Original URL: http://www.theregister.co.uk/2006/08/21/dell_linux_recap/

Mainstream press goes down on Dell

LinuxWorld stinks too

By Ashlee Vance

Posted in Servers, 21st August 2006 17:35 GMT

Not even processor superstar AMD could rescue Dell last week.

Abuse for the Titan of Texas flew in from all sides after it posted second quarter results so lackluster that they could almost be confused with a Sun Microsystems earnings report - almost. How bad was Dell's quarter? Well, CNET managed the headline "Dented Dell Gwana Gwana," while the New York Times had this to say…

Speaking from China to Wall Street analysts in a conference call after the earnings announcement, Michael S. Dell, the company’s founder and chairman, said, “We are not satisfied with our performance, and we will do better.”

While the company has told analysts for more than a year that it will do better, it has not been able to follow through. In a changing market, Dell has been unable to gain traction against competitors as it has in the past, when it has cut prices to gain market share.

In a separate story, the Times veered toward the absurd.

You would have thought, in view of the week's events, that Michael Dell would show up at a greet-the-folks gathering here Friday looking like some whiter shade of pale.

Not a bit: Appearing in a packed hotel ballroom during a brief stopover, the founder and chairman of the computer maker Dell seemed to glow a sort of sun-drenched pink as he defended his company and his actions.

Such harsh words from a pair of publications known more for their liberal use of "zippy" and "great" than "dented," "unable" and "pink."

In May, Dell tried to distract analysts and reporters from a poor first quarter by announcing a partnership with AMD. You could tell the AMD thing was a distraction because Dell won't have the four-socket Opteron servers it hyped then ready until the fourth quarter. The deal served its purpose though as critics gave Dell credit for making the types of changes needed to revive its business.

Following last week's second quarter debacle, Dell announced another deal with AMD for a two-socket Opteron server that won't ship until the end of the year either. Another distraction for another bad quarter. At this point, AMD has to be praying for a third quarter Dell bomb. That could result in a massive fleet of Opteron gear.

Dell's denial

Dell's fall is made all the more amazing because of the company's history of getting things right. Dell spent the pre-boom years growing its business at an astonishing rate and then kept growing at a torrid pace post bubble, while all of its major competitors struggled.

Much of Dell's success has stemmed from the way it can enter new markets, apply its direct model and grow revenue at double-digits in these new markets every quarter. Dell employed such a strategy in the server market, and did great.

But the company's dependence on Intel has proved a disaster over the past year. In the first quarter, Dell's server growth slowed to 3 per cent, and in the second quarter it dropped down to 1 per cent growth.

Let's put those figures in perspective for a moment. During its previous fiscal year, Dell's server revenue grew per quarter at 12 per cent, 9 per cent, 16 per cent and 10 per cent. It straddled double-digits the whole way back then, only to end last quarter near zero growth.

Dell's management has yet to cop to this drop in a proper fashion. The company's undying love for Intel's co-marketing dollars cost it on a massive scale. HP, Sun Microsystems and IBM all have a huge lead with Opteron customers, while Dell has been left to pick up the scraps.

And rather than correct the problem as it should have, Dell first decided to use Opteron only on high-end, four-socket systems. One quarter later it realized that wasn't such a crash hot choice and announced the two-socket box. There's some serious denial going on in Round Rock, since everyone on the planet - Dell's customers included - told the company it was making a huge Intel-only mistake.

We'd like to see CEO Rollins or Chairman Dell admit to the company's server gaffes if for no other reason than to assure us that they still have some hold on reality.

Enough Dell bashing - cough - let's move on to the new Opterons.

Rev F - The F is for A+

After some minor delays, AMD managed to push the Rev F - aka Socket F - versions of Opteron out the door last week.

When compared to Intel's recent release of the Woodcrest chip, AMD's Rev F dance looks like the definition of minor upgrade. One server seller put it well to us at LinuxWorld, saying "Intel turned itself on its head to get Woodcrest out and stop the serious bleeding, while Rev F just gives you some virtualization stuff and prepares everyone for four-core chips." And, in fact, the migration toward higher pin counts is one of the more gripping parts of the Rev F announcement.

We'd love to hear if any of you out there can actually buy Rev F-based systems. AMD tells us the chip is already shipping in volume and that "anyone who wants one can get one."

Not so, according to our moles.

One smaller server vendor said his company has been struggling to cope against the big boys for months because AMD cannot supply enough Opterons. He has pushed people toward Xeon sales simply because he can guarantee that chips are available - even if they're old, junky non-Woodcrest chips.

He expects this situation to get worse now that IBM and Dell have joined Sun and HP as serious Opteron sellers. AMD, in some ways, could be thanking Intel for pushing Woodcrest out. It might lower Opteron demand enough for AMD to meet its supply commitments.

Some of the first Rev F systems to arrive from a Tier I have appeared at Sun.

The company last week announced two low-end servers and a workstation centered around the chip. The Sun Fire X2100 M2 and X2200 M2 servers take up just 1U of rack space and stand as basic additions to Sun's Opteron server line. Sun has used the M2 designation to mark the Rev F versions of the one-socket X2100 and two-socket X2200. The new servers should go on sale this month, and Sun plans to put out Rev F versions of its existing Opteron systems by the end of the year.

Along with the servers, Sun also shipped the Sun Ultra 20 M2 workstation - code-named Munich.

Sun managed to take care of its core UltraSPARC business as well last week. Customers will find an UltraSPARC IV+ refresh across Sun's entire server line with the chip's speed hitting 1.8GHz - up from 1.5GHz on average.

Customers using the newer UltraSPARC T1-based servers in California can enjoy an upgrade of a different sort thanks to an unusual promotion Sun has forged in partnership with local energy concern PG&E.

"PG&E will give rebates to California businesses for jettisoning our competitors products, and replacing them with more efficient Niagara machines, our UltraSPARC T1000 or T2000 servers," Sun's CEO Jonathan Schwartz wrote on his glob. "If you ever get asked by a cynic, or your management 'what's the real value of being green?,' I can give you a very specific answer, at least for Sun. In the State of California, it's worth $700 to $1000 per server. I did say per server. Every single bid we're in across the state just got $700 to $1,000 per server more competitive."

Rev F Assortment

Most customers will be waiting a fair bit to see Rev F gear appear from IBM and HP.

IBM has said that its new Opteron gear will ship in the "third quarter." Meanwhile, our sources inside of HP say that company expects to be four to six weeks behind rivals on the Rev F front. Why the delay? Well, HP focused a ton of attention on getting it C-class blade servers done and dusted. As a result of the delay, customers can expect to hear HP's sales force hawking Woodcrest with a bit more vigor over the next quarter.

New Rev F gear can also be found from the following vendors:

Now, on to the LinuxWorld recap.

Wow! What a dud.

In the good old days, ponytailed freaks at LinuxWorld would mingle with - or at least watch - the likes of Michael Dell, Carly Fiorina, Scott McNealy and Larry Ellison. The biggest name the LinuxWorld organizers could muster this year was Jeopardy answer-cum-forehead model Larry Lessig. The second biggest name? XenSource CEO Peter Levine, who is still trying to understand the power of open source software.

The conference was so lackluster that Red Hat didn't even bother show up. The company rejected the show floor - and the thousands of minions that made it a success - in favor of holding meetings with a select few at a hotel. Apparently your pricey support contract does not buy any face time with this Linux prima donna.

That's great news for Novell which seems to need all the help it can get drumming up business.

Speaking of Novell, the company eliminated any chance of real news coming out of LinuxWorld by announcing SLES 10 well before the show. Novell apparently told partners that it planned to re-launch the software at LinuxWorld, which explains a lot about why the company does so poorly. Our attention span doesn't really...

The whopping list of two press conferences, the suits and the boredom all made us wonder if Linux isn't over in the cultural phenomenon sense. Linus Torvalds has sure been doing his best to kill the Linux culture. Now it seems the rest of you are happy to kill off Linux mania as well. Good riddance.

Our hat goes off to Mandriva, which still seems to care about this Linux thing.

The Mandriva team used LinuxWorld to announce the Sept. 14 release of Mandriva Corporate Server 4, the Oct. release of Mandriva 2007 and the mid-Nov. release of Mandriva Corporate Desktop. The company was also showing off its slick Pulse management software for controlling Windows and Linux servers. It's worth a look.

In other Linux news, Qlusters said that its openQRM systems management software now supports FreeBSD and Solaris (SPARC and x86). ®