Dell Gets Serious About Blade Servers

Dell is finally about to embrace the blade-server market in a big way, bringing out its first Xeon-based system a year and a half after Hewlett-Packard and IBM debuted blades using Intel's best-selling server CPU.

The market for blade servers has doubled in the past year and is expected to nearly double again in 2005, according to IT advisory firm Gartner. Dell, which has so far offered only a low-end Pentium III blade, is following its traditional strategy of aggressively diving into a market once it begins achieving high-volume sales. Gartner estimates blade-server revenue will total around $1 billion this year, up from $545 million in 2003, and will grow to about $1.7 billion in 2005. The market is expected to total more than $3 billion by 2009.

Its Xeon offerings, due this month, will address the need for high processor density while keeping blades cool, and still at lower costs than traditional rack-mounted servers, says Tim Golden, director of Dell PowerEdge servers, though he declined to provide details. Entry-level blade servers typically are more costly than traditional servers, and their prices don't achieve parity with those systems until about six blades are installed. "Today, people trying to get increased density inside their data center with blades are paying a premium for it, and we don't think that should be the case," he says.

Dell hasn't made its mark in the blade-server market yet, Illuminata analyst Gordon Haff says, but it has a good chance to. "When it comes to producing volume systems where price is clearly important you can expect them to become a stronger player," he says.

The competition will be tough, though, as HP and IBM push ahead with new features on their offerings. HP last week revealed an agreement with Brocade Communications Systems Inc. to include its 4-Gbps Fibre Channel Switch module as an integrated feature in its blade line by the second quarter of 2005.IBM has previously introduced offerings in its BladeCenter portfolio with an integrated 2-Gbps Brocade module, which Haff says has enabled IBM to gain momentum in the market.