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1 HP BladeSystem Leadership and Innovation for the 3 From the Gartner Files: HP BladeSystem Leadership and Magic Quadrant for Blade Servers Innovation for the Data Center 17 About HP Featuring the Gartner Magic Quadrant for Blades

Choosing the best HP BladeSystem is the market leading choice of IT technology is professionals for good reasons: paramount to meet your business needs • HP BladeSystem is the foundation for industry to improve business leading solutions that deliver superior agility and maximize investment protection every step of the way on benefit from your IT your path to the cloud budget. The Gartner Magic Quadrant is • HP BladeSystem is the leading platform a trusted source of for virtualization and cloud, delivering objective, independent breakthrough economics research on information technology. In Gartner’s new 2013 • HP BladeSystem provides intelligence and Magic Quadrant, HP has been positioned as a automation to simplify management and give leader for both completeness of vision and ability you unprecedented insight into your data to execute, for which it received the highest center ratings. HP is positioned as a market leader for its commitment to innovation, partnerships and • HP’s blade market share is more than double solutions. the combined share of its two closest competitors Gartner Magic Quadrants are a culmination of research in a specific market, giving you a wide- At HP we are committed to helping you angle view of the relative positions of the market’s transform your data center. Your business users competitors. By applying a graphical treatment and customers demand immediate access to and a uniform set of evaluation criteria, a Gartner information and services. Now you can equip your Magic Quadrant quickly helps you digest how well data center with built-in intelligence to work more technology providers are executing against their efficiently, staying ahead of evolving demands. stated vision. The Gartner research attached to It’s an advantage you can only get with the latest this newsletter provides findings and analysis on HP BladeSystem advancements—engineering the worldwide server blade market. breakthroughs that give you the ability to:

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• Simplify and automate your infrastructure with efficiencies in system management, monitoring, and provisioning, optimizing IT staff resources

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• Accelerate performance with next-generation technologies in the new HP BladeSystem c7000 Platinum enclosure, delivering the industry’s most advanced architecture. We invite you to read the full Gartner report and • Dynamically optimize bandwidth and enable see the impact HP BladeSystem can have for your faster network changes with HP Virtual Connect business at www.hp.com/go/BladeSystem, or wire-once technology. contact your local HP account manager.

HP BladeSystem intelligence maximizes every Sincerely, hour, watt, and dollar by reducing downtime, increasing productivity, reducing TCO and Jim Ganthier delivering a five month return on investment. Vice President, Global Marketing HP Servers 3

From the Gartner Files: Magic Quadrant for Blade Servers

The blade server market is becoming increasingly chassis interoperability between manufacturers, so polarized, with vendors deploying high-end users are effectively locked into whichever chassis integrated systems to help increase margins and design they favor. share of wallet, while the lower end of the market is inundated by multinode server designs that It is common for blades with higher complements address the market’s appetite for extreme scale- of processors or storage to be wider, so that two out workloads. or more chassis slots are consumed. There are four common form factors: full-height single Market Definition/Description width, full-height double width, half-height single Within this evaluation of the blade server market, width and half-height half width (for example, two we also include other modular server form factors blades in a single half-height slot). Blade chassis (such as multinode), given their proximity to the capacity can vary, and may be populated with market in terms of functionality and user buying blades of different types, including additional criteria. memory, storage devices and network switches, or other I/O modules for added connectivity. Most A blade server is a modular compute platform that blade chassis are designed to fit within standard combines blades into a custom-designed chassis to 19-inch racks, but some earlier enterprise blade create a fully functioning system. Multiple chassis platforms have been based on other dimensions. may then combine within a rack to create a larger It is easy to regard blade servers as being a system, and multiple racks may be combined distinct form factor that addresses different market to create a large system that could consume a requirements compared with rack-optimized whole aisle or container. Because blades can be servers. But all blades, by definition, leverage a bought and deployed individually, they become rack-based topology (usually based on the standard an efficient way to add compute resources when 19-inch form factor). With each generation, the maximum granularity is desired. distinction between blades and conventional rack-based servers becomes more blurred. The Although blades provide the computing power, the distinction is even harder to maintain with the chassis is really the most crucial investment. The advent of multinode (skinless) servers, which, chassis provides power and cooling provisioning like blades, utilize common system components, to all blades, along with various common such as shared power supplies and cooling fans, management functions. The chassis supports a and enable easy hardware provisioning. Unlike backplane that provides connectivity (and even blades, multinode servers are usually deployed aggregation) from server to server, or from server horizontally in trays that fit into the rack, but to storage or the network, but network and connectivity is equally proprietary. Blades become storage input/output (I/O) can also be directly hybrid solutions that exploit the standardization routed to the blades. While blade servers can of the 19-inch rack form factor, while imposing have onboard storage, the trend is toward diskless proprietary integration within the chassis. blades that are booted direct from a (SAN). While the blades will conform to Blades are not the only form of modular server; a common form factor (within the vendor’s own multinode servers are an even more rack-dense product strategy) to fit the chassis, they can have form factor that has emerged during the past four different processor and memory characteristics years to address many extreme scale-out workload to address a variety of workloads, and specialized requirements that, ironically, blades were first storage, graphics and other blades can be deployed designed to address. We now see the emergence together with servers. Some blade vendors can of extreme low-energy servers (typically based on combine two or more blades to become a larger, low-cost processors from Intel, AMD and ARM) that logical computer. Blade chassis designs are also will extend the horizontal scaling further – again, highly proprietary; there are no standards for usually based on some modular, tray-based form factor. 4

True multinode servers typically lack the The blade server market has largely stalled since availability of the richer tooling that benefits 2011, as cannibalization from multinode servers blade environments, so the two form factors has eroded the growth that blades had gained address distinctly different workload needs. As through increased market adoption of fabric- the addressable market for blade servers evolved based infrastructure (FBI). Based on 2012 data, toward more sophisticated and diverse workloads, blades still only represent about 12% of the total a vacuum in the server market gradually formed server market in units (down from 13% at the and blades became overengineered for their end of 2011) and 21% in revenue. This has barely original market objectives. Multinode servers are changed from 2011; in comparison, multinode an alternative form of modular design developed to servers now outsell blade servers in unit terms fill that vacuum. They are designed with a reduced (despite being sold for only a few years and number of racks, chassis and, in some cases, addressing a more limited volume market). In motherboard components to maximize server 2012, multinode servers represented a 15% unit density potential and to reduce manufacturing share (nearly doubled from 7.8% in 2011) and 10% cost, material use and power consumption. revenue share (again, nearly doubled from 5.3% in Typical designs involve a lack of outside sheet 2011). metal coverings (hence, the commonly used term “skinless”), compared with individual servers, as Because they favor more horizontally challenging well as shared power and cooling resources within workloads, most blade and multinode deployments the rack frame. favor architectures; however, vendors such as HP, IBM and Oracle ship non-x86 blades, At first glance, multinode servers share many primarily targeted at Unix users, and vendors such common attributes with blade servers, which as Supermicro, SeaMicro (now owned by AMD), explains why some vendors regard the markets Dell, Huawei and HP are bringing low-power Intel-, for blade servers and multinode servers as AMD- and/or ARM-based servers to market. synonymous. Like blades, multinode servers are designed to slide into a common chassis, enabling Because multinode servers are taking over the low- the quick and easy addition of new components, end workload space traditionally occupied by blade and the replacement of failed components. They servers, and because blade servers are usually may rely on common components, such as power the foundation for vendor FBI strategies, we are supplies, cooling fans and I/O, which become seeing more adoption of blades in production functions of the chassis, not the multinode environments for complex applications – such as server. They are usually based on a standard x86 high-end database serving, data warehousing, ERP architecture, run a regular Windows or Linux and CRM. Blade servers are also well-suited for workload, and conform to the 19-inch-rack-width complex in-memory database workloads. This has standard. led to an increasing technology overlap among blade, multinode and rack-optimized servers, thus In addition, the emergence of extreme low-energy driving a need for vendors with a presence in all servers, based on Intel, AMD and ARM processors three form factors to be more transparent about (and even potentially reduced instruction set workload optimization for each competing form computer [RISC] processors), will open the door factor. We recommend that customers continue to to new software stacks. As with blades, the demand valid references and proof points for all mounting technology for multinode servers will workload scenarios that push the upper (or lower) be dictated by the server manufacturer, and is boundaries of viable blade server implementation. proprietary. Workloads and situations that lend themselves well to multinode server approaches After a long period in which HP and IBM include applications that share server resources dominated the blade server market, it is becoming across a network, such as extreme analytics and slightly more even with the 2009 entry of high-performance computing (HPC) environments. Cisco. Despite being a newcomer to the server Multinode servers offer an additional benefit: market, Cisco is carving out a strong share of Because they use less material in the server the blade server market that is rivaling IBM in infrastructure, less material needs to be replaced many geographies (and even rivaling HP in a few and/or recycled. Some blade vendors referenced geographic markets). HP, IBM and Cisco now in this research are actively marketing multinode control 80% of the blade server market (based on server designs, either as an alternative to or as a 2012 shipments). However, HP remains the volume variant of blade server strategies. market leader by far, with more than the revenue 5

share of IBM and Cisco combined. As blade servers scaling requirements. To extend its international form the foundation of most vendor FBI strategies, reach beyond the Western European heartlands, the market will continue to attract investments Bull has collaborative ventures with regionalized from most server vendors, especially because vendors and fulfillment partners in multiple Gartner believes that FBI products have much countries, including emerging geographies. higher profit margins and vendor lock-in than With just under 5% global market share, it is a other x86 server businesses. The market potential viable blade server vendor, subject to the limited for private and public cloud server infrastructures geographic reach that becomes a gating factor to also provides a natural opportunity for blade (and execution ability. multinode) servers, as most cloud infrastructures are likely to be based on highly virtualized x86 Strengths platforms that are well-suited to the need for easy and frequent hardware provisioning. • Bull maintains a viable presence in Western Europe, in addition to vertical niches across Magic Quadrant multiple geographies in industries such as Vendor Strengths and Cautions financial services and the public sector. • In recent years, Bull has become a well- Bull established HPC market contender with a Bull offers several blade or multinode solutions strong (and rapidly growing) international that address a variety of market needs, with a presence. special focus on the HPC market segment. The NovaScale x86 blade family is targeted at business • The vendor has entered into several OEM and computing needs, while Bull’s bullx server design other fulfillment agreements to expand its is aimed at HPC, analytics and other extreme technology reach in emerging markets.

FIGURE 1 Magic Quadrant for Blade Servers

Source: Gartner (April 2013) 6

• Bull is committed to technology innovation, With no in-house storage strategy, Cisco must especially energy efficiency and the partner with various vendors to create predefined management of large-scale clusters. integrated system solutions based on UCS; notable examples are VCE Vblock (EMC-based), Cisco/ Cautions NetApp FlexPod (NetApp-based) and a recent alliance with Hitachi. Cisco also has developing • Bull’s limited regional presence is frequently relationships with independent software vendors a gating factor for its potential as a partner for (ISVs), such as the Virtualization Experience multinational implementations. Infrastructure (VXI) initiative between it and Citrix for infrastructure to support hosted virtual • The vendor has a limited channel presence, desktops. As a result of steady market progress particularly outside Western Europe, where it is through 2012 (which, in a static blade market, has dependent on OEM/co-marketing relationships. been achieved to the detriment of rival vendors), Cisco has further consolidated its position as a • Bull will have to compete for cloud Leader in this Magic Quadrant, with 14% global infrastructure provider priority against market share, although it can be difficult to significantly larger global vendors in a finite validate the precise share between Cisco UCS and service provider community. solutions such as VCE Vblock and Cisco/NetApp FlexPod that leverage UCS technology. Cisco Despite its relative youth as a mainstream Strengths server vendor, Cisco has established itself as a recognized Leader in the blade server space. • Cisco is a global corporation with a recognized The Unified Computing System (UCS) is highly and respected presence in most data centers, innovative, and is targeted at highly integrated due to its strong market share in networking. and virtualized enterprise requirements, with a growing focus on service providers. During 2012, • UCS is an enterprise-class platform with Cisco launched additional initiatives to price and good integration of networking, virtualization position UCS as a viable midmarket solution, and management tools, and is strengthened along with management console improvements. by ongoing acquisitions that enhance Continuing management tool vendor acquisitions management capability. (such as Cloupia) are helping to reinforce market confidence in Cisco’s commitment to the server • Cisco has extended the UCS portfolio during market. The UCS architecture differs from that of 2012 to better address midmarket and small or most other vendors by deploying a top-of-rack midsize business opportunities. switch as a fabric director, which is able to assign virtual personalities to the blades that become • Vblock and FlexPod are proven FBI solutions automatically provisioned on installation. Most that provide Cisco with cross-selling other vendors need to deploy a subnetwork to opportunities to the broader, combined achieve a similar result. UCS, therefore, becomes installed bases of partner organizations; further a form of integrated system where part of the relationships with vendors such as Hitachi and total platform is networking-based, rather than Citrix are being developed. computing-based. With no proprietary storage offering, UCS does not fulfill all the requirements • The 2012 acquisition of Cloupia should for a complete FBI, but Cisco’s design allows users augment investments to strengthen Cisco’s to integrate and leverage their existing storage. management software portfolio. The UCS portfolio is not limited to blades; Cisco Cautions sells a limited range of rack-optimized servers, and, in 2012, it became the first vendor to offer • Despite the rapid growth of its blade server common identity profiles that function across business, Cisco’s rack-optimized server market both blade and rack servers, thus eliminating share significantly trails that of the established management barriers and variations between major vendors. This limits its opportunity to form factors. To date, Cisco has made very little be recognized as a leading vendor across the impact on the rack-optimized server market, as its whole server market. marketing efforts have concentrated on achieving early success in the blade market. 7

• Cisco’s strategy remains dependent Strengths on alliances with storage vendors (and management tool vendors, in some situations) • As a mainstream, x86 server market leader, Dell to create a complete offering. has extensive cross-selling opportunities to a large and growing installed base that spans • The perception of Gartner clients is that Cisco multinode, blades, racks and towers. and EMC’s close natural partnership appears to be increasingly strained, with both vendors • The acquisitions of Compellent, Quest Software, investing in partnerships and acquisitions that Force10 Networks, Gale Technologies and RNA compete with the other. Networks strengthen Dell’s fabric computing message. • Strategic alliances with key OS and application vendors are still maturing for Cisco as a relative • The vendor is the clear leader in the rapidly newcomer to the server market. growing market for x86-based multinode extreme scale-out servers. • With no presence in the market for multinode servers, Cisco is exposed to the rapid growth of • Dell has an aggressive pricing policy and a this sector, which is taking business away from strong midmarket presence. low-end blades. • It has focused innovation in areas such as Dell memory aggregation, general-purpose graphics Dell offers Intel Xeon and AMD Opteron blade processing unit (GPGPU) support, cooling and servers that are well-engineered, enterprise-class virtual I/O. platforms that fit well with the rest of Dell’s x86 Cautions server portfolio. Dell’s blade servers target a broad range of market needs and geographies. • Dell has continued to lose blade market share The vendor has focused its recent energies on during the past two years, and is now the No. 4 expanding the scope of its entire FBI strategy, vendor (at best) in most geographic markets. in which the M-Series blade family plays a key role. The announcement of Dell’s Active System • Dell’s data center strategy is the best it strategy brings together blade server technology has ever been; but despite its No. 1 or No. with recent hardware acquisitions, such as Force10 2 position in most x86 market segments, Networks, RNA Networks and Compellent, along credibility among most enterprise buying with software assets from Quest Software, Scalent centers remains very hard for the vendor to win. and Gale Technologies. Existing FBI strategies such as vStart and Virtual Integrated System (VIS) are • Its FBI messaging has been confused by being further incorporated into the Active System overlapping acquisitions, partnerships and strategy during 2013. branding policy; Dell must achieve messaging around the new Active System branding to fully Meanwhile, the vendor comfortably maintains the leverage recent acquisitions and establish a market leadership position in the growing market viable FBI presence. for multinode servers with the PowerEdge C line, and its Data Center Solutions (DCS) division has Fujitsu been created to target cloud services providers and other buying centers for extreme scaling with Fujitsu offers a broad range of blade server and customized designs. These innovations put Dell multinode server offerings, although with only on a trajectory to create greater market disruption, 1.5% global blade market share; its presence is and initially helped the vendor defend its market stronger in other server markets. This includes the share. Dell maintains a viable blade market high-end Primergy BX900 Dynamic Cube platform, presence (now at just under 7% global market the Primergy BX400 for midsize businesses and share), but has continued to gradually lose share to the Primergy CX multinode server design targeted leading rivals. at HPC, cloud and other rack-dense requirements. In addition to its own server management suite, a collaborative agreement with Egenera is enabling 8

Fujitsu to grow modest business in North America highly integrated virtualization. Gartner client and EMEA. Fujitsu is executing better on an inquiries consistently indicate that Hitachi’s blade international scale, but messaging remains weak, servers are highly popular among the vendor’s resulting in a Challenger position in this Magic installed base, and this has helped Hitachi to make Quadrant. gains in this latest Magic Quadrant update. During 2012, Hitachi Data Systems expanded its channel Strengths partner program to increase market penetration, particularly in the Americas and EMEA. • Fujitsu blade and multinode server designs are highly innovative and compete well with Strengths designs from better-known rivals. • Hitachi has a well-proven platform, with a • A strong portfolio of rack-optimized, blade, strong Japanese installed base. tower and multinode designs gives Fujitsu extensive cross-selling opportunities to a large • The vendor offers chassis options that address and growing installed base. enterprise and workgroup/departmental/ branch requirements, as well as the Unified • The vendor has strong vertical market Compute Platform’s integrated system. strength (especially in the public sector), and a strong regional presence in Western Europe • Hitachi has a very strong reputation as a (particularly Germany and the U.K.) and Japan. storage vendor that it is leveraging through channel program expansion in multiple Cautions geographic markets.

• Fujitsu has a limited track record as a volume • The vendor is committed to technology supplier outside Japan and Western Europe. innovation, particularly in I/O and memory aggregation, as well as hardware-embedded • The vendor is ramping up its multinode virtualization. business, but recognition remains low for its capabilities in topical modular server markets, • Support for Peripheral Component Interconnect such as FBI and multinode servers, mainly Express (PCIe) ExpressModules provides Hitachi due to limited market awareness and passive blades with very versatile I/O manageability. marketing. • Feedback from Gartner clients on the Unified • Fujitsu has a limited channel presence, Compute Platform is very positive. especially in North America. Cautions Hitachi Hitachi has made quiet, but steady progress with • Local sales and marketing execution in Western its blade server strategy during 2012, although markets remains generally geared more toward geographic implementation remains firmly skewed Hitachi’s storage business than servers. toward the domestic Japanese market and global market share is just over 1.5%. However, Hitachi • Hitachi remains relatively unknown as a server is learning the “adjacency market” technique that vendor outside Japan. Cisco employed to penetrate the blade server • Its channel presence is particularly limited, market as a natural extension to its network especially in EMEA and North America. market presence. In Hitachi’s case, this policy is based on the strong storage market presence it HP has achieved in most markets. Hitachi blades are owned by the Hitachi Data Systems brand, and HP is maintaining volume blade market leadership, address a broad set of enterprise and midmarket with a market share roughly equal to the combined requirements. The Unified Compute Platform share of the next four vendors (IBM, Cisco, Dell and integrates Hitachi’s Compute Blades and storage Oracle). However, in a static market, HP’s financial technology to create an integrated system aimed supremacy continues to be slowly chipped away at at service providers and enterprises. Hitachi by rival vendors, with a 4% decline (from 49% to innovates strongly around blade aggregation and 45%) since 2010. 9

In terms of its blade server portfolio, the breadth market achievement and reach, along with proven of HP’s available technology remains very high – technology innovation. However, they should also the most extensive portfolio in the industry. This demand clear positioning of the relative strengths includes highly scalable individual blades such as and business arguments of each architectural the recently introduced four-socket HP ProLiant approach. BL660 (which is well-suited to processor/memory- intensive workloads like SAP Hana); the range Strengths of VirtualSystem, CloudSystem and AppSystem branded integrated systems (although not all • HP’s blade market share is more than double AppSystem variants are blade-based); and the the combined share of its two closest recent introduction of the BladeSystem c7000 and competitors. c3000 Platinum chassis, which offers significant performance gains over its predecessor. Most • HP is further building on strong investment in importantly, the new Platinum chassis claims management tools that already enable a single complete forward/backward compatibility with any point of management across physical and technology designed for the c-Class chassis. virtual infrastructures (and across blade- and rack-based servers), with plans to extend this In the short to medium term, the greatest to common tools across compute, storage and expansion in addressable market opportunity will networking. come from HP’s multinode server investments. HP has launched new ProLiant SL designs targeted at • HP’s blade and multinode chassis options workloads such as Hadoop and Vertica structured address diverse market requirements – data analytics. HP is also developing extreme scale-out center, workgroup/departmental/branch, computing solutions on the brand-new Moonshot mission-critical availability, extreme scale-out server family, which extends the previous ProLiant and hyperscale. SL potential into true hyperscale territory, by supporting up to 180 servers in a 4 rack unit (4U) • The vendor is committed to blade innovation, chassis (45 servers at launch). HP’s plan of record particularly around its Virtual Connect and consists of interchangeable cartridge options, FlexFabric virtual I/O solutions, cooling, including multiple processors (Intel, ARM and infrastructure autoprovisioning, blade AMD) and various specialty engines for graphics, aggregation and fabric-enabled infrastructure security, etc., all bound by an internal switched convergence. fabric. In the short term, the HP Moonshot System servers will address a limited audience of large- • HP’s launch of the Moonshot servers (and the scale cloud services providers and similar types pending launch of Odyssey servers) builds on of markets, but the concept opens up many new the BladeSystem architecture to create the workload opportunities across multiple industries most comprehensive modular server portfolio in and governmental applications. In addition to the industry. Moonshot, HP’s Project Odyssey will bring very large-scale, blade-based servers, based on Intel Cautions Xeon, that will help address the growing market • HP has made limited progress in 2012 with the for Unix migration and mission-critical x86 positioning of such an extensive portfolio of workloads. server options, spanning everything from tower, rack, blade and multinode server form factors Consistent articulation of its message across a and value propositions. broad channel is HP’s greatest challenge. If the vendor cannot always outline the best strategy • While Virtual Connect is well-established to deploy the range of blade and multinode on blades, the lack of support for rack-based servers it already has, then the introduction of the servers creates operational complexity for new Moonshot hyperscale form factor will only users who have both form factors, and inhibits exacerbate the situation. Blade and multinode capabilities such as live migration and high server buyers should shortlist HP on the basis of availability. 10

• Positioning of HP’s generic BladeSystem servers center technology) as a natural complement alongside various integrated system designs to its much-better-known core networking and (and the positioning of one integrated system telecommunications businesses. Huawei has against another) is a particular challenge, particular strength in the telecommunications especially because two-thirds of blade server industry, and is now targeting other vertical revenue is driven by the channel and it is industries, such as financial services and relatively easy to create an integrated system energy. The vendor has earned a reputation for experience using separate components. strong support, and a willingness to make large investments in markets for longer-term gains. • HP’s Unix revenue has continued to decline through 2012, and this places increasing Strengths scrutiny on the blade-based Odyssey strategy, which should see products brought to market • Huawei can leverage a very strong regional later in 2013. presence in China and across many Asia/Pacific countries. • Early success for the much vaunted Moonshot strategy will be highly dependent on the ability • The vendor has good cross-selling to attract early adopters, and a viable software potential, especially where it is a preferred ecosystem that could be fragmented across telecommunications or switch/router vendor, different ARM variants. and where Chinese and other Asian companies are expanding operations into Western markets. Huawei During 2012, Huawei has continued to make • With a rapidly growing (but still small) blade steady progress with its blade and multinode market share, Huawei has the company breadth server strategy. Although business is still heavily to build market awareness on a global scale. skewed toward the domestic Chinese market, the • Huawei supports up to two full-height PCIe vendor is targeting new business in other Asia/ ExpressModules per blade, providing very Pacific countries and other fast-growing IT markets versatile I/O manageability. such as India, the Middle East, Latin America and Eastern Europe. Huawei plans aggressive • The vendor is committed to delivering expansion of its non-Chinese business in 2013. It innovation around integrated systems, has achieved 1% total market share (more than virtualization and extreme scale-out solutions. three times its share at the end of 2011). Although progress is slower, Huawei is also creating Cautions campaigns to achieve recognition and trust in North America and Western Europe. The vendor • Despite the marketing communications offers three modular server solutions. The E6000 campaigns under way, the Huawei corporate is a full-height enterprise blade platform based brand still has relatively little market on Intel Xeon that is mainly aimed at installed awareness in Western markets. base users. In 2012, Huawei announced its new- generation blade server, the E9000, targeting a • Huawei has struggled to overcome nationalistic range of markets, including private cloud and sentiment and mistrust among North American HPC. The E9000 supports multiple two-socket and buyers, particularly those in public-sector four-socket compute nodes and flexible switch organizations. modules, including (GbE), FCoE and Infiniband. FusionCube is an integrated system • Recognition of Huawei as a server vendor is based on the E9000 that is well-suited to cloud still limited in many regions (with the obvious infrastructure rollouts and other highly virtualized exception of China). instances. The X6000 is a multinode server design aimed at scale-out workloads (and Huawei plans to IBM launch an even more extreme scale-out platform The 2012 launch of Flex System and the later in 2013). PureSystems family was widely anticipated, and was vitally needed by IBM. Despite continuing Huawei is deploying a classic adjacency strategy, innovations, the vendor’s outgoing BladeCenter where it seeks to sell servers (and other data 11

range steadily lost blade market share during the zBX blade-based infrastructure within the 2010 and 2011. IBM market share lost four System z architecture. percentage points between 2010 and 2012 (25% to 21%), a proportionally larger drop than that • IBM’s blade strategy benefits from the vendor’s of HP. However, in 4Q12, IBM recorded a 0.6% extensive portfolio of end-to-end management increase, which indicates that the ramp up of the tools that extend beyond servers to storage, new PureFlex System and Flex System products are and are augmented by the 2012 introduction more than offsetting the decline in BladeCenter of patterns that are designed to facilitate business. In recent months, Gartner has seen a deployment of workload-optimized stacks. marked increase in client interest, and this will potentially manifest itself in a greater degree of • Because Flex System is a new chassis market share recovery during 2013. technology, it should remain viable and strategic for IBM through the decade. Flex System is a new-generation blade platform that, like BladeCenter before it, is able to host both • The PureFlex, PureApplication and PureData Power and x86-based workloads, but is additionally strategies provide IBM with the opportunity engineered to enable strong integration of storage, for highly verticalized platforms that integrate networking and management. It is well-suited the hardware and software stack for multiple to support a variety of enterprise workload workloads. needs. Flex System then forms the foundation of PureFlex, IBM’s integrated system that further Cautions integrates storage and networking assets, and the PureApplication integrated stack system. The • IBM has gradually lost blade server market PureApplication System integrates both DB2 and share through the past three years – this share WebSphere, enabling PureApplication to address declined from 25% in 2010 to 21% in 2012. both single and multiple workloads. IBM has also However, there is early evidence that Flex launched the PureData System, which is targeted System and its derivatives are now returning at big data workloads. the vendor to net growth.

The BladeCenter range is still available, for • IBM’s x86 server strategy has long lived in both current users who need to extend current the shadow of much stronger marketing infrastructure and for more specialized needs, and messaging of Power and mainframe like extreme scale-out and Network Equipment- systems; the strong corporate commitment Building System (NEBS)-compliance. Users to PureSystems has yet to dispel speculation should validate the road map for further product about the vendor’s commitment to the x86 development as part of their due diligence when server market; and fresh speculation about making major long-term investments. IBM potentially divesting some or all of its x86 server business will create additional flux until The Flex System launch has enabled IBM to make the situation is resolved. gains in this Magic Quadrant update, although market adoption is still ramping up and users • Although we know IBM is investing strongly should ensure that IBM has the presales and in reference and case study generation, client postsales support assets in their geographies, feedback indicates that the number of proven as well as appropriate references to prove both references remains limited. market readiness and suitability for purpose. • Despite the promise of PureApplication, IBM’s Strengths marketing around integrated stack systems has not yet overcome the strength of Oracle’s • IBM has a very broad set of blade chassis engineered system market momentum. options that address multiple enterprise and workgroup/departmental/branch requirements, • Vendors such as Dell, Huawei, HP and as well as more specialized needs, such as Supermicro have more visible traction in the NEBS compliance. market for x86-based big data solutions. As IBM ramps up its PureData solution, this will • The vendor supports x86 and Power-based potentially enable the company to redress the blades, spanning Flex System, BladeCenter and balance. 12

Oracle Cautions Oracle sells a family of x86 and SPARC-based blade servers built around the Sun Blade 6000 • Oracle’s blade market share has gradually chassis that was originally brought to market declined year over year, despite company by Sun Microsystems. Oracle does not heavily initiatives to rebuild client and channel market these systems for volume-based new confidence in the technology gained from the business, partly because it is focusing its x86 Sun Microsystems acquisition. hardware energies primarily on the increasingly • Passive and inconsistent messaging means that successful Engineered Systems (such as Exadata Oracle has failed to dispel market speculation and Exalogic). The Engineered Systems are not that volume, general-purpose computers are blade-based platforms, and help to demonstrate not strategic to its future. that a viable, integrated system strategy does not have to be built on the use of blades. However, the • With no presence in the market for multinode success of Oracle’s Engineered Systems strategy servers, Oracle is exposed to the rapid growth of continues to drive market speculation about the this sector, which is taking business away from strength of commitment that Oracle has to the low-end blades. general-purpose x86 server market. Because most Engineered Systems have Oracle x86 servers as SGI the principal building block components, Oracle is likely to continue its investment in the x86 With just over $62 million in 2012 revenue, SGI business. has the smallest share among the eligible server vendors, with 0.7% market share. However, the Despite the lack of strong promotion, Oracle vendor has good recognition across many markets, maintains a comfortable No. 5 market position in with well-established international business the blade server segment, with just over 3% global distribution helped by the 2009 acquisition of SGI market share; however, this has declined from by Rackable Systems. That acquisition provided 5.6% in 2010. While demand for Oracle Sun Blades SGI with a comprehensive portfolio of server remains relatively high, the primary demand platforms that help it address a diverse set of comes from the telecom sector, where Sun’s long workloads. Its strategic blade offerings are the commitment to NEBS compliance has made Oracle SGI ICE X and SGI ICE 8400 blade-based clusters, a strategic vendor. Oracle is also committed to both of which are leveraged from SGI-originated delivering total cost of ownership (TCO) advantages technology. These primarily address the HPC through simplified pricing and support, particularly market, where the vendor has a long and proven for users of Oracle software products. track record. Meanwhile, the SGI CloudRack C2 and X2 are multinode servers that build on Strengths the traditional scale-out Strengths of Rackable Systems to address the growing demand for • Oracle is investing in Sun Blade technology and big data workloads. SGI has refreshed HPC and has a broad range of blade offerings, including CloudRack lines in recent months. Intel x86 and the latest-generation SPARC T5 processor that has just been introduced. By recognizing that the Silicon Graphics name had better global brand recognition (the Rackable • NEBS compliance makes Oracle a strategic Systems brand was little known outside North vendor for telecommunications vendors. America), the “new” SGI has been able to leverage both installed bases, albeit with the challenge of • Support for PCIe ExpressModules provides educating the market that the SGI brand now has Oracle blades with very versatile I/O meaning for more than just HPC users. This is an manageability, including the ability of every ongoing effort, particularly outside North America. blade to have its own unique I/O configuration. Strengths • Oracle is committed to technology innovation, particularly around energy management, • SGI is one of the most established and hardware resilience, virtualization and recognized HPC leaders, with a significant management tools, as well as flash memory global installed base across many vertical integration. markets. 13

• The polarized nature of the traditional SGI and or more modular server technologies. The main Rackable Systems businesses gives the vendor catalysts for inclusion in this Magic Quadrant are cross-selling opportunities in many segments. that the vendor should have had sales volume of at least $50 million globally during 2012, of which • SGI is committed to technology innovation, at least 5% should have come from beyond the particularly around extreme vertical and home market for the vendor. This means obvious horizontal scaling, and integration of graphics inclusion for the three vendors (HP, IBM and Cisco) accelerators. that represent the majority of blade shipments worldwide, plus seven vendors that have a strong Cautions commitment to the market, albeit sometimes in niche geographic or vertical deployments. A small • SGI has a complex set of blade and multinode number of blade vendors were excluded either server options that need comprehensive because their overall sales were less than $50 positioning to avoid confusion. million, or their market presence is geographically extremely narrow (with less than 5% from • Integrating two corporate product lines has international sales), or because they are legacy resulted in many legacy Silicon Graphics and vendors that mainly address an installed base Rackable Systems users having nonstrategic market where there is little or no new business technology that will need migration to the that Gartner can evaluate. streamlined product portfolio that SGI now sells. Evaluation Criteria Ability to Execute • The SGI brand continues to be mainly associated with HPC, particularly outside North Blade market execution is achieved through a America, where Rackable Systems only ever combination of three methods: gained limited recognition. • Large, established vendors with a strong Vendors Added or Dropped installed base of rack-optimized servers are in a natural position to advocate the use of blades We review and adjust our inclusion criteria for (and/or multinode servers) as a mainstream Magic Quadrants and MarketScopes as markets evolution. HP, IBM and Dell are good examples. change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope • Equally well-known vendors that have strong may change over time. A vendor appearing in a data center awareness (but in a different Magic Quadrant or MarketScope one year and hardware discipline) can use the blade server not the next does not necessarily indicate that market as an adjacency play to extend data we have changed our opinion of that vendor. This center reach. Cisco, Hitachi and Huawei are may be a reflection of a change in the market and, good examples of this policy in action. therefore, changed evaluation criteria, or a change of focus by a vendor. • Smaller vendors (plus larger vendors that are more specialized by geography or vertical Added industry) can leverage the advantages of blades No vendors were added for the 2013 update of this for certain workload requirements, where they Magic Quadrant. can maintain a viable presence in a more niche- oriented market. Vendors like Fujitsu, Bull and Dropped SGI fall into this category. NEC was dropped from this Magic Quadrant. Its blade server sales remain strong (in sixth place This creates a polarized market reflected in the worldwide), but the vendor is very oriented toward Magic Quadrant, where every vendor is pursuing the domestic Japanese market. a blade server strategy that yields profitable business. For the larger vendors, blades introduce Inclusion and Exclusion Criteria a new positioning challenge that can impact Both blades and multinode (skinless) servers execution effectiveness, while more niche-oriented constitute a segment of the overall server market vendors must work to evolve their target markets that is defined by its modular deployment, and and maintain added value. most (but not all) server vendors invest in one 14

Table 1. Ability to Execute Evaluation Criteria integration of multiple components, such as CPU and memory. Meanwhile, multinode server designs Evaluation Criteria Weighting offer some vendors an even denser approach that Product/Service High suits extreme scaling workload requirements. Overall Viability (Business Unit, High Where absolute maximum throughput, at the Financial, Strategy, Organization) lowest cost of deployment and with minimum demand for sophisticated management tools or Sales Execution/Pricing Standard hardware resilience, is king, even blade servers can Market Responsiveness and Track High be overengineered for the task. Record Table 2. Completeness of Vision Evaluation Marketing Execution Standard Criteria Customer Experience High Evaluation Criteria Weighting Operations Standard Market Understanding High Source: Gartner (April 2013) Marketing Strategy Standard Completeness of Vision Sales Strategy Standard Data center innovation is leading to a gradual Offering (Product) Strategy High convergence of technology classes that will become steadily more granular and component- Business Model Standard based, and blades are a natural steppingstone Vertical/Industry Strategy Low (although not the only one) toward this state. Innovation High Most vendor FBI strategies typically use blades as the foundation for their work (although viable Geographic Strategy Standard exceptions exist, such as Oracle’s Engineered Source: Gartner (April 2013) Systems, which deliver all the attributes of an FBI, but are based on rack-optimized technology). Quadrant Descriptions Blade servers create new challenges for I/O and Leaders networking, which, in turn, puts an additional Blade market Leaders typically need to have onus on the functionality and close integration built an enduring track record across multiple of server management tools. This favors vendors geographies, vertical markets and workload that are leaders in this field, or that have strong scenarios, or need to make a very strong and management tool integration with third-party sustained market entry. For many years, the blade partners. server market was dominated by two vendors – HP and IBM. Those two vendors are still volume With each new processor generation, blades are leaders, but their degree of market leadership has increasingly capable of addressing challenging been eroded since Cisco penetrated the market in workloads. x86 blade servers with up to four 2009. In most geographies, the combined share sockets and 40 cores are becoming viable, and of HP, Cisco and IBM revenues is 80%-plus. As even larger x86 blade configurations are planned blade market growth has dwindled (due mainly for the near future. Some vendors are already to the growth of multinode servers), the polarized selling non-x86 blade platforms with the ability to nature of the market presents a challenge to other scale to 32 sockets. However, while there are few vendors seeking significant volume growth, as workloads that demand such a degree of vertical sustained achievement can only come from the scaling, blade server vendors are increasingly partial decline of one or all the Leaders. positioning the whole chassis – or even the whole rack or aisle – as a single system. The notion of Challengers a single system will be further driven by vendor Challengers are likely to be capable vendors that strategies to deliver processor and/or memory are focusing their blade strategies on a broad set aggregation across multiple blades; this will of target clients, rather than on pure innovation. enable even larger and more complex workloads to As the markets for rack-optimized servers and be addressed, still with the advantage of a fine- blade servers gradually converge, and new market grained technology addition or replacement. By opportunities such as multinode servers emerge, “aggregation,” we mean the logical and scalable mainstream server vendors with a strong natural 15

ability to execute will increasingly target the incremental application benefits, compared with modular server market. their rack-based peers. Blades are also not the only choice for modular deployment; rack-optimized Visionaries servers deliver some modularity benefits, and Visionary vendors in this market will either multinode servers now represent even higher- represent the discontinuous leading edge of the density deployment for workloads like analytics market or be large vendors with a plan to drive that demand extreme levels of horizontal scaling. market success through technology innovation and Because some vendors position their blade and a narrower product portfolio. multinode servers as part of a standard modular server portfolio, the nascent market status of Niche Players multinode servers continues to be reflected in this year’s blade server Magic Quadrant (even though This is a market that addresses specialized edge multinode servers are not strictly blade servers in niches of the broader server market well. This will our opinion). naturally drive innovation by vendors that may be gaining market momentum, but that only address Blade servers (and some multinode servers) certain geographies, vertical markets (such as represent a much greater lock-in effect than HPC, analytics or cloud infrastructure) or specific regular rack servers impose, and ROI calculations workload situations. Consequently, this Magic need to be more stringently applied. When Quadrant will always have a strong complement calculating TCO, users need to consider the of Niche Players that drive real innovation in their longevity of the blade chassis as the most target markets, but whose small size or narrower significant investment. Bought at the right time geographic concentration forces them to focus in its life span, a chassis should provide several their energies to maintain relevance and deliver years of active life and the ability to incrementally business value. add resources or refresh obsolete components over time. Users should carefully match their Context blade needs and investment objectives to vendor Blades have always represented a transitional portfolios, product life cycles and vendor strategies stage in the evolution of servers as separate, for modular architectures as a whole. discrete designs (especially towers and frames) give way to modular designs, and are usually – but Market Overview not always – the foundation of FBI strategies that The overall server market is gradually transitioning further blur the boundaries among servers, storage toward a modular data center infrastructure – from and networking. This creates an increasing overlap building to rack to individual compute elements of functionality among product categories that – that will mask (and ultimately hide) the barriers were previously more clearly delineated. In reality, between discrete compute, storage and networking all blade servers are simple examples of a fabric- technology classes, and the management thereof. enabled architecture, due to the switch-based Blades are not an essential part of this technology backplane or midplane they exploit. Multinode convergence (as Oracle is demonstrating with its servers, while chassis-based like blades, are usually own integrated system strategy based on rack- based on the same rules for I/O connectivity optimized technology), but the modular nature as those of rack-optimized servers. Blades and of blades makes them a natural fit for the trend, multinode servers represent a more proprietary and the blade market has grown steadily as a investment than rack-optimized servers, due to result. That growth faltered in 2011 and 2012, the lack of hardware form factor interoperability due to the emergence of multinode servers, standards, and (in the case of blades only) the although vendor FBI strategies are expected to growing dependence on proprietary management drive renewed market growth between 2013 and tools and virtual I/O solutions. 2015. Current market interest is focused on new- generation workloads such as extreme analytics Due to their modular nature, blade servers and in-memory databases, where blades are offer compelling facilities-oriented benefits, often overengineered for the task. This low-end such as improved cabling, rapid hardware cannibalization of the blade server market will provisioning (including the ability to replace failed continue, and will force vendors to position blades components), high computing density, energy- higher up on the food chain, resulting in greater efficient design and increasing management conflict between the optimum use of blades and rack- automation. However, blades deliver few, if any, 16

optimized designs. Operations: The ability of the organization to meet its goals and commitments. Factors include the Evaluation Criteria Definitions quality of the organizational structure, including skills, Ability to Execute experiences, programs, systems and other vehicles that enable the organization to operate effectively and Product/Service: Core goods and services offered by efficiently on an ongoing basis. the vendor that compete in/serve the defined market. This includes current product/service capabilities, Completeness of Vision quality, feature sets, skills and so on, whether offered natively or through OEM agreements/partnerships as Market Understanding: Ability of the vendor to defined in the market definition and detailed in the understand buyers’ wants and needs and to translate subcriteria. those into products and services. Vendors that show the highest degree of vision listen and understand Overall Viability (Business Unit, Financial, buyers’ wants and needs, and can shape or enhance Strategy, Organization): Viability includes an those with their added vision. assessment of the overall organization’s financial health, the financial and practical success of the Marketing Strategy: A clear, differentiated set of business unit, and the likelihood that the individual messages consistently communicated throughout the business unit will continue investing in the product, organization and externalized through the website, will continue offering the product and will advance advertising, customer programs and positioning the state of the art within the organization’s portfolio statements. of products. Sales Strategy: The strategy for selling products Sales Execution/Pricing: The vendor’s capabilities in that uses the appropriate network of direct and all presales activities and the structure that supports indirect sales, marketing, service, and communication them. This includes deal management, pricing affiliates that extend the scope and depth of market and negotiation, presales support, and the overall reach, skills, expertise, technologies, services and the effectiveness of the sales channel. customer base.

Market Responsiveness and Track Record: Ability Offering (Product) Strategy: The vendor’s approach to respond, change direction, be flexible and achieve to product development and delivery that emphasizes competitive success as opportunities develop, differentiation, functionality, methodology and feature competitors act, customer needs evolve and market sets as they map to current and future requirements. dynamics change. This criterion also considers the vendor’s history of responsiveness. Business Model: The soundness and logic of the vendor’s underlying business proposition. Marketing Execution: The clarity, quality, creativity and efficacy of programs designed to deliver the Vertical/Industry Strategy: The vendor’s strategy organization’s message to influence the market, to direct resources, skills and offerings to meet promote the brand and business, increase awareness the specific needs of individual market segments, of the products, and establish a positive identification including vertical markets. with the product/brand and organization in the Innovation: Direct, related, complementary and minds of buyers. This “mind share” can be driven by synergistic layouts of resources, expertise or capital for a combination of publicity, promotional initiatives, investment, consolidation, defensive or pre-emptive thought leadership, word-of-mouth and sales purposes. activities. Geographic Strategy: The vendor’s strategy to Customer Experience: Relationships, products and direct resources, skills and offerings to meet the services/programs that enable clients to be successful specific needs of geographies outside the “home” or with the products evaluated. Specifically, this includes native geography, either directly or through partners, the ways customers receive technical support or channels and subsidiaries as appropriate for that account support. This can also include ancillary tools, geography and market. customer support programs (and the quality thereof),

availability of user groups, service-level agreements Source: Gartner Research, G00250031, A. Butler, G. Weiss, 29 April 2013 and so on. 17

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Published 08/2013 4AA4-8867ENW