Cisco UCS: On Trial in the Court of Public Opinion (and the Verdict Is?)
There have been some rumors floating around regarding the viability of Cisco’s UCS in the market and whether Cisco will continue with it.
My take is that we are talking about a generation 1.5 product and as anyone in technology knows, newcomers to a vertical always have to make a land grab, even if you are positioned as Cisco, a monster in the switching vertical. The question at hand is:
Does UCS differentiate itself as a product in the market?
I can honestly say even the authors of the imminent end of UCS concede that it does. Once Cisco is confident in the market share, which in my opinion is happening at a frightening pace, we will see UCS prices (and Cisco margins) begin to rise. Frankly, I don’t think Cisco field reps know how to sell this yet—again, yet. Once they get the hang of it, Dell is going to find themselves in real trouble in the blade space.
Also, it is a mistake to think of UCS as a server platform: the true beauty of it is how it ties server and network physical management into a single construct with the modularity and flexibility to adapt and upgrade as the standards in both spaces evolve (again, at a frightening pace). The competitors’ management tools usually come at a cost and still do not offer the same abilities of the tools that Cisco is giving away for free. And finally, I would be interested to see how much Nexus has been sold à la carte vs. inside the UCS. I would consider UCS a success for Cisco if only due to the remarkable Nexus footprint it generated, as Nexus is now positioned as the obvious future of Cisco.
I don’t think UCS is going anywhere but into more data centers. Granted, I am sold on the technology more than the business angle, but IT folks are generally willing to pay more for the best and most scalable tools out there. Oddly enough, today with UCS, they don’t have to.
Photo Credit: steakpinball
I could not disagree more with everything in this post.
Does Cisco UCS differentiate itself in the market place?
No, the same virtual fabric interconnect of servers and FoE storage is being provided by HP and, after the acquisition of BNT, IBM. Either of these providers are better suited to discuss “unified computing” as they own storage sub-systems (which Cisco does not, EMC partner) and system management and provision tools (which Cisco does not, BMC partner). Cisco is a switch provider which has white-boxed some x86 servers. Even Dell, the laggard of the industry, will be able to duplicate this architecture with Force 10.
Also, UCS is only unified if all your workloads are x86, not realistic in large companies with mission critical Unix, mainframe, etc. Even if you had all x86 workloads, you can easily oversubscribe those switches. In a real world scenario of 4:1 Network oversubscription, (2) 6140′s and (1) UCS Manager would be required per rack.
UCS will increase Cisco’s margins?
How in the world do you think UCS will raise Cisco’s margins? They are accustomed to having little, if any, competition in the switching space which has allowed them to charge ludicrous 60% gross margins on their commodity switches. Even if Cisco retains their networking customers, they will retain them at much lower margins as HP and Juniper are offering the same performance and QoS at 50% the TCO or less. Cisco took on the rest of the IT industry, with the exception of EMC and BMC, when they released UCS. This will turn networking margins into x86 server margins. Competition makes margins go down, not up.
Cisco UCS Manager is a “no cost” option?
Do you think you are getting your cell phone at “no cost” when you sign a two year contract? No, the price of the phone is baked into the service cost. The Cisco UCS Manager cost is baked into the switch and SmartNet costs. I assure you that BMC is not giving them the software for free and they are no giving it away at “no cost” because they like losing money. There is a difference between “included in the price” and “no cost.”
Adam – thanks for the rebuttal.
I guess when I say unified I mean unified in management, not unified in faceplates. HP has many different interfaces to manage the contents of a single blade chassis – let alone any storage that falls underneath it. HP blades are just servers. HP switches are just switches. The fact that they are in the same chassis is coincidental and simply a matter of location, not management or functionality. In the case of the UCS, the fabric interconnect houses the management console as well as the profile of the server, and the server blade hardware interacts with the management logic in the switch to acquire it’s outwardly facing properties such as MAC address and BIOS settings. If a particular blade is removed, it’s replacement takes on the identity of the prior blade all the way down to those properties normally associated with the hardware itself. This is increasingly important as virtual environments have increasingly complex network structures where standardization is key.
From this, I see the UCS memory, CPU, and network unify into a dynamic, centrally managed entity. I would extend this paradigm identification to the chassis servers as well that integrate into the UCS framework to be centrally managed with the blades. I fully suspect that Dell and HP could do the same thing but the fact is they haven’t and they treat their blade systems as if they were typical server/switch facilities, just in a smaller package.
In terms of workloads, yes, UCS is aimed at the x86 market for sure. I guess Cisco just has a bad habit of developing to what the market is asking for. While I have nothing but respect for the robust nature of UNIX, iSeries, Mainframe etc. the market is generally moving away (dated but makes my point: http://www.computerworld.com/s/article/9177445/Unix_server_sales_sink_IDC_cites_a_perfect_storm). X86 hardware augmented by improved platforms such as VMware provide excellent reliability for all but the most highly availability demanding workloads at a fraction of the costs. So, no, the UCS is not a replacement for a mainframe, but the UCS is not trying to be.
In terms of oversubscription, yes, they can be oversubscribed, but the 10G converged networking platform is a major boon to virtual environments that have historically had to dedicate 4 to 7 connections to get the job done and even then the links were not balanced to ensure they actually benefitted fully from all that connectivity. New backplanes in the Nexus line are evolving very quickly which again, could certainly be oversubscribed, but what an evolution. Beyond the bandwidth we must also recognize the flexibility that the virtual interface card (VIC) has brought as well, where a single controller card can emulate over a hundred different cards to provide logical traffic isolation. Yes, great companies like Xsigo do this and more with switching and cards but Cisco has integrated this technology into the UCS as a whole, into the single management interface, and into the concept of the server profile.
Ah yes, margins.
I get the sense you believe Cisco sells at list price. Uhhhh, no…
I have to concede that the UCS sale has a lower margin than a Catalyst 6500 sale. However, the switching market has long been commoditized and servers are the very icon of IT commoditization. Speaking from experience I have seen many true HP blade diehards admit that they see a benefit in the UCS management capabilities and have made the switch. If you purchase a UCS, you are purchasing the fabric interconnects and also the fabric extenders, so when Cisco sells servers, they sell two other major elements of their portfolio and therefore increases the revenue to the company from a “server” purchase. I will happily also concede the per sale margin on the UCS may be lower than other larger Cisco product sales, but the net is that UCS is bringing Cisco a bigger footprint in the data center and they are not losing money doing it. To continue to grow as a company with such immense market penetration in the route switch space they can either innovate their products are or widen the offering and between Nexus and UCS. Cisco is doing both.
No cost? It’s true, somewhere there is a cost. But I did get my cell phone for free if someone else was going to give me the same contract at the same price without a phone? So if Cisco gives me a great management interface with the UCS at the same price for another manufacturer’s blade center that does not (or cannot) provide said interface, I’ll call it free.
I assure you, I do not believe that the UCS is the silver bullet for server/network integration, but I really like where Cisco went with it – especially for the virtualization workspace. If the UCS spurs the likes of HP and Dell to innovate and unify their products, then all the better. But I strongly believe that the UCS is different than anything else in the server/switching space, and it is helping Cisco continue to grow and thrive as a company.
- David