System Builders Getting All Set For Big Upgrade Cycle


Printer-friendly version Email this CRN article

Like the seemingly resilient U.S. economy, the custom-system market, after making a somewhat soft landing in 2006, could be primed for renewed growth in the months ahead.

More energy-efficient and powerful multicore processors, the release of Microsoft's Windows Vista operating system, delayed spending on new hardware and a stable economy all could help fuel the fire. At least that is the theory— one that is raising optimism among many custom-system builders.

"It's positive from our perspective. There are a lot of things taking place. The hardware, the dual-core, Vista, the service pieces, the direct-push technology—those are all driving some business for us," said Dan King, president of New West Technologies, a POS solution provider and system builder in Portland, Ore. "And there are a lot of folks who have been sitting on their laurels for awhile. A lot of those folks are getting to the point where they just don't have a choice but to reinvest."

There is room for caution. Vista could continue to confuse the market as businesses delay adoption, perhaps for months. Custom-system builders have failed to gain much traction in the fast-growing notebook segment. And there are always supply shortages, inflation or a slowing in corporate profit growth to worry about.

SERVERS GET ENERGIZED

But system builders say Intel's initial rollout of quad-core processors already has begun to bolster custom server sales. And that combined with the pending release of Advanced Micro Devices' four-core Barcelona processor, should keep the custom-system builder channel busy crafting servers throughout the year.

"Quad-core processors will definitely drive sales this year," said James Huang, marketing manager at Amax Information Technologies, a Fremont, Calif.-based system builder and contract manufacturer. "Many of our OEM customers are already testing quad-core processors for their upcoming projects."

Last November, Intel began shipping its Quad-Core Intel Xeon 5300 and Intel Core 2 Extreme quad-core processors, beating rival AMD to market. In addition to sparking server upgrades, the quad-core processors are raising average selling prices for Intel and its partners, system builders say.

"Almost everything we're shipping is either 5100 or 5300 multicore Xeons," said Keith Josephson, vice president of engineering and CTO of ION Computer, a Hauppauge, N.Y.-based Intel Premier Partner and system builder. "I think there's a little bit of growth there."

ION manufactures 1U and 2U quad-core servers, which Josephson said offer increased performance over the servers they're replacing and use less energy. That's been a big selling point. System builders and solution providers are rolling out quad-core solutions at a time when data centers small and large are housing an increasing number of resource-hungry applications and are looking for cooler, more efficient solutions.

After record market-share gains that topped 25 percent last year in its ongoing rivalry with Intel, AMD is planning to add more fuel to the fire with the release of its Barcelona chip in the second quarter. The chip should be generally available in the third quarter. AMD executives believe the scalability of the new Barcelona microarchitecture, performance gains and single chip design will score significant points with the marketplace.

"Some people are saying Intel's quad-core is not a true quad-core," said David Chang, president of Agama Systems, a Houston-based system builder. "They say Intel is just putting four die on one platform. But can one-plus-one-plus-one-plus-one become more than four? That's what we'll see. But in the meantime, I think AMD is working hard to win back the channel."

The Sunnyvale, Calif.-based chip maker annoyed many system builders during the third and fourth quarters last year when it ran into supply problems and pricing issues while taking on Dell as a new OEM customer. Since then, AMD has been attempting to mend fences with system builders, promising—among other things—tighter partnerships with component suppliers, as it attempts to hold on to mind-share in the months leading up to Barcelona's launch.

So far, it looks like it may be succeeding. System builders such as Agama and Amax are planning to achieve growth in 2007 not only with Intel's quad-core technology but AMD's as well. "Our focus products will include high-performance clusters, general-purpose rack-optimized and pedestal servers, appliances, storage subsystems, graphics workstations, stable corporate image computer platforms based on both AMD and Intel processors," Huang said. "These products will take full advantage of the latest Intel and AMD dual- and quad-core processors, with better performance per watt than previous generations of processors."

Next: The Big Vista Question


Printer-friendly version Email this CRN article