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Volume 2, Number 36 -- September 27, 2005

Egenera Gets $300 Million Reseller Deal with Fujitsu-Siemens


by Timothy Prickett Morgan


Blade server maker Egenera has announced that it has negotiated a $300 million reseller agreement with Fujitsu Siemens Computers, the European arm of the Fujitsu and Siemens information technology partnership. The deal spans 30 months so it can complete FSC's next fiscal year (ended in March 2006) and then adds two years to it.

Unlike many OEM partnership and supplier deals, this is not an estimated sales rate by Fujitsu-Siemens in its Europe, Middle East, and Africa region, but rather a solid commitment by Fujitsu-Siemens to actually sell at least $300 million in BladeFrame blade servers in 30 months. The servers will be rebranded as the Primergy BladeFrames. As part of the deal, Fujitsu-Siemens is the sole distributor of BladeFrame servers in EMEA, and current Egenera resellers in EMEA will now have to work through Fujitsu-Siemens to get their iron and make their deals.

Susan Davis, vice president of product marketing at Egenera, says the company was building out its own sales force in the EMEA region, which is hard and expensive for a small U.S.-based startup like Egenera. About 10 months ago, Egenera and Fujitsu-Siemens started talking to each other, because Egenera needed a bigger sales force and Fujitsu-Siemens needed to expand its blade server offerings beyond its current FlexFrame products. This OEM agreement, which is exclusive to Fujitsu-Siemens in EMEA, is the end result of those conversations.

By picking the BladeFrames, which support Intel's Xeon processors as well as Advanced Micro Devices' Opteron chips--and when they are available early next year, Intel's dual-core "Montecito" Itanium chips--Fujitsu-Siemens has brought the Opteron processors into its Primergy line for the first time. To date, Fujitsu-Siemens has developed its own Sparc 64 RISC/Unix processors and has used Intel processors exclusively in its Primergy X86/X64 server lineup. For its PrimeQuest big iron Wintel and Lintel servers that were announced earlier this year, Fujitsu-Siemens has chosen the Itanium chip, not Opteron. With its Solaris Unix partner, Sun Microsystems, pushing Opteron so hard in the past year and Sun peddling Fujitsu-Siemens' PrimePower Sparc64-based servers along side its own UltraSparc-based Sun Fire machines, it is logical to wonder when Fujitsu-Siemens would get around to either putting Opteron in the PrimePower or the Primergy lines. But up until now, Fujitsu-Siemens has said it has no intention of using Opterons in its servers, and has similarly quashed any suggestion that Solaris 10 would be supported on the Primergy line, too. The Primergy and PrimeQuest lines are for Windows and Linux, and the PrimePower machines are for Solaris.

With the Egenera OEM deal, however, this is no longer the case. Last November, Egenera and Sun worked out a deal to get Solaris 10 supported on Enegera's BladeFrame systems just after Egenera had delivered support for Opteron processors in its blades. Davis says Fujitsu-Siemens absolutely intends to sell the entire BladeFrame product line in terms of hardware, but says the matter of Solaris 10 support is up to Fujitsu-Siemens. By the way, even though Egenera and Fujitsu-Siemens have agreed to do some development work together as part of the OEM agreement, they have not hammered any of the details out yet and it seems highly unlikely (but technically possible) that the two companies could deliver a Sparc64-based BladeFrame blade server. This would be one way for Fujitsu-Siemens to maintain its Sparc64-Solaris parity and purity. But it seems unlikely, since their co-development will probably focus on integrating Fujitsu-Siemens' storage and systems management tools into the BladeFrames.

The BladeFrame is not a normal blade server in that it is not a chassis that virtualizes servers that are then stored in racks, but rather virtualizes servers and turns the rack into the chassis. A BladeFrame consolidates 24 two-way or four-way server blades plus networking and storage into what Egenera calls a processor area network, or PAN. The BladeFrame is built from the ground up to provide high availability clustering and dynamic resource allocation across the blades in the chassis, and it has what is essentially a redundant SAN switching network (comprised of controller blades and switch blades) as the backplane connecting all of the components. The company also sells a BladeFrame ES system, which is a six-server setup that also supports two-way or four-way boards. Egenera sells two-socket and four-socket processor blades that have 64-bit, single-core Xeon processors from Intel and 64-bit, single- and dual-core Opteron processors from AMD. While the hardware is interesting, the secret sauce is the virtualization and fault tolerant technologies that Egenera has created to turn this frame of servers into something that is very close to the kind of information utility server makers are always talking about.


Egenera filed to go public in June 2004, and up to that point it had raised over $124 million in four rounds of venture funding. The BladeFrame concept was hatched by Vern Brownell, the former CIO at brokerage house Goldman Sachs. In March 2000, Brownell incorporated and set up a company with a staff of engineers in Marlboro, Massachusetts, and its first products became generally available in October 2001. The reason why Solaris support is important is because financial services firms and banks went nuts for Solaris in the 1990s, and a lot of their applications run on Solaris boxes. While many companies have moved applications to Windows or Linux, many applications remain pretty tightly tied to Solaris features and Sparc electronics.

So how big of a deal is this for Egenera? Well, Davis says Egenera was on track to book revenues of around $100 million for calendar 2005 without having a strong presence in Europe or Fujitsu-Siemens peddling its gear. So an average of $10 million a month in BladeFrame sales more than doubles the BladeFrame's slice of the $50 billion server pie. "Fujitsu-Siemens has made a big commitment, and we are certainly hoping it becomes a larger one," says Davis. Obviously, the $300 million level is a floor, not a ceiling.

Egenera and Fujitsu-Siemens are working hard to make sure Egenera's resellers and partners in Europe are not alienated as part of this agreement. Peter Critchley, strategy director at the technology and integration unit of Morse, says it has been working with Egenera for more than two years and had exclusive distribution rights to the BladeFrame in the United Kingdom. "We are going to remain a key partner, and we have been working with Fujitsu-Siemens for the past few weeks to figure out how the new partnership will work," explains Critchley. Morse has quite a few BladeFrame customers in the city of London, and complements Fujitsu-Siemens. Morse has relationships with most of the big server players already, but liked Egenera because of the sophistication of the BladeFrame. "It is a relatively small part of Morse's business, but it is a new technology and a fast-growing technology, and we expect it to continue to grow."

The question now is will Fujitsu do a similar deal to distribute BladeFrames on an OEM basis and exclusively in Japan? This seems like a possibility. And Fujitsu could even peddle the gear in North America if it so chooses. Which begs the next question: Will Fujitsu just snap up Egenera before it goes public?

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Editor: Timothy Prickett Morgan
Contributing Editors: Dan Burger, Joe Hertvik, Kevin Vandever,
Shannon O'Donnell, Victor Rozek, Hesh Wiener, Alex Woodie
Publisher and Advertising Director: Jenny Thomas
Advertising Sales Representative: Kim Reed
Contact the Editors: To contact anyone on the IT Jungle Team
Go to our contacts page and send us a message.


THIS ISSUE
SPONSORED BY:

Egenera
Linux Networx
California Digital
Roaring Penguin
Novell


The Linux Beacon

BACK ISSUES

TABLE OF
CONTENTS
AMD Cranks Up Dual-Core Opteron Clocks

Dell Starts Peddling Dual-Core Paxville Xeon DPs in PowerEdges

IDC Concurs that Q2 Was Pretty Good for Servers

Egenera Gets $300 Million Reseller Deal with Fujitsu-Siemens

But Wait, There's More


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The Windows Observer
Microsoft Reorganizes Ahead of Allchin's Retirement in 2006

Microsoft Refines Software Assurance for 2006

Softricity Streamlines Access to Desktop Apps with ZeroTouch

Egenera Gets $300 Million Reseller Deal with Fujitsu-Siemens

The Unix Guardian
UltraSparc-IV+ Chips Give Sun's Midrange Servers Twice the Oomph

Egenera Gets $300 Million Reseller Deal with Fujitsu-Siemens

IBM Shifts Its SOA Initiative Up Into High Gear

Notes/Domino 7 Brings New Collaboration Technology, Performance Gains


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