push behind consolidation because of the reduced cost of management," said Adam Strange, Sun marketing manager at Computacenter.

"Sun's V880, its top-of-the-range midrange server, is a good product for consolidating departmental applications. Sun has got some very good, reliable boxes; the 12k is aimed at the low-end data centre, with enough flexibility to upgrade to a 15k," he said.

"Both Sun and IBM have good propositions and a solid road map going forward. The Unix market is not dead or dying. Times have been difficult. The market has taken a bit of a downturn, but this is just a short-term blip."

Prestige Systems, a Hewlett Packard (HP) reseller, is also taking the consolidation message to market. Jim Tully, the firm's technical director, said: "Customers with three or four low-powered machines may be paying between £50,000 and £80,000 to the manufacturer in support and maintenance fees.

"If you look at that sum over a three-year period, you can see it makes sense to spend the money on a bigger box and consolidate applications.

"We are constantly consolidating branch networks back into a central site, with a central back-up server and central storage. Quite often the issues are to do with storage back-up and restoring data; that is what makes customers realise that they need to centralise."

No quick buck

Any resellers hoping to make a quick buck poaching HP's customers as the company merges its channel with that of Compaq may have to think again.

"There is a potential opportunity in the HP channel but, unless something radically bad happens, customers are still going to be loyal to HP," insisted Strange. "If you have made an investment in an architecture and a skill set, you are not going to move off that platform in a hurry."

While consolidation is the latest buzzword for vendors and channel partners alike, could alternative trends such as Linux make money for resellers in the Unix market? On this point, opinion is divided.

TBC has claimed that it is already making money selling Linux services to academic institutions, and that profit from supplying these services to the commercial market is not far behind.

"In the past, Linux has been used experimentally on the edge of the network for file and print, web serving and firewalls. Now customers are approaching us to discuss moving mission-critical applications across to Linux," said Mangan.

"There is momentum; we have seen accounting [software] company Sage port its software to Linux. We see Linux as the biggest threat to the server marketplace. Ignore it at your peril."

IBM distributor Magirus is bullish about Linux's potential for shifting tin, and is just about to run a seminar for its resellers on using Linux to make money.

Tony Stirrup, the firm's managing director, said: "You cannot make money on software because Linux is virtually free, but it is a huge opportunity for leveraging hardware.

"IBM's attitude is that there is going to be a lot of Linux boxes out there, whether used for central business applications or peripheral ones, which is a huge amount of business."

Stirrup added that he often sees customers with Linux who say they are using it just for their website, not for mission-critical applications. "And then they admit they use the site for trading, so in a sense it is mission-critical," he said.

Other resellers are not convinced. Tully said: "We have seen Linux used for web servers. But whether people will use it for true business systems, I don't know. We have not seen our customers take that risk."

Summary

• Vendors are vying for the midrange Unix server market, with IBM, Hewlett Packard and Sun all releasing new products within the past few months.
• Resellers say the servers offer a good return on investment because they allow users to consolidate their applications and make staffing and space savings.
• The channel is divided on whether markets such as Linux are still making money. Some resellers claim that end-users still see Linux as too risky and are not yet ready to deploy it for mission-critical applications.