Server consolidation under-girds HP's growth

Server consolidation under-girds HP's growth

Summary: There's significant new ease in running apps and platforms as distinct and protected instances within one environment

TOPICS: Hewlett-Packard

Dig into HP's recent quarterly financial results and you'll see some growth numbers that highlight how HP is capitalizing well on a hot trend: server consolidation. HP, the number one global server supplier by units (and number two by revenue) may have an advantage over its competitors as server consolidation ramps up.

The reason is that HP has balance and strength across all the major platforms of Linux, Unix, and Windows servers, which bodes well for consolidation from any platform to any platform. For IBM, Dell, and Sun, their strengths are more spotty, more polarized.

Enterprises have talked about consolidating their platforms, servers, applications, and data for decades, only to see ever-greater proliferation and scale-out of even more boxes, and in even more places. The ongoing operational costs of supporting the iron sprawl is the truly meaningful "C" in TCO.

Now a confluence of factors is driving consolidation for real, and it has huge implications for the IT industry. Why is now the time to consolidate strategically, and not just for certain projects? The x86 architecture (both 32- and 64-bit, both Intel and AMD), has risen to the task, just about any mainstream task, at price any cheapskate purchasing agent can love. As multi-core chip sets propagate across the server product lines, there will be even more reason to peel off multiple applications from multiple servers at multiple sites into fewer server instances at more centralized facilities. This is pure arithmetic.

Another calculus for this change is the partitioning and virtualization ramp-up across efficiency-minded data centers. This is more like multiplication, and gets utilization rates near where you'd expect a middling grade at just about any other endeavor (70%). You get more work from fewer better boxes. What's more, a mixed bag of Unix, Windows, and Linux platforms can be combined in new ways across like boxes and within partitions on the same box. Virtualization is an important benefit and is making a lot of CIOs happy.

And virtualization efficiencies are only in the opening stages of improvement. There's significant new ease in running apps and platforms as distinct and protected instances within one environment, such as with Sun's Solaris 10 containers. And virtualization as a definition is expanding, especially virtualization of hardware, which bodes very well for consistently high utilization rates regardless of the types of applications supported.

Indeed, HP calls virtualization a "cornerstone" of its server consolidation drive, and a girder for of HP-UX 11i. Expect more news from HP next week on a series of virtualization initiatives. HP is also using consolidation as the business value wedge for its Integrity line of Itanium 2 servers. HP's consolidation efforts are still predominantly in swapping out older Unix hardware for x86 running Windows and Linux. But reducing the numbers of Windows boxes onto more powerful servers (say, running SAP) is also a big deal now, a place where HP is quite strong. Consolidating instances of Linux is only beginning to occur but will also offer a growth opportunity for HP.

When you factor all of this with the increasing use of open source in the data tier, ie My SQL (no threat to HP), the use of higher 10GBASE Gigabit Ethernet buses for surging I/O performance that is attractive for Microsoft Exchange email consolidation efforts (where HP is strong), and the forthcoming impactful roles of mainframe modernization and SOA (also big HP initiatives), then HP is looking pretty good server-wise.

While there's lots of room to jawbone on the comparative attributes of Power5, Itanium 2, Opteron, Sun's Niagara and Rock, as well as Intel's Montecito, to me the more important issue of 64-bit, multi-core chip-powered servers is where they make the most business sense. Lowering operational costs and reducing the server staffing overhead is a business imperative. Having systems-wide management is music to the CIO's ears. Gaining higher overall utilization rates and the flexibility to support all the mainstream platforms and applications more centrally leveraging virtualization is the clincher.

Server consolidation projects, especially the strategic variety (whereby enterprise and hosting organizations make large and long-term supplier commitments), are on the rise and form the low-lying fruit for the heterogeneous environment support vendors. Buyers should expect some good old-fashioned price wars and wheeling and dealing as they seek their preferred server consolidation suppliers, regardless of the platform or applications.

Topic: Hewlett-Packard

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  • How nice to see a non-sheep

    Maybe it took a good Mark-Hurd run Q3, but this is probably the first positive view I have seen from an analyst about HP (or Compaq) in several years.

    All we have been seeing are the same cliche' arguments that hp is "squeezed by Dell at the bottom and by IBM at the top."

    Maybe it's just a problem with having your logo on cheap digital cameras and sub-$100 printers with 30-day warantees, but HP has difficulty being viewed as an enterprise company by the press.

    The usual suspects chime in each quarter referring to this venerable company as "the number two PC vendor", or 'number three digital camera manufacturer" or whatever mocking statistic they can pull out of their mindless little charts. Of course they ignore the untouched #1 market share in laster printers and x86 servers since they were invented, #1 Linux, #1 Windows, #1 Oracle on x86, #1 Exchange, #1 raw storage in Petabytes, etc.

    It is very refreshing to see an analyst buck the trend, and give some credit where it is due. Consolidation certainly is a strong point for HP, and the fact that they are standardizing on off-the-shelf procs from Intel and AMD make it even more compelling. There is no "up-sell" to Power or Sparc (or Alpha <g>.) involved.

    BTW, I own no shares in HP ....
    • Could look good for HP

      You're correct. Though I thought Dell was #1 in Windows. Unless you're talking just about servers.
      John Zern
  • HP's Opteron Servers have a Halo effect

    If you look at HP's DL585 4P 8 way dual core server, it outperforms IBM and Unisys' 16P Xeon 3G/4MB servers by 20% in SAP and other tests. This creates a halo effect that HP is the performance leader. and this helps HP to sell more lower end servers.
  • Server consolidation to a point

    I get the same story from IBM about consolidating our AS400,AIX, and Linux boxes but I just rather have many of my AIX boxes LPARed, linux boxes on blades, Sun boxes and the AS400's by themselves. I see people like myself who rather not conolidate everything, just pieces.
    I'm also not convinced w/ the Itanium chip either. We just bought a couple of VMS boxes last year from HP with the DEC chip and will probably migrate later to IBM. I know people well say the Superdome competes w/ p595 but their is twice as many processors and then my oracle license goes up on the hp superdome.
    • More than 1 way to skin a cat

      Well, it comes down to how happy you are with proprietary solutions. Obviously, VMS on Alpha was about as good as IT could ever ask, but the market rejected it (or DEC/Compaq didn't know how to market the combo despite the outrageously good technologies.)

      The Power chips seem to trump the Itanics overall. I'm sure IBM would love to keep you on AIX as much as HP would love to get some HP/UX revenue from you.

      I've seen some pretty compelling numbers from 4-socket Dual Core Opterons if you don't need to go over that in a single box. Microsoft doesn't charge per core (Oracle is the last hold out .. BEA just dumped that strategy. MSFT, Red Hat / SUSE and VMWare all look at socket and not core.)

      You might want to get an eval 4-way D/C Opteron, max it out with RAM and get a BETA of 64-bit SQL server. THAT will make your Oracle rep squirm a little.

      Granted you don't get the same hard partitioning in the x86 world as you do in the RISC/EPIC world, but for the money, you can can afford VMotion or Polyserve, or some other software solution to abstract your applications from the hardware, and have some change left in your pockets.