Data Center Strategies

Back To The Future (2) – Oracle + Sun

In my previous post on this topic I promised to take a look at how a more “vertically integrated” set of IT suppliers might change things. In this post we’ll look at the challenges faced by a combination of Oracle and Sun.

The first challenge that any company will face is that a modern IT organization is orders of magnitude more complex and diverse than in era when IBM ruled the data center. For example, most IT organizations today run tens or even hundreds of applications from a wide variety of vendors on a diverse set hardware. That’s a far cry from the IBM era when an organization might have one or two computers and a handful of applications. So the big question is whether true vertical integration all the way up the hardware and software stack for the entire enterprise is even possible today. I’m inclined to think not, because even Oracle only has a handful of the applications needed by a modern enterprise

So if full vertical integration isn’t an option, the key questions are “how far up the stack can Oracle go?” and “does the convenience of vertical integration for part of the IT environment offset the issues of vendor lock-in and higher upfront purchase costs?”

The answer to the first question is that Oracle could offer a well integrated stack for Oracle databases and any applications from Oracle that live on top of that Oracle database. Using Sun’s hardware and operating system (along with OEM products like the Hitachi Data Systems enterprise arrays) they have access to a complete suite of enterprise hardware and system software. The problem is that much of that hardware is not widely used in the enterprise and many IT organizations have long since made the choice of another supplier, so Oracle has to persuade them to rip-n-replace a significant chunk of their infrastructure in order to benefit from integrated Oracle solutions.

The answer to the second question will depend a great deal on the previous choices made by an IT organization. For example an IT organization running Oracle on Sun hardware using Sun storage products may find the idea of tighter integration quite attractive. On the other hand an organization using HP servers and EMC storage to underpin it’s Oracle applications may not be interested at all.

An area of particular concern is the hypervisor, given Oracle’s recent acquisitions, it’s clear that they want to be a player in the server virtualization world. The problem is that many large enterprises are already deploying VMware ESX and to a lesser degree Microsoft HyperV and Citrix XenServer along with a suite of tools to manage the virtual environment. If Oracle fails to displace these products and becomes a “virtualization island” with it’s own set of management tools, then much of the vertical integration advantage disappears, as IT organizations are forced to work with two sets of tools, one for Oracle solutions and one for everything else.

Posted by: Nik Simpson

Back to The Future

As you may have gathered by now (see [1],[2]), I’m skeptical about Oracle’s plans to create a one stop shopping experience for IT organizations by combining their software offerings with Sun’s hardware. But let’s assume for the moment that I’m wrong and Oracle really does plan to go down that path.

Such a move would attempt to turn the industry clock back 40 years or more to an era when IT companies were vertically integrated and IT organizations sourced pretty much everything from one mainframe vendor. At that time there was very little in the way of an Independent Software Vendor (ISV) community, you bought your hardware, operating system and applications from the same place. Over time vertical integration gave way to the horizontal integration that we have today, were companies pick and choose hardware, operating systems, and applications from a wide variety of vendors.

Each model has distinct advantages and disadvantages:

• Vertical integration: Buying everything from one company as an integrated package should certainly be easier to manage and gives IT organization “one throat to choke” when things go wrong. On the other, it’s likely to be more expensive to purchase because the IT organization is heavily committed to a single vendor’s solution which weakens their bargaining power.
• Horizontal integration: The large and competitive selection of vendors for every aspect of a horizontally integrated IT infrastructure means that prices are low and there is considerable scope for “let’s make a deal”. On the other hand, a horizontally integrated IT infrastructure will require more on site integration and ongoing management attention.

If Oracle is right and the industry is ripe for a move back to vertical integration, then we have to ask the question “how will this impact existing vendors.” That’s a big subject and too much to cover in one blog, so I’ll tackle in a series of blogs over the next weeks. The vendors I plan to look at are:

• Oracle + Sun
• Cisco + EMC + VMware
• Dell
• HP
• Microsoft
• IBM

Posted by: Nik Simpson

NetApp does not buy Data Domain, EMC does

The last time I blogged on the Data Domain play, the title was:

“NetApp buys Data Domain” (5/20/2009)

So much for that.  Here’s the 7/09/2009 update:

Assuming no other suitor shows up at the altar, it looks like EMC has bought the Data Domain bride.

I have to wonder though – what does EMC get? One should be careful what they wish for. As some have said privately or publicly, is Data Domain really worth $33.50 a share?

Let’s step back for a moment.

Data Domain’s beauty comes from deduplication technology and of course, its broad customer set. The hardware that the dedup algorithms run on is not particularly unique, but does offer a means to generate profit margins. And, no doubt the service contracts are lucrative.

A few years ago, the ability to perform dedup duties was important as the technology emerged from obscurity. But now – my gosh – dedup is near commodity status. In fact, vendors are  starting to consider pricing dedup as a commodity; look at what Acronis is doing with their dedup pricing. Yes, they are small, but their dedup per unit pricing is a harbinger of the future.  

The dedup game has moved past who has the best dedup ratio to who can scale and best fit into large and complex topologies. Topologies encountered in datacenters and across remote offices. My bet is that dedup becomes a feature, expected as part of any storage infrastructure. Look at the message that Symantec is espousing – dedup everywhere. Everywhere means commodity. Dedup becomes a feature not a product. In fact, look around the backup and archive product offerings in the enterprise/SMB market. It’s hard to find a product that does not include dedup.

So I wonder what EMC sees in Data Domain?

No doubt it’s the customer base. That’s no small thing. Getting the proverbial EMC (and their partner DELL) foot in the door for every account is a big positive. For where there is a need for dedup, there is also a bucket full of primary data needing its own equipment with a dependency on dedup for backup space efficiency. In a conspiratorial way, EMC also keeps Data Domain out of NetApp’s hands.

But EMC already has dedup’ing equipment. With the Data Domain acquisition, confusion will reign across the rest of the EMC dedup’ing products. What happens to the EMC/Quantum based dedup products? I guess they get put on an end-of-life cycle.  Take note: dedup algorithms are not interoperable. Now EMC has a cacophony of dedup engines (Quantum’s, Avamar’s, and Data Domain) to mash together. Good luck with that.

Challenging hardware implementations, is a growing trend to move dedup capability into the software and thus divorcing it from the hardware. Just listen to Symantec and Commvault. They will be happy to fill you in. To meet this threat, Data Domain must separate the dedup engine from dependence on the hardware, but that kills the hardware revenue stream.

So in the end I’m confused by EMC’s move.

Just what is this new relationship about? Why is it worth so much? Data Domain employees and stock owners get a nice dowry but does EMC gets its money’s worth long term? The long-term prospects for profits from Data Domain dedup technology are, to be polite, murky. Short term, EMC can capture some net market share but marriages should be about the long haul.

Maybe NetApp is the lucky one.

They could conceivable pickup Quantum and its dedup technology for pocket change compared to the Data Domain deal. They won’t get Data Domain’s global customer base but they also don’t need to dilute their company’s value either. In any case, NetApp is certainly free to find a new suitor or suitee; but that’s a different story….

Posted by Gene Ruth

EU Slaps Intel with €1.06 billion ($1.45 USB) Fine

By now, I guess everyone has seen the incredible news that the EU has levied a €1.06 ($1.45USB) fine on Intel for "illegal sales practices". As you can imagine, Intel was unhappy about the news, while AMD applauded the move.

From a technical analysis perspective, there are no immediate implications. Intel will still continue to ship it's entire portfolio of processor products, including the new Nahalem (XEON 5500 series) processor. Well, at least for now. However, one has to question the long term implications, including whether or not Intel has the cash to sustain these product lines given the fine. Intel, like many other companies in this economic climate, are watching every dime. Will this fine affect their ability to produce product in sufficient quantities to meet IHV demand? These types of issues make IHVs (e.g. Dell, HP, and IBM) very nervous. Often times, there simply aren't enough chips to go around in the server market. That's why every IHV scrambles to be "on stage" with Intel when they announce a new processor...to guarantee they are "first to market" and corner as much of Intel's capacity as possible. The more processors the IHVs have on hand, the more serves they can manufacture... and the easier it is to keep the competition from shipping similar servers. It's been this way in the server market for years. How many times have customers attempted to purchase a server from an IHV, only to find out that the ship date is extended 3+ months?

Another question: will this judgment hinder Intel from making more investments in future products? Chips design is a long process. New processors are on the drawing board 5+ years in advance. If Intel is forced to make hard decisions, R&D may be the place.

Part of what we've been blogging on here in DCS is the increasing competition within the IT industry...including Ciscos's entry in the blade server market with UCS and Oracle's Virtual Iron acquisition. We think it's an inevitability that larger companies will begin to compete across technical, geographical, and vertical market boundaries. Companies that were once "close partners" are now suspiciously watching each other from across the table. Stands to reason the the governing agencies will be closely following these unfolding events.

[posted by: Drue Reeves]

Amazon, Citrix, Xen, and KVM - the catalyst for change

A series of events have been unfolding over the past nine months that leads one to speculate on what Amazon will be doing in the future with its EC2 infrastructure.  For those not aware, EC2 is built upon an Amazon customized version of the Xen Hypervisor plus Red Hat Enterprise Linux 5 code. 

Here goes my speculation:  Taking from where Drue Reeves left off in his blog on this subject earlier this year, Amazon has got to be looking for a way to reduce its engineering maintenance investment into the EC2 infrastructure.  What better way than to partner with a technology supplier.  The announcement on May 6th at Synergy of Citrix-Amazon collaboration on internal/external cloud interoperability has “we’re moving to Citrix XenServer as our EC2 hypervisor infrastructure” written all over it.  Let’s look at some interesting points:
•    XenServer with live migration is now free.  Amazon has got to like “free.”
•    Citrix is collaborating on the same API and hopefully AMI as EC2
•    RedHat is abandoning Xen in favor of KVM (see Drue’s blog)

Amazon can continue to use Red Hat Linux as the guest operating system for EC2 as Citrix and the community will supply Xen paravirtualized device drivers moving forward.

So what do you think?

[Posted by Richard Jones]

Citrix Essentials for XenServer 5 Platinum

Just to illustrate how fast the x86 virtualization market is moving, Burton Group just published for its Data Center Strategies clients a product profile on Citrix XenServer 5.  However, within the same week, Citrix released its announced changes to the product stratification and branding with Essentials for XenServer 5.  The stratification change reduced the number of XenServer 5 offerings from four to three, and more importantly, the bottom level offering is now free – including XenCenter with live migration support.  The free version has XenCenter features that are not enabled until the customer purchases and adds one of the two Essentials offerings: Enterprise or Platinum.  Additional tools, such as Lab Manager and Workflow Manager are included in the Essentials offerings (features offered depend on the level selected).

The timing of Burton Group’s product profile was just not on cadence with Citrix’s update.  Therefore, Burton Group has just updated the product profile to reflect the new features and product stratification and branding change.  If you downloaded the product profile when it first released, please download again to get the updated version.  The newer version reflects Citrix’ improved standing in relation to Burton Group’s production worthiness criteria, however Essentials for XenServer 5 still isn’t quite there yet.

Citrix recently announced the next version, XenServer 5.5, that will add Directory Services integration for administrative authentication/authorization, role-based access controls, and improved auditing/reporting.  This will complete the required technical features for production environments.  The only missing requirement will be a published product lifecycle plan at product launch.  At Synergy, I got the chance to discuss this problem in depth with Citrix executives.  XenApp is the only product with a published lifecycle at launch, and they promised that general lifecycles for the other products (including XenServer) will be forth coming.

[Posted by Richard Jones]

There was a House in Santa Clara They Called the Rising Sun

So the soap opera we’ve been following for the last month has come to it’s conclusion, with a shocking twist in the final episode. After being spurned by the big blue Knight from Armonk,our heroine, Sun Microsystems, was rescued at the last minute by Oracle, presumably riding on in on white charger. The $9.50/share price is at the the top of the range for the rumored IBM deal, so it’s at least some good news for shareholders.

For Sun’s IT customers it’s good news/bad news. The good news is that Sun will not got nova for the time being, a prospect that was becoming all too plausible in recent months. In the short/medium term (I’m guessing the next 3-5 years) Oracle will continue to service and support UltraSPARC/Oracle customers, to do otherwise would be suicidal.

The bad news is the uncertainty this creates around the long term future for Sun’s hardware products, particularly its UltraSPARC high-end servers. The question is, “What does Oracle plan to do with the hardware business?”, because lets face it, the reason for the acquisition is Java, not hardware. Oracle has seen the future of hardware for databases, and its a commodity-based scale-out cluster; not large, proprietary, and expensive servers. So I believe it’s a question of “when” not “if” Oracle decides to stop further development of Sun’s high-end server line.

For the commodity server products the future doesn’t look too rosy either. Sun’s market share for commodity servers is negligible compared to IBM/HP/Dell which leaves them with two problems that they need to address:

1. There isn’t enough business in just selling hardware for database clusters to support a product line, so Oracle has to decide whether it really wants to be in the hardware business at all.
2. Going into accounts where Oracle is running on HP/IBM/Dell hardware and trying to kick out the incumbent hardware vendor is going be a hard sell and will do nothing to endear Oracle to their former hardware partners.

So you have to wonder why Oracle would choose to spend R&D dollars on x86 servers to go after a small segment of the commodity hardware business and turn their erstwhile partners in the hardware space into competitors.

Posted by: Nik Simpson

Cloud storage: confusion rains

Cloud storage is fogged up, the mist obscures it, bringing a veil of uncertainty. I feel the tension of an oncoming lightning storm. Hail pounds my roof, smashing my windows!

I love it. This whole cloud thing lends itself to word play.

Gets a little tiresome though.

I’ve been writing a research report on cloud storage for Burton Group clients and vacillate from being excited to discouraged about cloud storage. Many vendors offer it. Just ask. Do a Google search for “cloud storage”.

Lots of hits. Too many hits.

Sometimes I wonder if there is a contest to see how many times the word “cloud” can be used in marketing material. It’s similar to what happened when “green” storage came into vogue. Nearly every storage vendor has jumped on that bandwagon. Search “green storage”. Points will be granted for enterprise storage vendors who don’t mention green in their literature.

Not helpful.

Not helpful are all the vendors who claim some variant on “cloud storage”. Are they an infrastructure provider, a service provider, or a broker? Hard to tell without sifting through the marketing clutter. And where’s the business case? For large Enterprises or the SMB space, any contemplation of cloud storage should start with a ROI/TCO calculation or at least an attempt. Moving to cloud storage, whether internal or external is largely a financial decision. Can it save money and can an organization live with the tradeoffs? Vendors: we need some help.

So how do you know cloud storage when you see it?

Some folks liken cloud storage to a utility – like a utility, the data flows to a customer, metered in some way. A useful analogy, but not quite right. After all, taking the analogy further, it’s the lake above the dam that stores the data, eh, power, that gets delivered to one’s house.

A closer analogy is that of a physical storage unit – the kind that stores stuff that no longer fits in the garage. You rent a physical storage unit by size, it’s expected to be secure from theft, protected from destruction and the stuff in it available when needed. And when you no longer like the landlord or the rent gets too high, you can move your stuff to another physical storage vendor. A sore back may result but once moved you’ll get the same service. So, too, should be cloud storage.

OK, enough fun with analogies, but you get the idea.

Isn’t part of the value proposition for moving data to a cloud the blissfully ignorance of the machinations to store it? Now, I wouldn’t advocate using cloud storage if you are clueless of what the backend infrastructure is - but that's the concept.

Cloud storage will not succeed as long as vendors have their own spin on it. How could it? The idea is for users to be able to leverage cheap and reliable storage. Storage managed by somebody else with some reasonable service expectations. Sure service providers can offer premium and unique services but there must be a lowest common denominator across the industry. As a user I must be able to move my stuff – my data – between service providers at my whim. Maybe I want a better price, or the service provider is hard to deal with, whatever. As a user, particularly a large enterprise user, locking into a service provider gives away all my leverage.

It’s nothing more than signing a long term outsourcing contract.

That is not cloud storage.

I could grumble some more, but clearly if one looks into cloud storage at all they’ll see that the picture is muddled, foggy, misty, gray, ok I’ll stop.

Cloud storage needs some definition.

I’ll get into that in my next blog.

posted by Gene Ruth

 

IBM and Sun: Slight of Hand or Twist of Fate?

Wow, what a week it's been for the server market...and it's still only Wednesday!

Most of us, by now, have seen the speculation regarding IBM acquiring Sun Microsystems. If the story is true, there are some serious implications for other vendors in the server market. If untrue, then let's just say the rumor served its purpose.

Cisco's entry into the server market, termed "Unified Computing System", which Burton Group has blogged about here [1, 2, 3, 4, 5], was perhaps the biggest news in the compute space for, well, years. But just as the buzz around Cisco's announcement reached a feverish pitch, a story regarding IBM potentially acquiring Sun appears in the Wall Street Journal, drawing attention away from Monday's announcement. Coincidence? Mmmmm....maybe. At the very least, these rumors are a nice side benefit for any server vendor other than Cisco. And, I suspect, IBM and Sun have/are discussing a deal, which gives each company "plausible deniability" that the story was leaked early to intentionally rain on Cisco's parade.

Be that as it may, if IBM does acquire Sun (it's hard to believe they won't at this point), here are some implications for the remaining server vendors.

• Dell. Dell is the big loser in this acquisition. Dell's lack of high-end compute products in its portfolio puts them at a disadvantage in many enterprise accounts. Large enterprises require more than x86 compute resources for some workloads. Because Dell doesn't offer high-end compute, they capture only a portion of the total IT budget, exposing them to competition. Also, the incomplete portfolio further reinforces Dell's poor enterprise brand credibility. Sun was the one company that could really help Dell in the enterprise. Sun had both the high-end compute products AND the enterprise brand credibility to raise Dell to an HP or IBM level (or at least put them on that path). With Sun off the map, who else is out there than can give Dell the boost they need? At this point for Dell, one has to start asking the question if Dell is better off being acquired than acquiring someone else. Burton Group blogged about Dell and Sun a few months ago.

• HP. For HP, the acquisition is more of a market share and software issue than hardware. Adding Sun's products and capabilities to IBM's portfolio is probably not a big deal from a hardware standpoint. HP already has competitive offerings to both Sun and IBM in many aspects. There are, however, some serious software implications for HP, such as identity management, virtualization, data base, open source, that help propel IBM forward beyond where HP can go today. But the mad scramble will be for Sun’s customers who are forced to choose between the hardware platforms and software IBM chooses to keep versus switching to HP. If IBM can execute crisply -- which they rarely do -- then HP may need to make a move too.

• Cisco. Welcome to the game Cisco. This is how we roll. The implications here are not as big for Cisco, except this rumor has effectively squelched Monday’s news (seems like forever ago). However, this acquisition demonstrates the enormity of the players in this market and the depth of their pockets. One interesting idea would be for Cisco to acquire Dell (or merge). Similar companies, different business models. But -- if Dell and Cisco could convince large enterprises that the scalability and agility afforded by x86 platforms (along with virtualization) are better than big iron, they might do well. Throw in a tight EMC relationship, the game changes again.

• Fujitsu. Some of Fujitsu's server platforms depend on SPARC. Depending on what IBM does with Sun's portfolio, Fujitsu may need to change their product portfolio. What a pain. Not only will Fujitsu spend cash to change their product lineup, but also support a dying platform whose original hardware partner is now gone. Fujitsu, meet IBM. Make them an offer to buy SPARC.

• Intel and AMD. For these guys, they have to be bummed that another independent hardware vendor (IHV) won't be selling their wares. AMD in particular has much to lose because Sun is a heavy consumer of their chips.

Funny. Two days after the server market gets a new player, one (potentially) drops off.

[posted by: Drue Reeves]

Sun Heading Off to the Wild Blue Yonder?

Just when you think nothing ever changes in the server business, you get a week like this, first Cisco jumps into the server business(see Beware the Ides of March – Cisco Sends a Warning to the Server Industry, for our coverage of that announcement), then rumors of a IBM/Sun merger start to surface (see [1][2][3], all feeding of an initial Wall Street Journal report).

So far, Sun/IBM is just a rumor with both parties refusing comment. But the implications of such a merger are just too big to ignore (the parallels to the COMPAQ/HP merger are striking). For me, the overriding question concerns the overlap between the two companies in server, storage, and operating system fields. In all of these areas, a merged company would have to make some major decisions that would impact end users across the board. For example how do the following conflicts get resolved:

1. Would a merged company continue to develop SPARC- and Power-based server lines, or would SUN’s SPARC flicker for the last time?
2. What happens to all the various competing hardware lines such as x86 servers, disk arrays, NAS products; which products survive and which get consigned to the great rubbish skip in the sky?
3. How would Sun’s innovative, but not particularly successful open source storage stack fare. Would there be continued investment, or does it become just another open source project with no vendor backing it?
4. Between them, IBM and Sun would have to juggle two commercial UNIX variants (AIX and Solaris), a complete open source OS (Open Solaris), major commitments to LINUX development, a hypervisor, and a mess of other system software projects that would have to be culled.

It’s hard to see how these questions can be resolved without major impacts to enterprise customers of both companies, so this is a story that I’ll be following closely.

Posted by: Nik Simpson