December 29, 2000, 1:59 PM — WHEN DELL COMPUTER in early 2001 begins selling a re-branded version of the Unisys 32-way ES-7000 server, a race will be on between Dell and Compaq for dominance of the ultra-high-end Intel-based server market created by the ES-7000, a server that can run 32 Intel processors using Microsoft's Windows 2000 Data Center operating system. Dell announced its plans this month.
Meanwhile, analysts predict a second race will heat up between Compaq and Dell in the still-developing lower and middle range WinTel server markets, as both Dell and Compaq begin shipping more task-specific servers pre-loaded with software. Analysts believe Dell will further leverage its build-to-order infrastructure to try to beat Compaq prices.
"The people demanding [the 32-way server] are outgrowing their Microsoft-based systems" that currently run on 2-, 4- and 8-way servers, said Mark Melenovsky, a server market research manager with research firm IDC, in Framingham, Mass.
Concern about losing customers prompted Compaq, Dell, and Hewlett-Packard to re-brand the ES-7000 rather than develop their own systems, Melenovsky said. Officials for both Dell and Compaq said it would take two years to develop their own 32-way WinTel servers in-house.
The addition of the 32-way server was vital to the continued growth of the standard Intel architecture server market and the networks using Intel technology, said IDC research analyst Hoang Nguyen. "These vendors are trying to scale up, and [adding the 32-way server] is a good opportunity for them to compete with the upper class servers such as the Unix servers," he said.
The notion of "scaling up" with a larger server designed for heavy application versus "scaling out" by adding on multiple 2-, 4-, and 8-way servers represents something of a departure for Dell and Compaq.
"We believe that scaling out is the way to go, but some customers want to scale [up], and we don't want those customers going somewhere else," said Gene Austin, vice president of worldwide marketing for Round Rock, Texas-based Dell.
Compaq's WinTel server customers that were scaling outward with multiple 8-way servers "wanted the ability to grow up," according to Paul Santeler, vice president of the industry standard enterprise server group with Houston, Texas-based Compaq.
Despite Dell and Compaq each adding a 32-way server to their lineup, the systems won't make money for the companies at first due to what is still a relatively small market for the units, according to IDC analyst Vernon Turner.
Instead, observers expect the price competition to come from the middle and low end WinTel server market.