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3 From the Gartner Files: Magic Quadrant for Blade Servers Lorem ipsum dolor sit amet sit

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Utilizing the best technology to solve your business needs is paramount to getting an edge on the competition, improving efficiency, and maximizing benefit from your IT budget. The Gartner Magic Quadrant is a trusted source of objective, independent intelligence on information technology. In Gartner’s recent Magic “Due to their modular Quadrant, HP is positioned as a leader. nature, blades offer compelling facilities- Gartner Magic Quadrants are a culmination of oriented benefits, research in a specific market, giving you a wide- such as improved angle view of the relative positions of the market’s cabling, rapid hardware competitors. By applying a graphical treatment provisioning (including and a uniform set of evaluation criteria, a Gartner HP BladeSystem maximizes every hour, watt, and the ability to replace Magic Quadrant quickly helps you digest how well dollar in your systems—provisioning in minutes, failed components), technology providers are executing against their reducing equipment up to 95%, and slashing high computing stated vision. TCO up to 56%1. And our worldwide leadership density, energy- and consistent blade server innovation drives the efficient design and HP is positioned as a market leader for its “Ability change needed for IT to optimize business results. increasing management to Execute” and “Completeness of Vision”. We automation.” believe this solidifies HP’s leadership in blade HP is continually investing in breakthrough server technology, partnerships and solutions. advancements for integrated systems to provide superior user experiences. With our new HP HP’s server blades are the market leading ProLiant Gen8 server blades with ProActive Insight choice of IT professionals for good reasons: HP architecture, we are bringing to market intelligent BladeSystem is the foundation for building a servers built for the cloud era. These dramatic converged infrastructure; BladeSystem provides enhancements in productivity and automation resiliency, simplicity, and automation customers redefine the expectations and economics of the data need to simplify and integrate data centers; and center with the world’s most self-sufficient servers. HP ProLiant server blades deliver proven solutions from client to cloud.

1Based on internal calculations; Internal study HP BladeSystem Matrix TCO Analysis, 1/24/2011; HP BladeSystem and BladeSystem Matrix TCO Calculator

Featuring research from 2

The Gartner research note in this newsletter provides findings, and analysis on blade server “We are seeing leadership in the worldwide server market. more adoption of blades in production With the intelligence of the HP ProActive Insight environments for architecture built-in to each server, ProLiant complex applications Gen8 servers and BladeSystem transform the — such as high-end experiences and economics of applications and database serving, data optimization, server operations, data center data warehousing, efficiency and IT support by automating every ERP and CRM — and aspect of the server lifecycle: extreme horizontal scaling workloads like • Industry’s most comprehensive breakthrough analytics.” management tools delivers 3x increased administrator productivity2 with HP Smart Update and HP Active Health “The emerging market We invite you to read the full Gartner report potential for private • Industry’s first cloud-based support portal, and learn more about HP BladeSystem at and public cloud server HP Insight Online for 40% faster problem www.hp.com/go/blades, or contact your local HP infrastructures also resolution time to get systems back into account manager to refine your data center! provides a natural production faster and increase total uptime opportunity for Sincerely, blade (and skinless) • Over 150 innovations3 to deliver industry servers, as most cloud leading uptime by reducing system downtime Chuck Smith 4 infrastructures are likely up to 86%, helping administrators complete Vice President, WW Blades, to be based on highly tasks simply, reliably and with confidence Cloud and Business Development virtualized platforms Industry-standard Servers & Software HP is the one company that understands the broad that are well suited Hewlett-Packard Company to the need for easy infrastructure needs, trusted technology support, and frequent hardware and consulting services for businesses worldwide. provisioning.” Our consistent drive to meet these ever changing customer needs is the key to our long-standing market leadership. Gartner RAS Core Research Note G00225510 Magic Quadrant for Blade Servers, Andrew Butler, George J. Weiss, 05 Mar 2012

2Based on internal testing with a fully online firmware and system software update with HP SUM 5.0 vs. 4.2 3Design and feature changes documented by HP ProLiant mechanical design teams 4Average measured downtime of industry servers in 2010 vs. ProLiant Gen8 measured downtime goals 3

From the Gartner Files: Magic Quadrant for Blade Servers

This Magic Quadrant for blade servers focuses on for added connectivity. Most blade chassis are a market that is becoming ever more complex and designed to fit within standard 19-inch racks, but diverse, due to the convergence of related modular some enterprise blade platforms are based on form factors, a fast-growing interest in fabric- other dimensions. Blades are not the only form of based infrastructure and the influence of cloud modular server; skinless servers are an even more computing on buying behavior. rack-dense form factor that has emerged in the past three years to address many extreme scale- Market Definition/Description out workload requirements that blades were first This document was revised on 20 March 2012. The designed to cover. We now see the emergence of document you are viewing is the corrected version. extreme low-energy servers (typically based on For more information, see the Corrections page on low-cost processors like ARM or Atom) that will gartner.com. extend the horizontal scaling still further, although usually based on some modular, tray-based form A blade server is a modular platform that fits factor. True skinless servers typically lack the together with other blades (not necessarily availability of the richer tooling that benefits blade servers), into a custom-designed chassis to create environments, so the two form factors address a fully functioning system. Multiple chassis may distinctly different workload needs. The complete then combine within a rack to create a larger history of blade servers is analyzed in Note 1. system, and multiple racks may be combined to create a large system that could consume a whole As the addressable market for blade servers aisle or container. In all cases, the blades become evolved toward more sophisticated and the individual building blocks. The chassis provides diverse workloads, a vacuum in the server power and cooling provisioning to all blades, plus market gradually formed, as blades became various common management functions. overengineered for their original market objectives. Skinless servers are an alternative form of modular Via the backplane, blades can also provide design developed to fill that vacuum. Skinless connectivity (and even aggregation) from server servers are designed with a reduced amount of to server, or from server to storage or the network, rack, chassis and, in some cases, motherboard but network and storage input/output (I/O) can components to maximize server density potential, be directly routed to the blades. Blade servers and reduce material use and power consumption. can have onboard storage, or can be completely Typical designs involve a lack of outside sheet diskless, with OS booting done from the storage metal coverings (hence, the term “skinless”), area network (SAN). Most blade chassis are compared with individual servers, as well as shared designed for blades to be vertically mounted, but power and cooling resources within the rack frame. this is not essential, and there are exceptions. Google’s server designs started the skinless server Blades can, in theory, have any number of trend, and the company’s innovations in this area processors from any processor type, although it is continue to influence introductions of skinless normal for blade servers to be lower-end devices, servers. with no more than four processors. Some blade vendors can combine two or more blades to At first glance, skinless servers share many become a larger, logical computer. common attributes with blades, which explains why some vendors regard the markets for blade It is common for blades with higher complements servers and skinless servers as synonymous. For of processors or storage to be wider, so that two example, skinless servers are designed to slide into or more chassis slots are consumed. Terminology, a common chassis, enabling the quick and easy like “bricks,” has been used for these wider form addition of new components, and the replacement factors. Blade chassis capacity can vary, and of failed components. They rely on common may be populated with blades of different types, components such as power supplies, cooling fans including additional memory, storage devices and I/O, which are functions of the chassis, not and network switches or other I/O modules the skinless server. They usually are based on a 4

standard x86 architecture, run a regular Windows • Tower/stand-alone servers shipped 12.5% in or Linux workload, and conform to the 19-inch- 2009, and had a total vendor revenue of 9.03%. rack-width standard. In 2010, 10.9% shipped, and total vendor revenue was 6.97%. In 2011, 11.2% shipped, The emergence of extreme-low-energy servers, and total vendor revenue was 6.59%. based on Atom or ARM processors, will open the door to new software stacks. As with blades, the Blades still represent only about 13% of the total mounting technology for skinless servers will server market in units and 21% in revenue, based be dictated by the server manufacturer, and is on the first three quarters of 2011. Because they proprietary. Workloads and situations that lend favor smaller and less challenging workloads, themselves well to skinless server approaches most blade deployments favor x86 architectures; include applications that share server resources however, vendors such as HP, IBM and Oracle across a network, including extreme analytic and ship non-x86 blades, primarily targeted at Unix high-performance computing (HPC) environments. users, and vendors like Super Micro Computer, Skinless servers offer an additional benefit: SeaMicro, Dell and HP are bringing low-power Because they use less material in the server ARM or Atom products to market. Blade servers are infrastructure, less material needs to be replaced well-suited as test and development platforms in and/or recycled. Most blade vendors referenced in Unix organizations. During 2010, HP transitioned this research are actively marketing skinless server its entire -based Unix strategy to blades, designs — either alongside or integrated with their where the high-end Superdome 2 platform blade server strategies. outperforms its rack-optimized predecessor by a wide margin. Similarly, HP’s NonStop fault-tolerant The 2009 recession stalled the entire server platform is also blade-based, demonstrating market, and blade servers were no exception. that blade technology can be deployed even for While overall server market growth returned in continuous-availability workloads. 2010 and 2011, prerecession growth rates for blades have not yet been regained, and server As a result, we are seeing more adoption of market volume still heavily favors rack-optimized blades in production environments for complex servers. Based on the first three quarters of 2011, applications — such as high-end database serving, blade shipment share declined. This is mainly data warehousing, ERP and CRM — and extreme attributable to the growth of skinless form factors, horizontal scaling workloads like analytics. This which are included in the category of rack- will lead to an increasing technology overlap optimized servers. among blade servers, skinless servers and rack- optimized servers, driving a need for vendors to be Here are figures for server form factor revenue and more transparent about workload optimization for units from 2009 through 2011 (the 2011 values each competing form factor. We recommend that are based on first-quarter through third-quarter customers continue to demand valid references results only): and proof points for all workload scenarios that push the upper or lower boundaries of established • Rack blade servers shipped 13.5% in 2009, blade implementation. and had a total vendor revenue of 19.98%. In 2010, 13.1% shipped, and total vendor revenue Due to a focus on the market by IBM and HP — was 19.85%. In 2011, 12.5% shipped, and total which has been sustained for several years — the vendor revenue was 20.86%. blade server market is very skewed, with over 60% of revenue achieved by these two vendors. But • Rackmountable servers shipped 14.7% in 2009, Dell’s third-place position is now under assault by and had a total vendor revenue of 11.08%. In Cisco’s recent entrance into the market. Cisco’s 2010, 13.0% shipped, and total vendor revenue entrance into the market is causing re-evaluations was 9.09%. In 2011, 12.3% shipped, and total among the installed bases and channels of vendor revenue was 8.44%. established blade market vendors. Cisco now claims 18% of the North American market share • Rack-optimized servers shipped 59.2% in 2009, (although Cisco’s blade server business is still and had a total vendor revenue of 59.91%. In rather skewed toward the Americas, and the 2010, 63.0% shipped, and total vendor revenue market share is not consistent across geographies). was 64.09%. In 2011, 64.0% shipped, and total In the first three quarters of 2011, we calculate vendor revenue was 64.11%. 5

Cisco’s global market share at 7.9% units and • Bull is committed to technology innovation, 10.8% revenue (compared with 9.4% and 7%, especially energy efficiency and management respectively, for Dell). of large-scale clusters.

With so much investment in the concept, and Cautions with a strong compound annual growth rate (CAGR) that will erode the market for other server • Bull’s limited regional presence can become form factors, the blade server market offers a a gating factor for its potential as a partner for compelling opportunity for most server vendors — multinational implementations. particularly those that focus on more specialized geographic, verticalized or workload niches. The • Bull has a limited channel presence, especially emerging market potential for private and public outside western Europe. cloud server infrastructures also provides a natural opportunity for blade (and skinless) servers, as • To create a viable market for its Le cloud by most cloud infrastructures are likely to be based Bull strategy, Bull will have to compete for on highly virtualized x86 platforms that are well- influence against larger, global vendors in a suited to the need for easy and frequent hardware finite service provider community. provisioning. Cisco Magic Quadrant While maintaining a strong and viable presence in Vendor Strengths and Cautions the networking infrastructure of most data centers, Bull Cisco’s track record as a blade server vendor is relatively young. The company entered the market Bull’s NovaScale x86 blade family includes in 2009 via technology gained as a result of chassis options spanning 7U and 9U blade form acquiring switch vendor Nuova (which was already factors. These are targeted at business computing funded by Cisco at the time to develop the Unified needs, but are not the extent of Bull’s modular server offerings. Bull also launched its bullx server design in 2009, which is primarily targeted at HPC, analytics and other extreme scaling requirements; the bullion server line forms the FIGURE 1 Magic Quadrant for Blade Servers centerpiece of Bull’s new Le cloud by Bull strategy for enterprise-oriented, public cloud services. To extend its international reach beyond its western challengers leaders European heartlands, Bull has collaborative HP ventures with regionalized vendors and fulfillment partners in multiple countries, including emerging geographies. IBM

Strengths

• Bull has a strong presence in Western Europe, Dell Cisco in addition to verticalized niches across Fujitsu multiple geographies in industries such as ability to execute financial services and the public sector. Huawei Oracle • The company is a well-established HPC Hitachi market contender with a strong (and growing) NEC Bull SGI international presence.

• It is extending its geographic reach through niche players visionaries OEM and other fulfillment agreements in completeness of vision multiple emerging markets. As of March 2012

Source: Gartner (March 2012) 6

Computing System (UCS) platform and Top-of-Rack • UCS is a fabric-enabled, enterprise-class (ToR) technology). Cisco’s UCS is highly innovative, platform with good integration of networking, and is targeted at highly integrated and virtualized virtualization, management tools and storage. enterprise requirements, along with a growing focus on cloud and other service providers. • Solutions like Vblock and FlexPod provide Cisco with cross-selling opportunities to the The UCS architecture differs from that of other broader, combined installed bases of partner vendors by deploying the ToR switch as a organizations, such as EMC, NetApp, Citrix and management server, which is able to assign VMware. virtual personalities to the blades that become automatically provisioned on installation. Other • Cisco has strong partnerships with virtualization vendors need to deploy a subnetwork to achieve and management tool vendors, as well as the a similar result. UCS, therefore, becomes a form of emerging categories of cloud and other service integrated system where part of the total platform providers. is networking-based, rather than computing-based. While blades represent most UCS shipments, Cisco Cautions has a strategy to extend UCS Manager to include blades and racks, eliminating management barriers • Despite a strong data center pedigree, Cisco between form factors. has to work to overcome a lack of server product history, server market track record and Cisco’s growing server market viability continues installed base to leverage. to test the relationship between it and most other server vendors. The company is a founding member • The company’s strategy is dependent on of the Virtual Computing Environment (VCE) alliances with management tool vendors and alliance, which has developed into a joint venture storage vendors to create a complete offering. funded primarily by Cisco, EMC and VMware, with additional minority funding from Intel. VCE is • Strategic alliances with key OS and application responsible for engineering a vertically integrated vendors are relatively untested in an solution based on UCS called Vblock that targets environment where Cisco is a server vendor. multiple workload requirements for a highly integrated converged infrastructure platform. • Cisco has not yet established a recognized presence in the rack-optimized server market; Cisco has also developed similar vertically this limits its perceived addressable reach integrated solutions with NetApp (FlexPod), Citrix primarily to the blade market, rather than the (VXI) and other vendors to target specific, end- broader market scope of more established user workload and application needs. While still server vendors with more extensive product relatively new to this market, Cisco has created portfolios. a great deal of awareness, and is aggressively driving its blade strategy to increase wallet share Dell in accounts where Cisco has established a strong Dell’s current M-Series blade generation was influence. Cisco has started to openly disclose its launched in 2007; this platform enabled Dell to UCS results during 2011, and over the first three rapidly gain credibility as a blade server vendor. quarters of 2011, achieved a clear No. 3 market In 2008, Dell extended its fabric computing scope position in North America that contributed 65% through a collaborative relationship with Egenera, of total revenue in 2Q12 (Cisco and Dell compete and has more recently refined its strategy to focus for global third place in blade shipments based on on merger and acquisition (M&A) activity that units and revenue). enables Dell to extend its existing engineering and development towards fabrics and integrated Strengths systems. During 2010 and 2011, Dell acquired Scalent Systems, Force10 Networks, RNA Networks • Cisco is a global corporation with a presence and Compellent. in most data centers, due to its strong market share in networking. The Force10 acquisition is still very recent, and Dell has yet to publicly demonstrate how this 7

technology will benefit its blade strategy. But • Despite a strong and plausible data center we see networking integration becoming an strategy, Dell still lacks credibility among many increasingly important part of the blade evaluation enterprise buying centers. process, hence the potential importance of this acquisition. • Dell must achieve and sustain clear messaging around its fabric-based computing strategy to The Scalent technology is at the heart of Dell’s leverage the acquisitions of RNA Networks, integrated system strategies, such as vStart and Force10 Networks, Compellent and Scalent, and private cloud solutions, which leverage its Virtual to better leverage opportunities to consolidate Integrated System (VIS). Dell also maintains a and grow blade market share. leadership position in the growing market for skinless servers with the PowerEdge C line, and Fujitsu Dell’s Data Center Solutions (DCS) division has Fujitsu restructured its global sales and marketing been created to target cloud services providers, operations in April 2009, which has led to more and other buying centers for extreme scaling consistent sales execution and product branding with customized designs. Dell offers Intel Xeon across all geographies. The company offers a broad and AMD Opteron blade servers that are well- range of blade offerings, including the high-end engineered, enterprise-class platforms that fit well Primergy BX900 Dynamic Cube platform, and an with the rest of Dell’s x86 server portfolio. established marketing and support relationship to act as an OEM for Egenera’s blade platforms These innovations helped the company defend in EMEA. The CX1000 is a skinless server its market share during 2011, and put Dell on a design targeted at cloud and other rack-dense trajectory to leverage greater market disruption requirements. in the future. Dell’s blade servers target a broad range of market needs and geographies. Strengths

Strengths • Fujitsu has good technology innovation, especially in the Primergy BX900 Dynamic • As a mainstream, x86 server market leader, Dell Cube server, which competes with Cisco’s UCS has extensive cross-selling opportunities to a and HP’s CloudSystem Matrix, and the CX1000. large and growing installed base that spans blades, racks and towers. • Fujitsu has extensive cross-selling opportunities to a large and growing installed base that spans • Recent acquisitions strengthen Dell’s fabric blades, racks and towers. computing message, and position the company to launch more integrated system initiatives • The company also has strong vertical market during 2012. strength (especially in the public sector), and a strong regional presence in Western Europe and • Dell has an aggressive pricing policy and a Japan. strong midmarket presence. • The new global organization provides Fujitsu • Dell has focused innovation in areas such as with more consistent product and branding memory aggregation, general-purpose graphics strategies, and the responsibilities of the lines processing units (GPGPU) support, cooling, of business have clearer product, regional and virtual I/O and skinless servers. vertical demarcation.

Cautions Cautions

• While remaining a leader in the overall x86 • The company has a limited track record as a server market, Dell has lost its No. 3 blade volume supplier outside Japan and Western server market position in North America to Europe. Cisco (and is in danger of losing this position globally); consistent improvement in execution • Fujitsu has a limited channel presence, will be required during 2012 to defend Dell especially in North America. from the growing presence of Cisco. 8

Hitachi With a broad range of Intel Xeon, AMD Opteron Although less known outside Japan, Hitachi’s and Intel Itanium blades around three chassis form Compute Blades are well-established, and factors, plus more specialized NonStop blades address a broad set of enterprise and midmarket for continuous availability, HP’s blade strategy requirements. The company is a technology is the centerpiece of the company’s Converged innovator, especially in blade aggregation and Infrastructure strategy and vision. HP’s blade-based highly integrated virtualization. Hitachi’s Unified integrated system offerings — VirtualSystem, Compute Platform integrates Compute Blades CloudSystem and AppSystem — are integrated and Hitachi’s storage technology to create an systems aimed at a variety of solution-oriented integrated system aimed at service providers and and hybrid-cloud or rapid implementation needs, enterprises. where strong integration of compute, network and storage is an asset. Strengths HP also markets the ProLiant SL skinless server • Hitachi has a well-proven platform, with a design for extreme-scale-out workloads. HP strong Japanese installed base. transformed its entire Unix market focus around blades in 2010, with the release of Itanium-based • The company offers chassis options that address Integrity server blades in enclosures consistent enterprise and workgroup/departmental/branch with the deployment of ProLiant blades. In recent requirements. months, HP has announced three new initiatives that logically build on the existing BladeSystem • While less known as a server vendor in Western architecture: Voyager describes the innovations markets, Hitachi has a very strong reputation as HP is currently bringing to market based on latest a storage vendor that it can leverage. generation x86 platforms; Moonshot describes the collaboration with Calxeda to market extreme- • Hitachi is committed to technology innovation, low-energy servers based on the ARM processor. particularly in I/O and memory aggregation, as After a challenging year for its Unix business, HP well as hardware-embedded virtualization. announced Odyssey in 4Q11. This initiative will enable the blade-based Superdome 2 platform to Cautions support x86 blades for mission-critical workloads, in addition to continued support for Itanium • Hitachi’s sales and marketing execution in blades. The ability to aggregate multiple Intel Western markets has traditionally been geared Xeon blades in a single logical server should more toward its storage business, although dissipate most market concerns regarding the the company is now restructuring its sales and vertical scaling of x86 servers and blades in marketing to broaden its appeal. Currently, it general. remains relatively unknown as a server vendor. Strengths • Hitachi has limited account presence outside Japan. • As the blade market volume leader in all geographies, HP has extensive cross-selling • Hitachi has a limited channel presence, opportunities as the leading x86 server vendor especially in EMEA and North America. and as a major Unix vendor.

HP • HP’s blade strategy benefits from a strong HP continues to innovate and redefine its blade investment in management tools that enables strategy with a view to expanding the scope of a single point of management across multiple the entire blade server marketplace. Together with virtualization technologies (VMware, Microsoft the strengths of its ProLiant range in the broader and HP-UX-based virtualization), spanning x86 market, HP has been a blade market leader physical and virtual infrastructures. throughout the past decade (and the volume blade market leader since 2007). Since the 2006 • HP has chassis options that address data center, introduction of its latest chassis generation, HP workgroup/departmental/branch and mission- has steadily asserted market leadership, and now critical availability requirements. maintains a dominant (sometimes 50% plus) blade market presence in all geographies. 9

• HP is committed to blade innovation, Huawei’s blade server business compliments its particularly around its Virtual Connect and better-known technology businesses, like core FlexFabric virtual I/O solutions, cooling, networking and telecommunications, and blades infrastructure autoprovisioning, blade are incorporated into many of these designs. aggregation and fabric-enabled infrastructure Huawei is also targeting other vertical industries, convergence. like financial services and energy, plus positioning blades for cloud infrastructure deployments. • HP’s integrated system portfolio (and new The company has earned a reputation for initiatives like Moonshot, Voyager and Odyssey) strong support, and a willingness to make large build on the BladeSystem architecture, creating investments in markets for longer term gain. The arguably the most comprehensive blade-based executive team in charge of enterprise business portfolio in the industry. has strong a track record in Western markets, and the company is planning to increase the internal Cautions head count that is focused on enterprise business from 10,000 to 30,000 during 2012. • HP has an extensive portfolio of rack and blade servers that requires careful market positioning Strengths to avoid the impression of complexity (especially with the new push into extreme • Huawei can leverage a strong regional scaling workloads with the ProLiant SL skinless presence in China and across many Asia/Pacific server design). countries.

• Positioning of HP’s generic BladeSystem • The company has good cross-selling servers against integrated system designs potential, especially where it is a preferred (and the positioning of one integrated system telecommunications or switch/router vendor, against another) is not always clear; this and where Chinese and other Asian companies sometimes muddles the distinction between are expanding operations into Western markets. HP’s blade server portfolio being seen as comprehensive or complicated. • With a very strong balance sheet, Huawei has the capacity to aggressively build market • HP’s blade-based Unix strategy took a major awareness on a global scale. confidence knock in 2011; this has forced HP to the offensive with its new strategy to • Huawei is committed to delivering innovation stimulate a greater acceptance of x86 servers around custom integration, virtualization and for high-end, mission-critical workloads. As . HP introduces new x86 blades compatible with the current Superdome 2 enclosure, clear Cautions positioning against other enterprise-class blade offerings (Itanium and x86) will become even • The Huawei corporate brand still has relatively more crucial. little market awareness in Western markets (although a strong marketing communications Huawei campaign is under way to address this). Huawei has been well-established in the fast- • Huawei will be challenged to overcome growing Chinese market for many years, and has political sentiment in the U.S. that can mitigate more recently been expanding rapidly across against Chinese companies — particularly in Asia/Pacific countries. New initiatives are now an election year, and against a backdrop of targeting other fast-growing IT markets like India, geopolitical situations that are aggravating Brazil and Eastern Europe with a strong awareness national prejudices. campaign now addressing North America and Western Europe as well. The E6000 is a full-height • Where the Huawei name is known and enterprise blade platform based on Intel Xeon, trusted, it much more likely to be as a supplier while the X6000 is a skinless server design aimed of networking and telecommunications at scale-out workloads. equipment. Huawei still has much work to do to become recognized as a server vendor on the international stage. 10

IBM • IBM supports x86 and reduced instruction set IBM has a long track record of blade market computer (RISC; Power)-based blades, and innovation and commitment, and holds a viable has now committed to support blade-based No. 2 position in the blade server market, although infrastructure within the System z architecture. its market share slipped during 2011. In 2009, IBM started putting new initiatives in place to • IBM’s blade strategy benefits from the compete more effectively, including supply chain company’s extensive portfolio of end-to-end enhancements, dedicated sales resources and new management tools. channel programs, and these contributed to a good • Proven software market credibility and share recovery in 2010. provide IBM with opportunities for highly The 2010 acquisition of Blade Network verticalized platforms that integrate the Technologies signaled an intention to further hardware and software stack. strengthen IBM’s networking presence, and • The company is committed to blade innovation, this is helping IBM to strengthen its fabric and particularly around cooling and specialized infrastructure convergence strategy. But 2011 workloads, as well as memory/processor was a less inspiring year for IBM’s blade business, aggregation. and Cisco has been able to close within a few points of market share in North America. With five Cautions different enclosures, IBM can address a broad set of requirements that includes extreme scaling, • With such a comprehensive portfolio of server direct current (DC) power and Network Equipment- market offerings — spanning mainframes, RISC Building System (NEBS) compliance; yet, all IBM Unix and x86 — IBM has the most complex blades are interoperable among all five chassis positioning challenge. options, and IBM has always maintained a strong focus on chassis and blade interoperability. • The continued strength and effectiveness of IBM’s Power7 market execution imposes IBM introduced many blade server innovations additional positioning challenges for its x86- during 2010, including in-chassis FCoE support, based platforms. MAX5 memory aggregation, solid-state drive (SSD) support and blade server aggregation for enhanced • IBM has not articulated its message around scaling, plus zBX support for the latest System fabrics and infrastructure convergence as z mainframe generation. These investments are strongly as vendors like Oracle, Cisco and HP now leveraged into IBM’s latest BladeCenter HX5 have to date. innovations, and further blade innovations are expected for 2012, as IBM seeks to counter the • IBM’s strong blade market share has visibly growing integrated system threat from Cisco, HP, declined during 2011; in the first three quarters, Dell and Oracle. unit market share is 19.8% and revenue share is 21.4%; both are several points down on IBM’s Strengths 2010 position.

• The company has extensive cross-selling NEC opportunities in all geographies, as IBM is a mainstream, x86 server market leader NEC (in common with other Japanese vendors) (especially in high-end x86 servers), and the frequently lacks recognition in Western markets volume market leader in Unix and mainframe for the breadth and sophistication of its blade server markets. server portfolio and corporate strengths. NEC blade server offerings address a broad range of • IBM has the broadest set of blade chassis needs through two chassis designs: Sigmablade-H options (five in all) that addresses enterprise (for enterprise needs) and Sigmablade-M (for and workgroup/departmental/branch midmarket and departmental needs). NEC also is requirements, as well as more specialized investing in Atom-based servers to address the needs, such as NEBS compliance. emerging market for extreme analytics. 11

During 2011, NEC strengthened the integration • NEC has a limited channel presence, especially between its blade platforms and network switching in EMEA and North America (although the (with plans for OpenFlow support) and storage, company is working to address this with new and blades form the foundation of NEC appliances channel development initiatives). targeted at data warehouse, desktop virtualization and archiving workloads. In keeping with many Oracle other vendors, NEC is courting cloud services By acquiring Sun Microsystems, Oracle inherited providers to exploit the infrastructure as a service the 6000 blade family, which was launched in (IaaS) opportunity. 2007. As a replacement for the older 8000 blade family, this platform enabled Sun to grow its blade NEC also has a strong working relationship market share steadily until the market slowdown with Egenera and Blade Network technologies of 2009 and the subsequent acquisition by Oracle. (now owned by IBM), and collaborates at the The Oracle Sun Blade family is an evolution of that engineering level with several vendors (including product line — supporting both x86 and the latest Bull and Unisys in the blade server market). NEC generation SPARC T4 processors. continues to expand its local sales and marketing focus in EMEA and North America, taking a As the market has recovered from the recession, narrow and deep strategy, with a limited number Oracle has focused its x86 hardware energies of channel partners. While this has enabled NEC primarily on its successful Engineered Systems to grow its blade market share beyond average approach of Exadata and Exalogic (which are not market growth during 2011, it creates gaps in blade based platforms). The relative success of market awareness of NEC and its capabilities. Oracle’s Exadata and Exalogic strategies help demonstrate that blade-based systems are not Strengths essential for a viable, integrated system strategy. While this has raised speculation about Oracle’s • NEC has a very strong Japanese installed commitment to the general-purpose x86 server base, with potential to cross-sell through market, the demand for Oracle Sun Blades international subsidiaries of those client remains viable, particularly from within the telco organizations. sector, where Sun’s long commitment to NEBS compliance has made Oracle a strategic vendor. • The company has chassis options that address Oracle is also committed to delivering total cost enterprise and workgroup/departmental/ of ownership (TCO) advantages through simplified branch requirements, and the emerging market pricing and support that extend across hardware for extreme-low-energy servers. and Oracle software products. • NEC is committed to technology innovation, Strengths particularly platform convergence and intelligent power management. • The Oracle Sun Blade family addresses a broad range of blade offerings that include Intel x86 • Strong engineering relationships with vendors and the latest generation SPARC T4 variants. like Unisys and Bull strengthen the financial viability of NEC’s blade servers beyond its sales • The Sun Blade 6000 is well-suited to more reach. specialized blade markets, such as NEBS compliance. Cautions • Support for Peripheral Component Interconnect • NEC holds a broad and dominant market Express (PCIe) ExpressModules provides Oracle position in Japan, but a more focused go-to- blades with very versatile I/O manageability, market approach in Western markets leads to a including the ability of every blade to have its frequent lack of awareness. own unique I/O configuration. • The company’s international sales and support • Oracle is committed to technology innovation, infrastructure is still at a nascent stage for particularly around energy management, server deployments. hardware resilience, virtualization and management tools, as well as flash memory integration. 12

Cautions Cautions

• Although Oracle’s sales and marketing • The convergence of SGI and Rackable Systems initiatives have succeeded in rebuilding much technology requires comprehensive positioning client and channel confidence in the SPARC of modular product lines to avoid confusion. architecture, our current statistics show that Oracle was unable to grow its blade business • Integrating two corporate product lines has during 2011 (unlike most other leading blade resulted in many legacy Silicon Graphics and vendors). Rackable Systems users having nonstrategic technology that will need migration to the • Inconsistent messaging means that Oracle has slimmer product portfolio that SGI now sells. failed to dispel market speculation that volume, general-purpose computers are not strategic to • The new organization must dispel the myth the company’s future. that SGI’s market presence is mainly limited to HPC and markets with similar workload SGI characteristics. The acquisition of Silicon Graphics Rackable Systems in 2009 brought together two companies Vendors Added or Dropped with very different past histories. But a highly We review and adjust our inclusion criteria for complementary modular server strategy has Magic Quadrants and MarketScopes as markets emerged. The SGI ICE X and SGI 8400 blade- change. As a result of these adjustments, the mix based clusters build on SGI-originated technology, of vendors in any Magic Quadrant or MarketScope primarily addressing the HPC market, where SGI may change over time. A vendor appearing in a has an enviable market track record. Magic Quadrant or MarketScope one year and not the next does not necessarily indicate that Meanwhile, the SGI CloudRack C2 and X2 skinless we have changed our opinion of that vendor. This server families build on the traditional scale- may be a reflection of a change in the market and, out strengths of Rackable Systems. Finally, the therefore, changed evaluation criteria, or a change new Prism XL also falls into the skinless server of focus by a vendor. category, but is aimed at extreme scale-out HPC workloads. Recognizing that the Silicon Graphics Added name had better global brand recognition (the One vendor was added for 2012. Huawei has been Rackable Systems brand was little known outside actively selling blade servers for many years, with North America), the company made the bold well over $5 million in revenue, and marketing decision to adopt the SGI name in all markets. initiatives are now more international, with growth Consequently, the new SGI is able to leverage across Asia/Pacific and penetrating EMEA and the both installed bases, albeit with the challenge of Americas. educating the market that the SGI brand now has meaning for more than just HPC users. Dropped No vendors were dropped for the 2012 update. Strengths Inclusion and Exclusion Criteria • SGI is one of the most established and recognized HPC leaders, with a significant Blades and skinless servers constitute a segment installed base across many geographies and of the overall server market that is defined by vertical markets. its modular deployment, and most (but not all) server vendors invest in one or more modular • SGI has new cross-selling opportunities among server technologies. The main catalysts for the Rackable Systems installed base. inclusion in this Magic Quadrant are an active international market presence, and sales volume • The company is committed to technology of at least $5 million during 2010. This means innovation, particularly around extreme vertical obvious inclusion for the two vendors (HP and IBM) and horizontal scaling, and advanced graphics that represent the majority of blade shipments integration. worldwide, plus eight vendors that have a strong 13

commitment to the market, albeit sometimes This creates a polarized market reflected in the in niche deployments. A small number of blade Magic Quadrant, where every vendor is pursuing vendors were excluded either because their market a blade server strategy that yields profitable presence is geographically very narrow (that is, business. For the larger vendors, blades introduce they support just one or two countries), or because a new positioning challenge that can impact they are legacy vendors that mainly address an execution effectiveness, while more niche-oriented installed-base market where there is little or no vendors must work to evolve their target markets new business that we can evaluate. and maintain added value (see Table 1).

Evaluation Criteria Table 1. Ability to Execute Evaluation Criteria Ability to Execute Evaluation Criteria Weighting Until recently, blades were regarded as a distinct Product/Service High server form factor that addressed different market needs, compared with tower-, rack- and frame- Overall Viability (Business High based servers. But all blades, by definition, Unit, Financial, Strategy, leverage a rack-based topology (usually based Organization) on the standard, 19-inch form factor). With each Sales Execution/Pricing Standard generation, the distinction between blades and Market Responsiveness and High conventional rack-based servers becomes more Track Record blurred. The distinction is even harder to maintain with the advent of skinless servers, which, like Marketing Execution Standard blades, utilize common system components, such Customer Experience High as shared power supplies and cooling fans, and Operations Standard enable easy hardware provisioning. Source: Gartner (March 2012) Unlike blades, skinless servers usually are deployed horizontally in trays that fit into the rack, but connectivity is equally proprietary. Completeness of Vision Thus, the provisioning similarities with blades are Gartner believes that the data center and the obvious. Blades (and skinless servers) become infrastructure within it will become steadily more hybrid solutions that exploit the standardization granular and component-based; and blades are the of the 19-inch rack form factor, while imposing natural stepping stone toward this state. Vendors proprietary integration within the chassis. currently at the leading edge of data center fabrics are typically using blades as the foundation for Blade market execution is achieved through a their work (although equally viable exceptions combination of three methods: exist — most notably, the Oracle Exadata/Exalogic integrated systems). Blades put an additional • Large, established vendors with a strong onus on the functionality and close integration of installed base of rack-optimized servers are in server management tools, which favors vendors a natural position to advocate the use of blades that are leaders in this field, or that have strong as a mainstream evolution. management tool integration with third-party partners. • Equally well-known vendors that have strong data center awareness (but in a different The latest generations of x86, RISC and Itanium hardware discipline) can use the blade server processors are enabling blades to address more market as an adjacency play to extend data challenging workloads. x86 blade servers with up center reach. to four sockets and 40 cores are becoming viable, and even larger non-x86 blade configurations have • Smaller vendors (plus larger vendors that are been introduced. This, in turn, puts pressure on the more specialized by geography or vertical I/O capabilities of blades — be it server-to-server industry) can leverage the advantages of blades connectivity for increased scaling, or storage/ for certain workload requirements, where they network connectivity. can maintain a viable presence in a more niche-oriented market. Workload scaling is further enhanced by increased memory capacity and innovations like SSD 14

support. Leading-edge vendors will be investing as skinless servers emerge, mainstream server in more processor and memory aggregation to vendors with a strong natural ability to execute address larger and more complex workloads, with will increasingly target the modular server market. multichassis and even multirack aggregation as the ultimate manifestation. By aggregation, Visionaries we mean the logical and scalable integration of While this is a market that will always attract multiple components, such as CPU and memory. innovators, the primary blade market is stabilizing Meanwhile, skinless server designs offer some and maturing rapidly. Visionary vendors in this vendors an even denser approach that suits market will either represent the discontinuous extreme-scaling workload requirements. Where leading edge of the market, or will be large absolute maximum throughput, at the lowest vendors with a plan to drive market success cost of deployment and with a minimum demand through technology innovation and a narrower for sophisticated management tools or hardware product portfolio. resilience, is king, even blade servers can be over- engineered for the task (see Table 2). Niche Players The early pacemakers in the blade server market Table 2. Completeness of Vision Evaluation have all either been acquired, or have stalled as a Criteria result of the 2009 recession. But this is a market Evaluation Criteria Weighting that addresses specialized edge niches of the Market Understanding High broader server market well, and this will naturally drive innovation by small vendors that may only Marketing Strategy Standard address certain geographies, verticalized markets Sales Strategy Standard (such as HPC, analytics or cloud infrastructure) or Offering (Product) Strategy High specific workload situations. Consequently, this is a Magic Quadrant that will always have a strong Business Model Standard complement of Niche Players that drives real Vertical/Industry Strategy Low innovation in their target markets, but whose small Innovation High size or narrower geographic concentration forces them to focus their energies to maintain relevance Geographic Strategy Low and deliver business value. Source: Gartner (March 2012) Context Quadrant Descriptions Blades represent an important — but transitional Leaders — stage in the evolution of servers as separate, After a decade of shipments and product discrete designs (especially towers and frames) evolution, blade market leaders typically need give way to modular designs, and the boundaries to have built an enduring track record across between servers, storage and networking become multiple geographies, vertical markets and increasingly blurred. This creates an increasing workload scenarios, or they will need to make a overlap of functionality between product very strong and sustained market entry. This is a categories that were previously more clearly highly polarized market, where two entrenched delineated. These boundaries are being further vendors already command more than 70% of tested as more vendors launch integrated systems, worldwide business by revenue and units. Although which are mostly — but not always — based on we predict organic growth for the market, the bladed infrastructure. In reality, all blade servers polarized nature presents a challenge to other are examples of a fabric-enabled architecture, vendors seeking significant volume growth, as due to the switch-based backplane or midplane sustained achievement can only come from the they exploit. Blades represent a more proprietary partial failure of one or both of the two leaders. investment, due to the lack of hardware form factor interoperability standards, and the growing Challengers dependence on proprietary management tools and virtual I/O solutions. Challengers are likely to be vendors with a strong global presence that are focusing their blade Due to their modular nature, blades offer strategies on a broad set of target clients, rather compelling facilities-oriented benefits, such as than on pure innovation. As the markets for rack- improved cabling, rapid hardware provisioning optimized servers and blade servers gradually (including the ability to replace failed converge, and new market opportunities such 15

components), high computing density, energy- blade needs and investment objectives to vendor efficient design and increasing management portfolios, product life cycles and vendor strategies automation. However, blades deliver few, if any, for modular architectures as a whole. incremental application benefits, compared with their rack-based peers. Blades are also not the only Market Overview choice for modular deployment; rack-optimized The overall server market is gradually transitioning servers deliver some modularity benefits, and toward a modular data center infrastructure — from skinless servers now represent even higher- building to rack to individual compute elements density deployment for workloads like analytics — that will mask (and ultimately hide) the barriers that demand extreme levels of horizontal scaling. between discrete compute, storage and networking Because many vendors position their blade and technology classes, and the management thereof. skinless servers as part of a standard modular Blades are not an essential part of this technology server portfolio, the nascent market status of convergence (as Oracle is demonstrating with its skinless servers is reflected in this year’s blade strategy based on rack optimized technology), but server Magic Quadrant (as it was in 2011). the modular nature of blades makes them a natural fit for the trend, and the blade market is growing Blade servers represent a much greater lock-in steadily as a result. effect than regular rack servers impose, and ROI calculations need to be more stringently applied. The emergence of skinless servers, which share When calculating TCU, users need to consider many common attributes with blade servers, is the longevity of the blade chassis as the most having a dampening effect on blade market growth significant investment; bought at the right time as interest grows in new generation workloads like in its life span, a chassis should provide several extreme analytics and in-memory databases, where years of active life and the ability to incrementally blades are often overengineered for the task. This add resource or refresh obsolete components low-end cannibalization of the blade server market over time. Users should carefully match their is forcing vendors to position blades higher up the

NoteACRONYM 1. The HistoryKEY AND of Blade GLOSSARY Servers TERMS

The original concept of blade servers was introduced to the market more than a decade ago by small, specialist companies, such as RLX Technologies and FiberCycle Networks. The target for this first generation was large Internet data centers, and early demand was driven by the short-lived dot-com boom. When this fragile market collapsed, mainstream server vendors introduced blades for the broader enterprise data center market.

The most prevalent applications for blade servers tend to fall into the front end and midtier of the data center. Front-end Web tier applications depend more on fast throughput than on raw processing power, so they may be installed on blade servers with just one or two processors. Blade servers for front-end applications may need just one internal disk, or perhaps two for mirroring; increasingly, they will leverage SAN-based storage, but will retain the OS state onboard. Midtier application logic usually requires more powerful blade configurations, with more memory and I/O capacity. These larger blade servers can support transaction processing applications or small database applications, and can be a suitable basis for virtualization hosting.

Larger blade servers may require more internal disk space on the blade server, but are increasingly likely to rely on data stored on a SAN. Early examples of blade-based data center fabrics generally depend on the ability to boot from a SAN, so the blade becomes stateless, with the role of onboard storage declining as a result. The market for hosted virtual desktops is another fast-growing segment where the use of blades is viable. Blade servers may also be clustered to form an HPC cluster. Users have frequently regarded blades and server virtualization as alternative methods to gain more granular resource utilization, but the modern generation of blades is as well-suited to the use of virtualization tools as any other form factor. 16

food chain, resulting in greater conflict between Operations: The ability of the organization to meet the optimum use of blades and rack optimized its goals and commitments. Factors include the designs. quality of the organizational structure, including skills, experiences, programs, systems and other Evaluation Criteria Definitions vehicles that enable the organization to operate Ability to Execute effectively and efficiently on an ongoing basis. Product/Service: Core goods and services offered by the vendor that compete in/serve the Completeness of Vision defined market. This includes current product/ Market Understanding: Ability of the vendor service capabilities, quality, feature sets and to understand buyers’ wants and needs and to skills, whether offered natively or through OEM translate those into products and services. Vendors agreements/partnerships as defined in the market that show the highest degree of vision listen to definition and detailed in the subcriteria. and understand buyers’ wants and needs, and can shape or enhance those with their added vision. Overall Viability (Business Unit, Financial, Strategy, Organization): Viability includes an Marketing Strategy: A clear, differentiated set of assessment of the overall organization’s financial messages consistently communicated throughout health, the financial and practical success of the organization and externalized through the the business unit, and the likelihood that the website, advertising, customer programs and individual business unit will continue investing positioning statements. in the product, will continue offering the product and will advance the state of the art within the Sales Strategy: The strategy for selling organization’s portfolio of products. products that uses the appropriate network of direct and indirect sales, marketing, service and Sales Execution/Pricing: The vendor’s capabilities communication affiliates that extend the scope in all pre-sales activities and the structure that and depth of market reach, skills, expertise, supports them. This includes deal management, technologies, services and the customer base. pricing and negotiation, pre-sales support and the overall effectiveness of the sales channel. Offering (Product) Strategy: The vendor’s approach to product development and delivery Market Responsiveness and Track Record: that emphasizes differentiation, functionality, Ability to respond, change direction, be flexible methodology and feature sets as they map to and achieve competitive success as opportunities current and future requirements. develop, competitors act, customer needs evolve and market dynamics change. This criterion also Business Model: The soundness and logic of the considers the vendor’s history of responsiveness. vendor’s underlying business proposition.

Marketing Execution: The clarity, quality, Vertical/Industry Strategy: The vendor’s strategy creativity and efficacy of programs designed to to direct resources, skills and offerings to meet deliver the organization’s message to influence the specific needs of individual market segments, the market, promote the brand and business, including vertical markets. increase awareness of the products, and establish a positive identification with the product/brand and Innovation: Direct, related, complementary organization in the minds of buyers. This “mind and synergistic layouts of resources, expertise or share” can be driven by a combination of publicity, capital for investment, consolidation, defensive or promotional initiatives, thought leadership, word- pre-emptive purposes. of-mouth and sales activities. Geographic Strategy: The vendor’s strategy to Customer Experience: Relationships, products direct resources, skills and offerings to meet the and services/programs that enable clients to specific needs of geographies outside the “home” be successful with the products evaluated. or native geography, either directly or through Specifically, this includes the ways customers partners, channels and subsidiaries as appropriate receive technical support or account support. This for that geography and market. can also include ancillary tools, customer support Gartner RAS Core Rsearch Note G00225510, A. Butler, programs (and the quality thereof), availability of G. Weiss, 5 March 2012 user groups, service-level agreements and so on. 17

About HP

HP is a technology company that operates in more • Management Software than 170 countries around the world. We explore how technology and services can help people and • Virtual Connect companies address their problems and challenges, and realize their possibilities, aspirations and • BladeSystem Services dreams. We apply new thinking and ideas to create more simple, valuable and trusted experiences with technology, continuously improving the way HP BladeSystem our customers live and work. Customers • Success Stories: www.hp.com/go/success No other company offers as complete a technology product portfolio as HP. We provide infrastructure and business offerings that span from handheld HP Online devices to some of the world’s most powerful • HP BladeSystem: www.hp.com/go/blades installations. We offer consumers a wide range of products and services from digital • HP CloudSystem: www.hp.com/go/cloudsystem photography to digital entertainment and from computing to home printing. This comprehensive • HP Integrity Servers: www.hp.com/go/integrity portfolio helps us match the right products, services and solutions to our customers’ specific • HP Virtual Connect: www.hp.com/go/ needs. More information about HP (NYSE: HPQ) is virtualconnect available at http://www.hp.com. • HP Insight Software: www.hp.com/go/insight HP BladeSystem Portfolio • Blade System ProLiant Server Blades • HP Services: www.hp.com/services/ BladeSystemservices • Blade System Integrity Server Blades • HP Financial Services: www.hp.com/go/ • BladeSystem Enclosures hpfinancialservices

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