Servers, and especially volume x64 machines, are by and large sold not by the companies whose brands are on the boxes, but by a handful of master distributors who in turn sell them to legions of resellers that actually do the peddling to IT shops. And if Cisco Systems wants to get into the x64 server racket, it is going to need channel partners who can walk the server walk as well as they talk the network talk.
Luckily for Cisco, it has been in the data center since the Internet went mainstream in corporate computing, and its engineers know as much as what is going on inside of the glass house as the server and storage people do. While Cisco has plenty to learn about servers, the server makers have plenty to learn about networking. And there is going to be a big battle for the hearts and minds of channel partners who have expertise in both fields because ultimately, these partners are responsible party when it comes to selling, configuring, and integrating both servers and networking into the IT infrastructure.
If there is a convergence of networking, servers, and storage, it happens in the channel just as much as it happens in the data center, since one has always been a reflection of the other.
The channel - as Sun Microsystems has learned the hard way with its difficult transition from Sparc servers to a mix of Sparc and x64 iron - makes or breaks any company who wants to play in the volume server area. And as Sun so aptly demonstrates, having great server designs with differentiating features, as its "Galaxy" Opteron machines certainly did have when the debuted in September 2005 and continued to have as the line was refreshed over the years.
Good engineering is the ante to get into the server game, but the channel is going to decide if you win or lose. Having managed a large channel and complex products, Cisco perhaps understands this better than Sun ever did. And that, perhaps, is why one company is entering a new market and shaking things up and the other company is being eaten by a competitor in the software business.
As El Reg reported yesterday, Cisco is hosting its Partner Summit 2009 event in Boston, and at the event the company announced its C-Series rack-mounted server companions to the B-Series blade servers that are at the heart of the "California" Unified Computing System. Both the C-Series racks and B-Series blades will hook into the converged networking switches embodied in the UCS design - the B-Series when they start shipping at the end of this month and the C-Series at some point in the future, and presumably after they begin shipping in the fourth quarter of this year.
The UCS setup, in case you have been on vacation since last fall, converges Fibre Channel and Ethernet traffic over one set of switches using virtual 10 Gigabit Ethernet connections to blade servers and the Fibre Channel over Ethernet protocol to link out to storage, thereby simplifying networks. And according to Cisco, eliminating lots of cost and complexity.
The whole shebang is made to run VMware's vSphere 4.0 virtualization software and includes virtual switches implemented on the blades and a set of management tools called UCS Manager that runs in the fabric interconnect switches. The other secret sauce in the UCS setup is a special ASIC that came through Cisco's acquisition of Nuova Systems, which allows a two-socket server based on Intel's "Nehalem EP" Xeon 5500 processors to address up to 384 GB of memory, which is 2.7 times that available in top-end Xeon 5500 boxes. This extra memory capacity, Cisco says, gives it an advantage in supporting virtualized servers.
All the great technology in the world don't mean jack unless partners think they can make a buck - or maybe even two - peddling it. John Growdon, director of go-to-market for Cisco's worldwide channels, announced yesterday at Partner Summit 2009, concurrent with the launch of the C-Series rack servers, a widening of Cisco's channels to help it peddle these boxes when they come to market later this year.
So how much money are we talking about here? Cisco reckons that the total addressable market for data center hardware (servers, storage, and networking) plus software and services is about $85bn and that the California integrated system can address about $20bn of that opportunity. The C-Series products, provided they are priced competitively, will give IT shops a chance to back into converged fabrics and the UCS approach without having to take the California blade servers hook, line, and sinker.
It also gives Cisco a bunch of boxes to chase that remaining $65bn. (Cisco reckons that the total addressable market for two-socket servers is around $12.8bn by itself.) To be sure, Cisco is going to need "Nehalem EX" eight core servers that address high-end needs, and it may even need to have Opteron-based machinery because counting on either Intel or AMD to not flub a chip launch is problematic.
The UCS B-Series blades and the stand-alone C-Series racks are going to go through slightly different channels, much as Cisco's Nexus 2000, 5000, and 7000 converged switches also go through a different channel from the UCS box, which includes variations of these converged switches.
Growdon explained that the UCS boxes would be sold by channel partners who have a special certification known as Advanced Technology Provider. He did not divulge how many ATP partners Cisco has, but he said that they were looking forward to doing the complex assessments and integration engagements that putting in UCS gear entails and added that a certain amount of business process transformation work would also need to be done because the UCS architecture is different from having silos of networking, servers, and storage. The ATP certification will take about 90 hours of training from Cisco, which is a pretty serious commitment, but then again, the margins on UCS are expected to be pretty high too.
For the C-Series rack servers, Cisco is not expecting that companies will necessarily start converging their networks, but instead will want to buy servers that can plug into a UCS framework at some future date. To that end, the partners peddling the C-Series servers need to have some familiarity with UCS, but not the same depth of knowledge. And to that end, Cisco has created something called the Authorized Partner Program, or APP, that will build upon the sales channel it has been building for its converged switch products, known as the Data Center Network Infrastructure specialization.
Cisco launched the DCNI certification about a year ago when its converged switches came out, and it has 300 partners certified and another 200 in the works. Growdon said that the DCNI practice is the fastest growing certification in the company's history, and this is significant only because 500 partners will be able to take an additional 12 hours of training to get the APP certification and then start peddling the C-Series boxes.
At this rate, by early next year, Cisco could have well over 1,000 certified server partners. But here's the interesting bit. According to Growdon, 70 per cent of the partners who have the DCNI certification are already selling servers made by another of the big server makers. "Our partners are the right partners," Growdon declared. Well, they are from Cisco's point of view, if they end up peddling C-Series racks instead of rack servers or blade servers made by Hewlett-Packard, Dell, IBM, Sun Microsystems, or Fujitsu.
"Customers want choice, and this is a powerful choice," explained Bob Olwig, vice president at World Wide Technology, a Cisco partner that was trotted out on stage and that just so happens to push $350m a year in servers and storage with other brands on it.
Cisco has been tight-lipped about the margins its partners can get from peddling its servers and converged switches, but this is and has always been the game in the IT channel, particularly with systems. Cisco is apparently hiring Jabil Circuit, a contract manufacturer located in St Petersburg, Florida, to make the B-Series and C-Series servers (Jabil is a long time manufacturing partner of Cisco), which has to be a lot cheaper than trying to build the boxes itself.
So how are the beta tests for UCS going and what is the UCS pipeline looking like? Jackie Ross, vice president of marketing for the server access and virtualization group at Cisco, where the new servers live, is upbeat.
"The beta customers have all had good results with their systems," Ross said in an interview with El Reg. While the UCS boxes are not shipping until the end of the month, Cisco is taking orders now, and is thus far happy with the results. "We are building up a pipeline, and we are exceeding our forecasts." And, she added that Cisco has forecasted sales and manufacturing for the next couple of years and has the capacity to keep up with demand should "sales go crazy."
There have been some rumors swirling around this week that chip maker Intel and brokerage house Merrill Lynch, which are both beta testers, had sent their UCS boxes back, but Ross said these rumors were not true and that these two companies were still putting their California boxes through the paces. There's a similar rumor that AXA Equitable Insurance was testing a box and declined to keep it, but Ross was not aware of that deal and could not comment. ®