Cisco Systems says it now has 10,000 Unified Computing Systems customers for it’s not quite three-year-old product. That’s up from 4,000 customers a year ago.
The March 2009 UCS announcement was the first shot fired in what became a raging battle by vendors to sell hardware that melded compute and networking in a single box, tightly integrated with storage. Since then HP and Oracle entered the fray. These converged infrastructure servers are pricier than the commodity boxes that power most webscale operations but are pitched as a way to consolidate workloads, cut wiring, and save power.
The 10,000-customer number is impressive because these are the sort of IT buyers that are notoriously conservative, said Brian Modoff, analyst with Deutsche Bank. The figure also represents growth off a very small base — Cisco still doesn’t crack the top five server vendors by unit market share.
As other evidence of UCS mojo, Cisco CEO John Chambers said on the company’s Q1 earnings call in November that UCS had hit a $1 billion annual run rate. It is unclear how many UCS servers have sold altogether since some customers have more than one. A spokeswoman said about one-third of those 10,000 customers are repeat buyers.
There is anecdotal evidence from resellers to support Cisco’s momentum claims. One large Boston-area VAR that sells both HP and Cisco servers said he sees strong demand for UCS among large customers, many of which buy UCS as part of a VCE vBlock a preconfigured bundle of UCS plus EMC storage, or FlexPod, a somewhat analogous offering with NetApp storage. At least some of those sales come at the expense of HP which has seen upper management turmoil that caused some customers to worry about the company’s hardware strategy.
Modoff said UCS appeals to companies wanting to streamline their data center operations because they pack in more virtual machines per blade. And, “because you have more memory on the NIC cards you can actually virtualize things like SAP or Oracle databases that you could not do well before,” he said.
When Cisco announced plans to sell home-grown servers three years ago, it roiled the data center hardware world, alienating long-term server partner Hewlett-Packard. It caused no small consternation in the IT reseller channel where many VARs made a good living selling Cisco routers and HP servers into joint accounts. Customers likewise saw stress. HP quickly announced its own converged data center hardware and the battle took on an increasingly nasty tone.
There is demand for simplified, more integrated data center hardware, although not all businesses want to replace existing gear. For them Egenera offers software that brings some of those converged data center benefits to existing servers from Dell, HP, Fujitsu and NEC. Egenera said revenue from that PAN Manager software rose a whopping 400 percent in 2011.
While Cisco’s momentum news is positive, the company has miles to go to catch HP. In Q3 2011, HP accounted for 29.1 percent of all Intel-based servers shipped (despite a 3.1 percent decline for the quarter.) Dell was number two with 21.8 percent share with IBM, Fujitsu, and Lenovo rounding out the top five. Cisco remains in the “other” category.
It seems clear that more companies want to streamline their data center operations as they enter upgrade cycles, so the demand for more elegant, integrated data center hardware will grow. But so will the competition. As HP gets its house in order and is better focused on execution, watch for more battles in data center servers.
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