Mad Dog 21/21: Hot Deals and the Cool Server Nurseries
May 10, 2010 Hesh Wiener
You might not think that corporate computer executives shop for servers the way canny bargain hunters shop for laundry detergent, but if that’s how you see things you are missing something. Business buyers aren’t ashamed of cashing in coupons. If anyone is shy about doing business this way, it’s IBM. But with Power box sales down sharply, IBM has to stifle all that smart planet folderol and cut to the chase. By one means or another, Big Blue has to get the attention of prospective customers who like to play Dell or No Dell.
The users who chase bargains may not be the ones with whom vendors and their resellers have frequent contact. They might be off vendors’ radar screens because they are infrequent buyers, new customers getting their first servers, or established customers putting systems into a new location. Whatever the reason for the advent of a nursery site, the first server at the location is likely to initiate a pattern that will be repeated as the site grows. So if the site starts with a Power Systems i or AIX box, it may well be a loyal Power site forever; if it goes X64, the opportunities for Power may be foreclosed.
Still, there are plenty of people at mature companies who just love a bargain, people one might not expect to engage in Windows shopping. They take pride in getting good deals for their companies and they also use the pricing information they discover to help keep incumbent vendors in line. Sometimes incumbent suppliers don’t even know about the secret shoppers until they actually lose out to rivals. When a new vendor picks off an old one at a mature site, seismic events can ensue. The (possibly former) incumbent’s sales team may be slated for a relationship with Monster.com.
The potentially dramatic impact of current hard-driving sales tactics is something you can begin to understand in just a couple of minutes.
First, anyone who is thinking of acquiring or upgrading an IBM system ought to check the Power Systems deals Web page and the System x deals Web page on a regular basis. An i shop that can’t find a deal on a server or storage subsystem can still sometimes get a related reward in the form of vouchers that can be used for courseware or services.
If these pages are new to you, don’t be surprised. IBM’s Web is huge and notoriously difficult to search and navigate. Visitors to the site who find it intuitive are the exception, not the rule. One only has to look at Hewlett-Packard’s home page after visiting IBM’s to spot which company is better at asking people what products they are interested in buying. Getting from a home page to a special offer is easy on some computer companies’ Web sites, just about impossible on others.
To make things even more challenging, Dell and HP are much more active than IBM when it comes to one tactic that has a lot of potential appeal to first-time buyers: special deal coupons. In the computer game, these coupons have two key characteristics. They offer dramatic price breaks and they die like mayflies. The use it or lose it concept is precisely the right tactic to overcome the inertia of procrastinators.
Search engines will quickly provide many suggestions, a few of them actually useful, in response to phrases like “server coupons” or, more specifically queries like “dell server coupons.” The coupon sites change all the time and they run hot and cold, so it is difficult to create a satisfactory list for inclusion in an article that might be read a long time after it was written. Still, it won’t take long for a shopper to check out a couple of places that are often good sources of computer deals for small and midrange business shoppers, such as computermonger.com, bensbargains.com, or xpbargains.com.
In the X64 segment, IBM does a somewhat better job posting special offers, but it doesn’t make as big an effort as HP does on its Web site, to say nothing of Dell, which loves Web marketing.
Here is one concrete example from Dell that will be gone by the time you read this but which was posted for a little while around April 30. Dell wanted to blow out the last couple hundred PowerEdge T105 servers, which are Opteron-powered machines with more than enough capacity to support file serving and lightweight sales applications for a small business office with, say, no more than a couple dozen seats and up to a half-terabyte of redundant storage. So it posted a half price sale notice on its Web and very quickly picked up a couple hundred little footprints.
There’s no way to tell how many of these sites will be nurseries for growing enterprises, but every one of them is now a Dell user rather than an HP or IBM customer. Most of them are likely to be Windows server shops, because support is so abundant, but bargain X64 servers can be acquired with Linux, too, although Linux server support at the entry level isn’t always as competitive as it is for Windows users. Customers looking a couple steps ahead may decide to take the Linux route, which might give them more options if they later grew to the size where a Power box was a practical choice.
Sadly, for those who like lots of competition, Oracle hasn’t come up with a set of bargain turnkey systems to give IBM, HP, and Dell a run for the nursery site money. Sun never made tower servers and was briefly interested in server appliances (when it shelled out $2 billion to buy Cobalt Networks a few years back, and then did nothing with it); maybe Oracle is not interested in developing a fresh approach to the low end, where it is still impossible to find a small file and print server that’s cheap, reliable, and a no-brainer to administer. There are plenty of startup situations that are not going to want to put their data in the cloud, and these very small sites would probably love a little machine bearing the logo of a big vendor, such as IBM. But neither IBM nor Dell nor HP seem inclined to create a starter server that would be as easy to use as a workgroup printer, and just as popular.
It turns out that IBM has already done all the homework necessary to create a turnkey server that is a killer application. IBM offers this stuff as a cloud service but inexplicably it does not provide the same capability in the form of servers. The Smart Cube appliances, which come in Power-i and X64-Linux versions, come pretty close to the appliance I am thinking about. But IBM ought to provide a wider range of office appliances that starts with tiny turnkey machines and spans a range reaching upward far enough to overlap more than just the very the bottom of the Power and System x server lines. Google and Microsoft have similar functionality in their cloud offerings but they are not in the systems business. Dell and HP could deliver the hardware but they don’t have the software. They could conceivably collaborate with Microsoft or some other software company, but they couldn’t match IBM, if Big Blue really put its mind to it.