Market still waits for blade breakthrough

Two years after vendors began introducing slimmed down “blade” computers as the next stage in the evolution of the server, these denser, more power-efficient servers have been struggling to meet market expectations.

In fact, the last couple of years have been downright rocky for blades. The dot-com-fuelled Web serving market they were first aimed at has shrunk, and the IT market in general has grown much more conservative in its approach toward new technology.

Still, as far as analysts and blade vendors are concerned, the question is not whether these new servers will take off, but when.

Their confidence is understandable because, in principle, the blade concept makes a great deal of sense. The idea is to strip down the servers in a server farm to their bare essentials: removing the CD-ROM, video processor and keyboard connection and having the power and cooling supplied by a separate enclosure, so that the blade servers can be slid in and out of specialized enclosures like books in a bookshelf.

In theory, you have servers that are less expensive to produce, take up less space, and require less power.

In reality, you have a brand new architecture with benefits that have been harder to prove in practice.

This is why blade sales have fallen short of analyst expectations. In 2001, IDC predicted that 67,000 of the slimmed-down servers would be sold the following year, creating a US$148 million market. The industry research firm was bullish about blade growth, forecasting sales of $4.5 billion by 2005.

By the time 2002 was over, however, vendors shipped 40 per cent fewer blades than IDC had expected, and tallied just $100 million in sales, almost $50 million less than expected.

IDC has now nearly halved its 2005 sales prediction to $2.5 billion.

“The market fell apart,” said Alan Freedman, research manager with IDC Canada in Toronto. Two factors led to this. There was a “lack of spending on the customer” side and “research and development took longer to get products out than they (the vendors) were expecting,” he explained.

Having said that, IDC predicts the blade market will represent nine per cent of server revenue by 2007 in Canada and 14 per cent in the U.S. The higher number in the U.S. reflects a traditionally quicker adoption of new technology.

There is another reason for the lack of growth, according to another analyst.

“I don’t think the vendors have made a compelling argument of what these things are good for,” said Gartner Inc. analyst John Enck, who said despite their best efforts to promote the blade concept as a simple step beyond rack-mounted computing, these new servers have yet to be accepted as general-purpose machines.

One problem is pricing, Enck said. While blade systems have a price performance advantage when they are deployed in large systems, their costs are too high in configurations of less than 10 servers. “These things are just too expensive,” he said. “There’s no reason for blades to be premium-priced, other than (the vendors) can get away with it.”

For some the decision to go with blades was less price-driven than feature-driven. The University of British Columbia has bought two shelves fitted with Sun Microsystems Inc. blades (about 20 in all) as part of its overall data centre renewal project. “We were interested in computing cycles on demand,” said Dave Amos, associate director of IT services at UBC. Using blades fit nicely into UBC’s notion of being able to expand on short notice.

At the university certain departments use a lot of computing power infrequently. Student registration in September and year-end accounting are two examples of sporadic but heavy use. Though not fully installed yet, the overall hope at UBC is for an “effective, low-cost, expandable infrastructure” where network administrators will be able to provision servers and move them “from one network or app to another,” he said. Full deployment of the blades is expected by the end of this year, Amos said.

Is Complexity an issue?

Analysts also say that the complexity of blade computing – with few standards in the areas of backplanes, management software, or even blade form factors – is holding it back.

Not all users agree with the analysts, however.

“That’s typical analyst stuff,” said John Knuff, vice-president of network engineering with New York-based financial trading systems company NYFIX Inc. “I’ve never seen any new technology come out that didn’t have a steep learning curve. It takes you a few months or a year to be good at it, just like anything else.”

NYFIX is using blades to host high-availability servers in its data centres that are running securities transactions, and Knuff is happy enough with the blade return on investment that he’s planning to use some more.

Blades can be expensive, Knuff conceded. “If you’ve got inexpensive data centre space, the blade server will cost you more than a regular server, as far as cost per rack,” he said. But as the number of servers in play goes up, the economics of blade computing become more attractive.

Frank Morassutti of IBM Canada Ltd. agrees.

Though the Toronto-based certified consulting server specialist admits that IBM blade servers cost about 10 to 12 per cent more than the traditional 1U, there are actually savings when blades are installed. He cites less power use (both to run the servers and the air conditioning needed for the server room) and less real estate space needed to store them. This saves, on average, 15 per cent, for an overall three- to five-per-cent savings.

“Everybody is concerned about these intangible costs,” he said.

Morassutti does however agree that installing blades for less than a half dozen servers “isn’t the way to go.”

Others are less enthusiastic.

“We don’t see anything really compelling about blades,” said David Moffitt, the director of engineering at San Francisco-based health care information technology company McKesson Corp. “The kind of environment that looks good for blades is when you have a lot of similar Web presentations that you need to expand and contract fairly rapidly.”

Moffitt is not an ideal candidate for blade servers. His operation doesn’t need to set up a large number of identically configured servers, and rack space is not at a premium at McKesson. With current blade pricing, and the nascent state of management tools, Moffitt remains unconvinced that the new form factor promises a compelling return on investment for his company.

The analyst consensus is not that blades will fail to take off, but rather that their acceptance will take more time than originally anticipated. IDC expects vendors to ship 137,000 units this year, accounting for $434 million in sales. Looking at numbers from the first two quarters of 2003, it appears that those targets will be hit, said IDC analyst Mark Melenovsky. “The market is certainly meeting our expectations now.”

But whether the blade market will meet Enck’s and IDC’s expectations over the next few years is a matter of debate. Analyst firm Gartner Inc. expects the market to reach $1.2 billion by 2006, a respectable number, but far less than the $4.2 billion predicted by rival researcher IDC.

“Blades are going to happen. It really is inevitable,” said Illuminata analyst Gordon Haff. But a combination of risk aversion on the part of buyers and missteps by vendors has slowed down blade adoption, he said. These missteps include sellers bringing servers late to market or sending mixed signals about their product plans, and even technical problems with the products themselves, he said.