Blade Price Drops Shake Up Server Market

That was the message from one of IBM's senior consultants at solution provider GreenPages' annual solutions summit in Portsmouth, N.H. Kittery, Maine-based GreenPages held the conference for 55 of its customers.

Steven Loeschorn, a senior briefing consultant at IBM's facility in Research Triangle Park, N.C., told GreenPages customers at the event that the cost of 14 IBM BladeCenter servers is now 23 percent lower than comparable standard 1U IBM systems and 41 percent lower in a solutions configuration in a SAN environment.

"This is a major shift where the marketplace has been over the last year," Loeschorn said. "Blades used to be more expensive."

IBM is stepping up its assault on the four-way blade server space with Intel's Cranford multiprocessor Xeon. The IBM-Intel Cranford system, which has no L3 cache, allows IBM to deliver a fully configured, four-way system for less than $20,000, down from $30,000 six months ago, Loeschorn said. IBM's four-way barebones system now runs $5,000, down from $10,000 six months ago, he added.

Overall, IBM blade systems are outperforming comparable Dell and Hewlett-Packard systems by as much as 40 percent, according to Loeschorn. What's more, the improved power and cooling in IBM blade systems is paying off for customers, who are realizing as much as a 25 percent savings vs. comparable blades from HP and about a 15 percent to 20 percent savings vs. comparable Dell systems, he said.

The savings brought by IBM blades comes from customers not having to build out data centers with additional heating, ventilation and air conditioning capabilities, Loeschorn said. Roughly 18 percent of IBM's Intel-based hardware revenue came from blade systems in 2004, compared with a 5 percent industry average.

"We have made inroads with customers based just on our blades," Loeschorn said. "Customers have looked at both [IBM and HP] and decided to go with IBM, even though they are an HP shop. People have perceived blades as being more expensive. They didn't understand the opportunity for savings with blades."