Dell plans virtualization-oriented server

"You're going to see us in the second part of this year going back to the virtualization trend," said Jay Parker, director of Dell's PowerEdge server group. "We believe there's an opportunity to optimize hardware products and surrounding software for virtualization."

Virtualization lets a single computer run multiple operating systems in compartments called virtual machines, boosting efficiency and cutting costs by letting a single machine replace several that spend much of their time idling. It also is a good foundation for more flexible data centers that can move running tasks from one machine to another to adjust to shifting priorities. However, virtualization puts new demands on hardware and adds a new level of software complexity.

Despite the complications, virtualization is marching inexorably toward mainstream x86 servers, those that use Intel's Xeon and Advanced Micro Devices' Opteron chips. VMware pioneered virtualization for x86 servers, but the open-source Xen is built into prevailing Linux products and Microsoft's upcoming Longhorn Server has another alternative technology code-named Viridian.

"Today, about 8 percent of servers in data centers are running virtual machines. In about 12 months, 100 percent of new servers will ship with virtualization capability," said Rachel Chalmers, an analyst with The 451 Group. "Virtualization-capable doesn't mean virtualization-inevitable...but it doesn't seem unreasonable to go from today's 8 percent to 40 to 50 percent."

Parker offered only a few details about the plan, but he did say that the server will have two processor sockets. In the old days, that configuration meant an entry-level machine, but these days--with processors from Intel, and soon AMD, having four processing engines called cores instead of just one--that can mean significant horsepower.

Parker also indicated that the machine will be amply endowed with computing resources.

"For a segment of two-socket servers, we would expect some customers to go out with richer configurations so they can put more virtual machines and run more workloads on those systems," he said.

That design principle is in tune with recent IDC research that found customers are gravitating toward more powerful machines, in part so they can run virtualization better. Running many virtual machines typically requires more memory and network capacity and often more hard drive room as well.

However, Dell doesn't always see eye-to-eye with IDC. Virtualization was one reason IDC lowered its x86 server forecast by 4.5 million units, worth about $2.4 billion, and trimmed off about 10 percent of the total it previously expected to ship from 2006 through 2010. By using virtual machines, fewer physical computers are required, the firm said.

"We do not agree with the conventional wisdom from IDC and other analysts that...virtualization is the reason why the forecast is coming down," Parker said. Systems are being sold with more memory and other features, but that's more because they like the latest generation of Intel Xeon processors--the dual-core 5100 "Woodcrest" and quad-core 5300 "Clovertown"--and invested accordingly, he said.

"When Intel came out with a new architecture that had better performance and lower power (consumption), you saw a lot of customers move directly to those product sets. They want to be able to ride those products as long as possible. Those customers have bought relatively high in terms of processor capability, memory, and I/O (networking input-output) throughput," Parker said.

As for fourth-quarter sales for the overall x86 market that were lower than expected, Parker said that "macroeconomic factors and budgetary concerns" were more likely culprits. "Virtualization is a part of it, but only a small part of it," he said.

IDC analyst Matthew Eastwood, though, stands by his firm's analysis.

"We agree that virtualization is not the only explanation. But they shouldn't discount it quite so easily. There's a big change in usage patterns," Eastwood said. "In the x86 space probably only 8 percent (of servers) are virtual machine hosts. But if you're putting 4 to 6 virtual machines on a typical server, that 8 percent translates itself into a larger impact in the marketplace."

Eastwood thinks Dell lost ground to rivals in part because it didn't pick up on the market trends toward beefier servers.

"Dell until recently was very unit-oriented," focusing on moving larger numbers of servers, Eastwood said. "Everybody else was talking about a consolidation story where there are higher (profit) margins on fewer machines. (Dell) didn't quite grasp the change at the time. I think they see it now."