Taking on the Competition Using IBM ~ xSeries to Compete with Confidence This presentation is intended for the education of IBM and Business Partner sales personnel. It should not be distributed to customers. Topic #: Topic Title Topic Objectives and Benefits By the end of this topic, you will be able to: Discuss today's competitive environments Give an overview of the customer’s current issues Describe the Competition – Sun / Dell / HP • Target • Defend • Leverage • Special forces: Competitive Resources Prepare for competitive engagements • Technical Advantage and customers impact • Alliance Advantages: Strategies ► Linux, Microsoft, Intel and more Benefits of this topic include: • Increased knowledge (Consulting) • Increased competitive win percentage Topic #: Topic Title Competitive environment in a tight economy To grow we must take share from competitors Dell and IBM are making the biggest impact Customers focused on their IT spending Many are looking at the entire budget Purchases must show quick return on investment • Consolidation • Outsourcing • Centralized vs. decentralized Increase utilization of IT staff We cannot afford to only push boxes. Topic #: Topic Title Top Priorities – Understand the Customer What are their hot issues? • Reducing costs? Higher availability? Doing more with limited staff? • Lead them, using understanding of our advantages What projects are they going to be starting? What applications are they running or plan to run? What type of servers are they running them on? What are the +’s and –’s of their current vendor? Missing the first step often leads to missed opportunity! Topic #: Topic Title Top Ways To Win in Competitive Situations Get into the account early Understand the customer Solution involvement • Applications (ISV), eServer portfolio, Storage, PCD • Linux • Consolidation - Scale up and out Get customer to look at all costs • All purchase - HW, SW, options, services, maintenance • Impact to other IT costs - easy to deploy, manage, etc.. Leverage technology advantages Leverage resources Missed steps often lead to missed opportunity! IBM ~ xSeries vs. Sun Competitive Summary Understand and Target Topic #: Topic Title What is going on at Sun? Company • Perceived as arrogant • Big changes in executive leaders • Declining market share • More expensive ISV Changes • More focus is on Windows vs. UNIX • Growing ISV interest in Linux Products • Parity (at best), increasing reliability issues • Software suite under scrutiny • Users question “one-size-fits-all” strategy • "Tip-toe" into Linux The "Sun" has set ... let's show customers the light! Topic #: Topic Title Fighting the Rising Tide of Intel & Linux Attack pricing of Intel server space (V480 / V880) • Use Windows pricing vs. Linux • Select configuration difficult for Intel vendors to match • Offer only 1 year as base warranty, make sure of a similar comparison • Want customers to look at SW support cost based on 1 unit Linux play (LX50) • Trying to fragment Linux world with "branded" version ► Open door with Sun Linux, then push Solaris ► Trying to position Solaris and Linux as the same ► Good possibility Sun Linux will diverge from Red Hat • Old technology and older Solaris 8 support ► Extreme pressures put Solaris 9 support in the plans Intel and Linux have Sun on the defensive. Topic #: Topic Title IBM ~ xSeries vs. Sun 4-way V480 4-way Blades x255 x440 Xeon IBM ^ BladeCenter x360 8-way to 16-way 2-way Ultra 250 x235 280R x345 Sun LX50 Sun Fire V120 Sun Fire V100 Fire 4800 14-way x335 Uni x305 Fire 3800 8-way V880 8-way x440 4 to16-way Topic #: Topic Title Strategies Against Sun Select a strategy • Which Series? (If pSeries, don't forget xSeries) • Linux is "UNIX" skills or Windows if "already support Windows" Low price and cost of ownership • Leverage analyst studies • Leverage customer references • Costs - software licenses (Linux), maintenance, warranty, upgrades • Reduced footprint and power consumption Technical leadership • Modularity and Investment protection "Pay as you grow" scalability • High Availability - Active Memory and Active PCI Target clustering environments - low entry & incremental cost Application flexibility in the Intel space No one size fits all - eServer has complete portfolio Commitment to "e-business on demand" (open standards) Leverage the savings! Topic #: Topic Title Customer Examples Large Financial Institution - Server Consolidation • 1/5 the cost, 4 times the performance at 10% the size • Leverage: ITS Optimization Practice & TCO Studies, RedHat, FAStT storage, cable chaining, IBM Director, XCAT Financial Institution - Trading Floor • 1/30 the costs (TCO) • Leverage: LTC, RedHat, rack density and Blade Strategies Cluster Customer • 16 times superior price/performance • Leverage: Linux Impact team and visit another customer While Sun talks…IBM xSeries delivers! This data was gathered by sales personnel and/or customers and represent one customer's experience. Other customer results will vary. IBM employees can use the customer reference database to contact your peer. Topic #: Topic Title IBM Wins eTrade with xSeries and Linux Incumbent Systems: Sun 4500 TCO Advantage: 1/12 the cost* Performance Advantage: “Our new IBM eServer xSeries servers are 4 times faster than the ones we replaced.”* Leverage: Maintenance costs covered new system costs, Linux Skill/Leadership, Open Source - Flexibility of Choice The combination of IBM xSeries servers and the IBM commitment to Linux has saved the company millions of dollars and has enhanced the E*Trade Financial global brand. *(Josh Levine, CAO, E*TRADE Group, Inc. 2002) IBM ~ xSeries vs. Dell PowerEdge Competitive Summary Understand and Target Topic #: Topic Title What is Going on at Dell? Getting customers to focus on purchase price • Watch out for special Terms and Conditions (T&C’s) ► CNET: "Gartner to Dell buyers: Read the fine print" 5/5/2002 ► GartnerGroup 04/02: Dell purchase contracts: Prepare to negotiate Using PC success to move up into servers and storage • Able to increase wallet share from 10% to 50% in 2 yrs Targeting HPQ and Unix Claiming ease of doing business • Purchase focused • Killing IT staff • Service for clients and servers is different • Lacking solution optimization Low price today, high cost tomorrow! Topic #: Topic Title IBM ~ xSeries vs. Dell PowerEdge Universal (tower) 6600 Blades x255 1655MC IBM ~ BladeCenter Rack-Optimized x235 4600 8450 x440 6650 x360 2600 1600SC x225 x205 600SC 2650 x345 1650 x335 350 x305 Topic #: Topic Title Examples of success Manufacturer • Benefits: cost efficient, global fulfillment, control TCO • Leverage: software certification and asset handling, financial options and reduce spare parts/stock units • Success: One Vendor (IGF, IGS, PCD and xSeries) Oil Company – Cluster • Benefits: stability, scalability and reliability • Leverage: Price-point, number of xSeries Linux clusters already proven, Business Partner and Linux solution team. Another Oil Company – Cluster • Benefits: increased process capacity 350%, reducing costs 50% • Leverage: Top executives involvement, Business Partner, Linux and solution price This data was gathered by sales personnel and/or customers and represent one customer's experience. Other customer results will vary. IBM employee can use customer reference database to contact your peer. IBM ~ xSeries vs. HP ProLiant Competitive Summary No such thing as Compaq ProLiant, it is now HP ProLiant Topic #: Topic Title What Is Going On At HP? Pushing openness vs. IBM's proprietary approach Leveraging market share success and perceived technology leadership • Often focus on technology and lifecycle cost vs. purchase price Claiming IBM will take control vs. team approach (ISV & partners) Claiming better customer experience across the engagement lifecycle • A race to see who can effectively sell solutions Claiming deeper and broader technical expertise Pushing hard on IA-64 (lack of IA-32 high end) • Playing down x440 and telling customers IA-64 is the better • Years hyping their relationship with Intel on IA-64 development • How will IA-64 focus affect future IA-32 ProLiant servers? Don't let HP confuse! Source: Ann Livermore's presentation to securities analysts on June 4, 2002 Topic #: Topic Title IA-64 Server Forecasts IA-64 has yet to meet projections, with successive forecasts significantly reducing and delaying expected deployment. • Performance issues • Software support lacking • Current role of RISC and IA-32 IA-32 • Intel required to shift / renew focus on IA-32 in response to IA-64 issues and competition IA-64 Server Forecasts IA-64 IBM strategy: • 64-bit POWER - midrange market • IA-32 xSeries EXA chip set • IA-64 xSeries EXA chip set for select applications 40 Customer Revenue ($B) June ‘97 June ‘98 Aug ‘99 June 2000 June 2001 Oct ‘01 Mar ‘02 30 20 10 0 1999 2000 2001 2002 2003 2004 2005 Source: IDC projections Topic #: Topic Title IBM ~ xSeries vs. HP Intel Servers Universal (tower) Blades ML 570 G2 x255 IBM ~ BladeCenter Rack-Optimized ML530 G2 x440 x235 ML370 G3 ML350 G3 ML310 TC2110 TC2100 DL580 G2 DL380 G3 x360 x345 x225 x205 DL360 G3 DL320 G2 x335 x305 Topic #: Topic Title Success stories A processor manufacturer • Benefits: improved productivity, reduced expenses, increase performance 1.5-5 times, saved millions and better space usage. • Leverage: Relationship and competitive price A Canadian Manufacturing Company • Benefits: - reduced downtime 50%, more productive users, reduce IT costs, reduced help desk calls • Leverage: solution capability, technology and business partner Automotive Dealer in India • Benefits: - Improved dealer satisfaction, better cost control and reduced paperwork • Leveraged: IBM, long term partner, comprehensive solution (p/xSeries, storage & Tivoli) and technology. This data was gathered by sales personnel and/or customers and represent one customer's experience. Other customer results will vary. IBM employees can use customer reference database to contact your peer. Topic #: Topic Title Strategy Against Dell/HP Sell Solutions Focus on winning in the 4-way and above space • SAP, SAS, JDE, SQL, Oracle, UDB, and "Vertical Citrix" • Leverage - price, performance and technology leadership Rack 1U/2U space, include cables & switches into price • Add up to $11,000 for a rack of 42 systems • Think of the resources required to install and manage Scale out with BladeCenter • BladeCenter - Intel relationship, blade performance and high availability • Maximum density / performance with BladeCenter ► Rack price $59K vs. HP $52K, 84 blades vs. 48, Xeon vs. Pentium III Reducing IT costs • IBM Director has clean integration and full set of offerings • Technology Leadership - helps reduce costs & increase availability • Get the customer to include software support into price Emphasize low cost when possible! Topic #: Topic Title Strategy Against Dell/HP Get customers to take advantage of our technologies and tools IBM Director and Server Plus Pack ServerGuide and Remote Deployment Manager Cabling Technologies (IBM ACT or C2T) Scalability Offerings (x440 or BladeCenter) Cross-sell IBM PCD - stop competitors from up selling Services - keep technical influencers on IBM sides Financing - keep knowledge of leasing updates in house Storage - most servers today are hooked up to external storage eServer – most customers have heterogeneous environments • 83% of iSeries customers have Intel servers (sell IXA) Emphasize low cost when possible! Succeeding Against the Competition Topic #: Topic Title Intelligence Resources xSeries Competitive Sales Tool • Designed to provide the concise info needed by successful sales reps Competitive Information • System Sales - Compete Packs (Dell, HP, Sun, etc..) • COMP - WW Portal for Competitive Info. on HW, SW and services • Competitive Big Play Sales Kit - leverage multiple parts of IBM using marketing programs, tools and materials to win Focus on Cost of ownership and Return on Availability • Use the ROA Tool - to add $ value to IBM technology differentiation • Use the TCO Tool - to point out areas for consolidation Competitive Sales Assistance • Competeline - 1-888-426-5525 #4 or LA call: T/L 445-9700 • Americas Competitive Sales team • BPs call PartnerLine - 1-800-426-9990 Topic #: Topic Title xSeries Competitive Sales Tool Up-to-date competitive information at your fingertips, no matter where you are. Provides links to more competitive information. Overviews xSeries products • Systems Management • BladeCenter • Options and Services • FAStT Provides sales tips by product • Overcoming Objections • Selling up and Options • Selling Solutions and key solutions by product Covers • Competing vs. Dell and HP and head-to-head comparisons • xSeries Linux and Microsoft advantages Help leverage skills maximize IT resources Help lower costs save dollars today and over time High Scalability investment protection for future growth High Availability keep up and running Help Reduce Costs and Maximize Revenue Not all Intel processor-based systems are created equal Topic #: Topic Title IT Expenditures Total Cost of Ownership for 200 users Infrastructure 10.4% Software 10.0% HW 4.0% Software Support HW Infrastructure Support 75.6% Source: Yankee Group 8/27/02 Topic #: Topic Title Help Leverage Skills Maximize IT Resources Customer support staff issues • Support staff is often a big portion of IT budgets • Need for more skilled staff • Faced with trying to do more with less IBM can help IT… • Reduce time spent configuring and deploying systems • Avoid those costly hours going out to remote locations • Reduce or avoid having to do physical asset management • Reduce unnecessary reboots to prevent software aging • Effective maximizing performance, utilization and up-time • Use proactive management vs. reactive management • Avoid having to take servers off-line to perform diagnostics • Manage a heterogeneous Intel-environment Increase the capabilities of your IT staff! Topic #: Topic Title Better Relationship and Investment Protection Reduce IT support time • ServerProven • Linux ► Linux Technology Center • Microsoft ► IBM Center for Microsoft Technology Investment protection • Intel - Blades and XA chipset • XpandOnDemand ► Extreme I/O expansion capability - RXE-100 ► Scale systems up and out (x440 and BladeCenter) ► Partitioning with VMware Deploy smoothly, quickly and reliably! Topic #: Topic Title Other Savings Cabling savings • ACT - $80/server, $3K (42 units) • C2T - $200/server, $10K (42 units) • Think of IT staff savings in time Power Savings • Focus on BTU/hr vs. watts supported Space Savings Uni Tower 2-way Tower 4-way Tower Uni Rack 2-way Rack 4-way Rack 8-way Rack 16-way Rack IBM Dell HP x205 - 20% less W 600SC ML310 x225 - 25-63% less W 1600SC - 30% more W ML350 G3 - 25% more W x235 2600 - equal ML370 G3 - equal x255 6600 - equal ML570 - equal x305 - 1U 25% shorter D 350 - 1U DL320 G2 - 1U x335 - 1U 1650 - equal DL360 G2 - equal x345 - 2U 2650 - equal DL380 G2 - equal x360 - 3U 33% less W 6650 - 4U DL580 G2 - 4U x440 - 4U 40% less W 8450 - 7U DL760 - 7U x440 - 8U NA NA W – Width D – Depth Topic #: Topic Title Availability Cause of Server Failures Software 40% Other 40% Software HW Other HW 20% Source: Giga Network World 2/5/01 Topic #: Topic Title Keeping Your Business Open 24x7 It is estimated that 20–25% of all unplanned downtime is caused by server failure. (Gartner Group) Minimum recovery time from server failure is typically 4.5 hours The impact on costs is severe. The Standish Group downtime due to server failures can cost companies as much as $27,000/minute.* Annual total cost of downtime in mission critical environments is $4 billion for US businesses, average downtime event results in $140,000 loss (Retail) and $450,000 loss (Securities industry)** Server availability affects business results! * Source: NetworkWorld 2/5/01 ** Based on estimates from Network Computing (5/95) Topic #: Topic Title High Availability Software • Predicts software failures before they happen ► Monitors for evidence of resource exhaustion and predicts time period when software aging will bring down server ► 40% of downtime is due to software, IBM's tool is designed to help prevent a substantial amount of that Hardware • Predicts failure before it happens (Extensive PFA) ► Identifies failing component before failure up to 48 hours in advance of actual component failure • Instant visual identification of issues = rapid response ► Light Path Diagnostics leads the technician to the specific components-even when powered down Higher availability can = $avings! * Gartner Topic #: Topic Title High Availability – More Hardware Features Self-protecting memory features* ensure reliability of businesscritical applications • Memory ProteXion, Chipkill and Memory mirroring High Availability/Redundant** components help eliminate a single point of failure • Including mid-planes on BladeCenter Run diagnostics on system resources, without impacting users • Real Time Diagnostics Superior cooling for faster performing new components • Vectored cooling with variable speed fans Higher availability can = more revenues! * Select models ** some are optional Topic #: Topic Title Call To Action Get in early Take time to understand your customer Make sure you understand the competition Be part of the solution Leverage current IBM relationships Team with IBM peers & partners to build solutions Utilize IBM resources Communicate our advantages to customers • Help reduce solution costs (Technology Leadership) • Better use of IT staff and budget (Systems Management) • Better investment protection (scale up and out) • Reduce costs / maximizing revenue (availability leadership) • Sell solutions Available only one place – IBM! Topic #: Topic Title Legal notes Competitive information based on publicly available information and is subject to change without notice. Contact the manufacturer for the most recent information. © IBM Corporation 2002. All rights reserved. IBM Server Group, Department LO6, 3039 Cornwallis Road, Research Triangle Park, NC 27709 IBM reserves the right to alter product offerings and specification at any time. IBM makes no representations or warranties regarding third party products or services. IBM is not responsible for photographic or typographic errors. IBM, the e-business logo, the IBM logo, Active PCI, Active Memory, AIX, Chipkill memory, HelpCenter, iSeries, IntelliStation, BladeCenter, LAN Client Control Manager, Light Path Diagnostics, Predictive Failure Analysis, pSeries, RS/6000, RISC, ServerGuide, ServerProven, Tivoli, Xcel4, XpandOnDemand, xSeries, X-Architecture and zSeries are trademarks of IBM Corporation in the U.S. and/or other countries. Lotus and Domino are trademarks or registered trademarks of Lotus Development Corporation in the U.S. and/or other countries. Intel, Celeron, LANDeck, Pentium, Pentium III Xeon and Xeon are trademarks or registered trademarks of Intel Corporation. Microsoft, Windows, Windows NT and the Windows logo are trademarks or registered trademarks of Microsoft Corporation. Linux is a registered trademark of Linus Torvalds. Java and all Java-related trademarks and logos are trademarks of SUN Microsystems, Inc. UNIX is a registered trademark in the U.S. and/or other countries licensed exclusively through The Open Group. Other company, product and services names may be trademarks or service marks of others. Miscellaneous Slides Topic #: Topic Title Power and Cooling Costs All costs assume 24 x 7 operation (8,760 hours/year). Power cost assumes $.08/KWH Cooling costs assume 12,000 BTUs/Ton; 1.0548kj/BTU; 1.5 KW/Ton, $.08/KWH. Formulas • Power Cost ($) = rate ($.08/KWH) * Watts * 8760 (# of hours per year operation) / 1000 (convert Watts to Kilowatts) • Cooling Cost ($) = BTUs per Hour / 12000 (convert to tons) *1.5 (to convert to Kilowatts) * rate ($.08/KWH) * 8760 (# of hours per year operation) • Standard conversion factor - BTUs per Hour = Watts * 3.413. • Total cost for 3 years = (Power Cost + Cooling Cost) * 3 (years) Power and Cooling Requirements from vendor websites, using max. configurations. Using IBM, Dell and HP max. BTU/hr numbers - from online System Service Manuals and Product Guides Topic #: Topic Title 8-way Price x440 vs. Dell PowerEdge 8450 IBM ~ xSeries 440 8687 - 4RX Rack Two 1.5GHz, 512K L3 Foster, 2GB (512MB x 4) Std. Memory 6 x 1.5G 512KB L3 Procsr Upgr ($2,099/each) SMP Exp. Module IBM 73GB 10K Ultra160 SCSI Hot-Swap SL HDD (2x$1099) 512 MB PC133 ECC SDRAM DIMM (33L3324) (12x$499) 2 years addition annual maintenance 24x7 4hr same day response Total Price $18,099 $12,594 $5,199 $2,198 $5,988 $3,390 $47,468 Dell PowerEdge 8450 8x900 MHz Intel Pentium III Xeon Processor w/2MB Cache 8GB RAM 8X1GB DIMMs 2x 73GB 10K RPM Ultra 160 SCSI Hard Drive Dell Remote Assistant Card 2.0 3Yrs Same Day 4Hr Response Parts + Onsite Labor (7x24) Total Price Incl Incl Incl Incl Incl $70,065 Pricing from Dell website 11/18/02 Topic #: Topic Title Maximum density / performance BladeCenter Chassis Config Qty L is t Ex t. L i s t Compaq BL20p Chassis Config Qty L is t Ex t. L i s t BL20p Chassis Power Qty L is t Ex t. L i s t BL20p Blade+Chassis Subtotal Qty L is t Ex t. L i s t Compaq BL20p Blade Config Blade Server Config Blade+Chassis Subtotal Qty L is t Ex t. L i s t * Source: http://www.compaq.com/products/servers/platforms/index-bl.html Topic #: Topic Title Implementation and Cost Comparison Cost per server for implementation Number of Servers 5 9 12 20 33 43 64 ACT (requires 1 switch) $291.55/server $224.08 $203.00 $177.70 $162.75 $157.40 $151.61 KVM (requires switch) $316.80/server $282.00 $275.25 $253.35 $237.27 $239.86 $241.73 Total Savings with ACT over KVM $126.25 $521.25 $867 $1513 $2459.25 $3545.75 $5768 What is needed to build a complete system ACT Option 1 KCO per server + 1 4 port LCM KVM 1 KVM cable per server plus the needed number of switches/cascaded to accommodate all servers Topic #: Topic Title Eliminating costs (purchase, labor and utility) 42 Servers CT2 Interconnect KVM Switch Box $0* Cables $54** Total $54 Standard KVM $8,750 ($1458.34 x 6 eight port switches)*** $2,456 ($58.49 x 42)**** $11,206 Standard server with KVM CT2 Interconnect This... or this! * Each x335 servers comes with a cable to chain to the next server. ** Each chain of 1 or up to 42 x335 servers must have one and only one of these cable kits. This kit includes the cable required to attach the last server in the chain to a monitor, keyboard and mouse. *** Using the APC 8 port KVM switch (part number AP9278) priced at $1458.34 on www.cdw.com. Price verified 10/22/2002. **** Using the APC KVM cable kit (part number AP9850) priced at $58.49 on www.cdw.com. Price verified 10/22/2002. Topic #: Topic Title Lower Power and Cooling Costs Less internal heat = greater reliability of system components and less heat vented externally, which results in lower ambient cooling costs. Technology innovations help lower server power needs and therefore lower electricity bills. • x235 Lower power and cooling costs $1,829 vs. Dell's 2600's $2,724* • x335 Lower power and cooling costs $660 vs. HP's DL360's $875* Uni Tower 2-way Tower 4-way Tower Uni Rack 2-way Rack 4-way Rack 8-way Rack IBM x205 - 550 x225 x235 - 2081 max. Dell 600SC - 1137 max. 1600SC - 2275 2600 - 3100 max. x255 - 3412 max. x305 - 512 max. x335 - 751 max. x345 - 341 to 2200 max. x360 - 3566 x440 - 2728 6600 - 4097 max. 350 - 898 max. 1650 - 1033 max. 2650 - 614 6650 - 3073 max. 8450 - Expense $avings! HP ML310 - 1560 ML350 G3 - 1839 ML370 G3 - 2732 ML530 G2 - 2400 DL320 G2 - 682 DL360 G2 - 968 DL380 G3 - 1475 DL580 G2 - 4000 max. DL760 - 5309 max. * Based on 3-years, See detailed calculation in appendix