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 and prove that they have what it takes to emerge as an industry standard.

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 percent 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, and some of the early start-ups that had hoped to cash in on the move to blades have felt the pinch. FiberCycle Networks Inc., an early company created to sell low power blade servers quickly went out of business. Rival blade pioneer RLX Technologies Inc. has laid off staff and replaced senior executives.

"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 says that despite the blade vendors' 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, he said. "These things are just too expensive," he observed. "There's no reason for blades to be premium priced, other than (the vendors) can get away with it."

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