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Blade servers pierce the market

2004 seen as a breakout year for new computing form factor

Despite the beginnings of an economic turnaround, corporate IT spending in 2003 did not pick up as fast as the electronics industry would have liked. One bright spot, however, was the rate at which blade server sales accelerated, setting the stage for a significant market ramp-up in 2004.

Blade servers are sleek, ultrathin modular packages, each containing a CPU, memory and networking I/O, that slide into a small chassis outfitted with power, cooling, network switches and management features shared by all the blades, usually 12 to 16, depending on the vendor's design. The sharing of resources is one big element in cutting both hardware and management costs.

Analysts say that blades offer what IT executives are looking for: a technology that cuts costs and consolidates operations. But before the blade server market soars, analysts say, the electronics industry must address the need for standards, improve blade server management software and provide evidence of the total cost of ownership (TCO).

This new form factor is the next evolutionary step in server computing, according to vendors. Blade servers, which debuted two years ago, consume about half as much space as comparable rack-mounted servers. And IBM estimates that its chassis, which hold 14 blades, use 83 percent less cable than comparable rack-mounted server offerings. A blade server chassis can also hold storage and networking blades—some call it a data center in a box.

International Data Corp. estimates that 52,000 blade servers were sold worldwide in the third quarter of 2003 and forecasts 200,000 for all of 2003. Blades are still a thin slice of the total worldwide server market, which IDC forecasts to be 5.2 million units in 2003. But the blade market has grown steadily from a mere 10,000 units in the third quarter of 2002.

"By 2007, we expect blade servers will be about 2.3 million units out of a total of 8.4 million units," says Mark Melenovsky, an IDC analyst. IDC forecasts that the worldwide server market will grow from $49.2 billion in 2003 to $57 billion in 2007.

"This is the fastest-ramping server in our history," says Tim Dougherty, director of blade server strategy for IBM. "We far exceeded what we thought we would do in 2003." IBM entered the market later than Hewlett-Packard, which is the market share leader (see the graphic "Blade Server Leaders").

IBM and Intel have been working together to develop blade servers since mid-2002. Intel also offers a complete blade server package, including some software, to its channel partners. Patrick Buddenbaum, Intel's blade server product line manager, says that 10 OEMs were shipping blade servers by the end of 2003 and that many others will begin in 2004.

Anil Vasudeva, chief analyst at Imex Research, estimates that 140 companies, including OEMs, chip companies and software developers, are involved in some aspect of the market. He says that blade servers were originally developed for Internet service providers, because the architecture reduced the real estate that ISPs needed for housing thousands of servers.

Vasudeva says blade servers have made their way into research settings and are now finding corporate applications in the banking and retail markets, in online transaction processing and analysis and in applications that require streaming video. He expects blade servers to host many data center applications in the future.

Vasudeva says blades are ideal for data centers because they offer maximum flexibility. With management software available now, a server administrator can automatically configure blade servers for online transaction processing during a bank's open hours and automatically switch to back-office tasks overnight. Trying to manage racks of servers for the same purpose requires a lot of plug switching.

Software is the key, Vasudeva says. All major vendors—IBM, HP and Sun Microsystems—offer management software, but Vasudeva foresees a robust blade server software business as innovators find new and better ways to manage and extend the use of blades.

RLX Technologies offered the first blade servers, in 2002. Its management software, Control Tower XT, is what sets that company apart, according to Jeffrey Hewitt, an analyst at Gartner, who notes, "I would have to give its software an edge, from what I've seen." Hewitt says that OEMs need to establish blade standards the way they did for rack-mounted servers. Although blade chassis from different vendors can interoperate, the blades and other components cannot be moved from one vendor's chassis to another. Hewitt believes that users will eventually want more flexibility to mix and match blades and chassis.

Hewitt and others say that the industry also needs to start providing TCO evidence to convince potential buyers that blades are a better purchase than rack-mounted servers. In just one area—IT staffing—customers of RLX Technologies anecdotally report that they need fewer administrators to manage blade servers. Industry benchmarks typically put the ratio of administrators to servers at one to between 30 and 50 in a rack-mounted environment. With blades, according to Paul Barker, RLX vice president of marketing, one administrator at RXL's customers can handle 350 or more servers.

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