Rise Of The Appliance

Vendors are scrambling to make optimized hardware- software combos. Pay attention. They're game changers.
So, really now, is the IT industry's latest heartthrob--optimized software-plus-hardware systems, or appliances--really something new worth getting excited about? Or is it just this year's fleeting infatuation?

Are these highly engineered and integrated hardware-software combos truly going to be game changers for CIOs--delivering far greater performance, requiring dramatically shorter installation times, and demanding zero tuning and configuring and retuning? Or do we just happen to be seated in the front car of the hype-cycle roller coaster?

I'm betting that they're game changers, because the whole premise of these machines goes far, far beyond the no-value concept of simply taking two five-pound bags of concrete and combining them into one 10-pound bag, and calling that innovation. Instead, I think these new-wave systems are surging into the market because they can help companies of all sorts make the leap into the very different and demanding world of real-time business.

These optimized machines are in full ascendancy at this time because they're the most powerful and highest-value delivery platforms for some dazzling new software applications and technologies designed to analyze not just bigger mountains of data, but to do so in less time and with greater insights and with almost-unlimited variations.

Today's next-generation enterprise software is bringing alive the promise of business analytics, predictive analytics, real-time analytics, real-time OLTP, staggeringly large databases, and the soaring volumes of queries triggered by many millions of mobile business users. In doing so, it has become so powerful and so complex that generic servers--even the biggest and gnarliest boxes--simply can't exploit the full range of insights, foresights, and opportunities that today's top software can deliver.

And in response, every single major IT company--hardware vendors, software vendors, and the crossovers as well--is rushing in with its own combinations (Oracle and IBM) or in partnerships (everyone else). Here's a sampling of what several of those companies have been saying about customer interest in highly optimized and integrated systems, and why they're so bullish on the opportunity:


Skeptics can theorize all they want about why they think this optimized-system activity is just vendor hype, but big customers are saying that they're big believers: Oracle's Exadata Database Machine is now on an annual revenue run rate of $1.5 billion, while only six months ago that run rate was $1 billion--which already was a stunning number for a first-year product. And Oracle is making the optimized system the core philosophy of its entire company by weaving it into the company logo and tagline: "Oracle: Hardware and Software. Engineered to Work Together." As Larry Ellison said, "There will be more things like this to come."


Shortly after Exadata began to attract significant interest, IBM stepped forward to tout its own extensive line of appliances and what it calls "workload-optimized systems." IBM is attacking the market from a couple of directions: offering all-IBM optimized systems such as its own Cognos business intelligence software on IBM Power systems, while also working in close concert with SAP to develop highly engineered systems featuring SAP applications on IBM servers. On top of that, IBM just launched a $1.7 billion bid to acquire Netezza, a small but high-growth maker of powerful but affordable analytics and data warehouse machines. One more move by IBM: underscoring the breakdown of silos that have traditionally separated hardware and software, IBM consolidated responsibility for its entire software business and its entire systems business under senior VP and group executive Steve Mills, who previously had overseen the software group.


While Teradata has a long history of offering hardware-software combinations, until two years ago those were exclusively very-high-end machines that addressed only a relatively limited market. Two years ago, though, Teradata, in what the company calls its most strategic new product release in company history, introduced entry-level and midrange optimized systems. That opened up significant new markets for Teradata's highly regarded technology and spurred the company to a new wave of significant growth.


Within the next two months, HP is planning to introduce a huge line of optimized and integrated systems that will range from midmarket packages to specialized mission-critical applications within the world's largest corporations, HP recently told Global CIO. (Read that column at information HP already plans to roll out a system optimizing Microsoft's SQL Server database and is one of the hardware partners with SAP for a forthcoming high-end analytics machine. HP plans to offer engineered systems for data warehousing, OLTP, business intelligence, Microsoft Exchange, and other applications.


In a recent phone conversation, SAP CTO Vishal Sikka told me that SAP's powerful new analytics tools are intended for use with in-memory technology and in many cases optimized systems or appliances provide the perfect hardware component. "We see this will often materialize optimally in the form of an appliance, which we will build together with our world-class hardware partners: IBM, HP, Fujitsu-Siemens, and blades from Intel," Sikka said.

And then in a shot at Oracle-Sun, he added, "The hardware will be built by the best companies on the planet, not some third-tier company we had to buy to get into the hardware market." That machine, which SAP has dubbed "HANA" for high-end analytical appliance, will come out at the end of November, Sikka said, and will play a key role in SAP's quest to become the leading provider of real-time information and business insights to global corporations.


Looking to offer optimized systems for two different types of customers, Microsoft will go after the enterprise as a key player in the big forthcoming product blitz from HP noted above, as well as go after cloud service providers with a specialized machine based on its Azure platform. My superb colleague Charles Babcock describes the machine this way: "The Azure platform appliance is designed to be deployed in an on-premises private cloud in racks of hundreds or thousands of servers. It will run both Windows Server and a software stack that matches what's available in Microsoft's Azure public cloud. In addition to enterprises, the appliance is geared for use by large cloud services suppliers."


EMC may have bought its way onto this data warehouse playing field last summer by acquiring Greenplum, a maker of analytics database management software that has some heavy-hitter, big data customers. But EMC has a lot to prove. Because of the challenges of rearchitecting for EMC hardware, Jason Maynard, an analyst with Wells Fargo Securities, predicts it will be mid-2011 before we see an EMC-Greenplum integrated product.

Time For Tough Questions

So if vendor-side interest is a valid indicator of CIO-side demand, then this optimized-system thing is as powerful and wide-ranging an opportunity as we've seen in this market for some time. Of course, with such innovation come some concerns and questions, such as these:

>> If something goes wrong, whose throat gets choked?

>> When used in such vital applications as analytics and business intelligence and online transaction processing, will these engineered systems become the source of vendor lock-in? How do customers ensure that doesn't happen?

>> As more CIOs look to slash their costs of infrastructure to be able to devote more dollars to growth-oriented innovation, don't these full-stack machines represent a step back in the old direction?

These are all valid questions, to be sure. But one of the great things about the list above--and it's not by any means a complete list of the players--is that it's big and getting bigger, which means lots and lots of competition and innovations and better ideas and a huge focus on customer value. All of that mitigates aggressively against sneaky lock-in tricks and hidden integration messes--and, with a new and potentially huge market looming, these IT vendors should be on their very best behavior from the outset.

The Rise of the Appliance has definitely begun, and from where I sit it looks like there's a lot of significant advantages in being part of this powerful business-centric movement.

Bob Evans is senior VP and director of InformationWeek's Global CIO unit. For more Global CIO perspectives, check out globalcio. You can write to Bob at [email protected]

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