Analysis: With Sun, Intel Wins, but AMD Doesn't Lose

The top four server providers globally - HP, Dell, IBM, and Sun - all now have Intel-based as well as AMD-based options, thanks to Sun's agreement this morning with Xeon manufacturer Intel. The move is very interesting since Sun, like IBM but unlike the others, manufactures its own CPUs and competes with its own partners. But today's move could signal the rise of Sun as an equal player in the server space, says Insight64 principal analyst Nathan Brookwood.

"For the first time in my memory, you can go to any of the top four server companies - IBM, HP, Dell, and Sun - and buy boxes with AMD chips or boxes comparably configured with Intel chips," Brookwood commented to BetaNews. "So if you, the end user, have a reason for wanting one or the other, you don't have to compromise any more. And that's huge, that's just huge."

As recently as last year, enterprise customers found themselves tailoring their CPU preferences to fit with their vendor choices, and vice versa. If you preferred AMD, you couldn't choose Dell; likewise, if you preferred Intel, you couldn't choose Sun. And ongoing purchasing agreements with existing vendors made it hard, if not impossible, for businesses to switch vendors even if the changing CPU landscape gave them good reasons to do so.

While Dell has only recently slipped from the #1 spot in PC market share worldwide, IDC has shown HP in the lead in servers shipped since mid-2002. One reason HP has been able to hold onto that lead has been its adoption of what it calls a "chipnostic" approach, for lack of an adequate term. Essentially, this means the ability to service the customer with the CPU of its choice.

Up until last year, Brookwood said, "Dell, obviously, didn't have any AMD stuff; and Sun, obviously, didn't have any Intel stuff. So that, I think, is a big change. Now all four suppliers have a legitimate claim to saying they are 'chipnostic."'

"The interesting thing is, companies like HP who had that story before the others," he continued, "were using that as a way to kind of get account control; if they could persuade the customer to like Opteron, they knew they could keep Dell and IBM out of their accounts. Now those kinds of marketing tactics will lose effectiveness."

With all the major vendors adopting a "chipnostic" approach - though hopefully with a much better marketing name for it - the challenge for CPU manufacturers will be to distinguish themselves. While certain architectural features like Intel's on-board virtualization and AMD's support of HyperTransport may accomplish this to some extent, AMD and Intel both still need to court vendors in order to help them build unique applications of their hardware, particularly in terms of what Intel CEO Paul Otellini described in this morning's joint press conference with Sun, as ways for the operating system to "expose" features of the hardware.

With Sun's move in June 2005 to release Solaris into the open-source realm, it has steadily gained a reputation, Brookwood said, for two key factors: robustness and scalability. Indeed, 70% of Solaris users already found that out by running the system on an x86 platform.

This is where Intel's virtualization and Solaris' penetration on the high end of the server space, come together. "The server consolidation story is all about being able to move workloads, intact, without software changes, from small boxes to big boxes," Brookwood explained to us.

Data centers today, he said, all have a mix of various operating systems: NT, Windows 2000, Windows Server 2003, and all the wonderful myriad of Linux flavors, mixed with sprinkles of proprietary Unix flavors. Throughout the '90s and until the early part of this decade, whenever an enterprise launched a new application internally, it acquired a new server. So development had one, IT had another, finance had a third, maybe management had a fourth. If an application seemed huge, then businesses purchased multiple servers to handle it; if it seemed small, it then justified purchasing multiple servers anyway, with some used as backup or development systems.

It's a kind of server jam that businesses are faced with, where each server consumes about 200 watts of power on average. In an environment like the virtualization test platform that Otellini referred to, the application that used to consume 200 watts on a 24/7 basis now consumes about 30. That's a compelling reason for businesses to choose individual, but bigger, replacement servers with powerful processors and a robust operating system to manage them all.

"Sun actually has a lot of experience there because they know how to build big systems," Brookwood told us. "So that's an area where [virtualization] makes sense, and it's not people going to do multiple operating systems to support the technical virtuosity, because they don't want to have to tamper with all these different software configurations as they consolidate.

"If you're on the 40th floor of a skyscraper in Manhattan," he continued, "you ain't gettin' more power than you currently got, and you're not getting any more cooling capability than you already got. So if the workload's increasing, you gotta find ways to handle the increased workload in a constant power and thermal envelope. That's an area where, I think, Sun has really done very well over the last year. Sure, it's been AMD putting up these billboards, 'Look at all the power we're saving!' (probably was more true a year ago than it is today), but it's been Sun that has actually better solutions than either Intel or AMD for certain select applications that tend to be really popular in data centers."

Next: Sun adopts the "chipnostic gospel"