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HP inks deal with Foxconn to build lower-cost servers

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April 30, 2014

HP is trying to keep its dwindling server market share from lower cost Asian makers that are eating into its own shipments by inking a deal with China's Foxconn in an effort to reduce the cost of lower-end servers. HP had been mulling the decision for several months already.

When it comes to the Cloud, the so-called 'white box' server market is still a rapidly growing market, according market research firm IDC.

But besides Foxconn, there are a lot of other lower cost server makers in Asia, including offerings from Quanta Computer, Wistron, Inventec and Compal Electronics, among others.

Those Chinese and Taiwanese hardware-builders account for single-digit percentage market revenues and are still overshadowed by HP itself, Dell and Lenovo.

However, they are still considered to be forces to be dealt with in the United States, producing servers for big names including Google, Amazon, Sun Hosting, Rackspace and Facebook.

Against such a backdrop, HP has signed a strategic commercial agreement with Foxconn to build a new line of cloud-optimized servers targeting that very market segment.

The servers HP wants the deal to work include quick customer response times and volume manufacturing that result in high-density, easy to manage, cost competitive hardware.

Server specifications, prices and availability are expected once the non-equity joint venture takes effect from tomorrow, but HP said the line will sit alongside its existing ProLiant systems.

In prepared comments, HP CEO Meg Whitman said it was combining its innovation with Foxconn's high-volume design and manufacturing capabilities.

Foxconn CEO Terry Gou added-- "Cloud computing is radically changing the entire supply chain for the server market as customers place new demand on breadth of design capability, value-oriented solutions, large scale and global manufacturing capabilities."

To be sure, Foxconn already builds HP servers, storage and integrated custom built systems in EMEA. The plants are Foxconn-owned but HP teams are on site for planning, logistics and quality assurance.

In other IT news

LSI said yesterday that it has added some faster chips to its Nytro PCIe server flash cards. Now, SQL Server 2014 can run in-memory. LSI's updated Nytro cards provide a server with PCIe-connected flash.

SQL Server 2014 has a Buffer Pool Extension feature that extends into flash memory where it functions as a level 2 cache, subordinate to the level 1 cache which is DRAM.

That means, where the SQL Server 2014 working set is bigger than the L1 cache, it can avoid going to disk for data it wants that isn't in the L1 cache and in that manner it can run faster.

SQL Server 2014 will automatically transfer frequently accessed read data into the L2 cache, by writing them into a BPE file.

An Alter Server Configuration command is used to place the BPE file on the Nytro card.

The buffer pool extension feature extends the buffer pool cache with non-volatile storage, usually SSD. Because of this extension, the buffer pool can accommodate a larger database working set, which forces the paging of I/Os between RAM and the SSDs.

This effectively offloads small random I/Os from mechanical disks to SSDs. Because of the lower latency and better random I/O performance of SSDs, the buffer pool extension significantly improves I/O throughput, especially when dealing with large databases.

To be sure, Fusion-io's PCIe flash cards can support the BPE feature in SQL Server 2014, and we would suspect there's a set of Microsoft-certified PCIe flash cards and SSDs for BPE as well as the Fusion-io and LSI Nytro products.

In other IT news

Earlier this morning, IBM said it has launched its new cloud marketplace, a PaaS (platform-as-a-service) web property that offers IBM and third party a broad base of IT services.

The marketplace has three main elements. The foundation is the familiar SoftLayer infrastructure-as-a-service element, which like competing services from AWS, Google and Microsoft, allows enterprise customers cloud servers and then discard them when not needed anymore.

A new piece of IBM's cloud is the Bluemix platform-as-a-service play. Bluemix is based on Pivotal's CloudFoundry and offers its rapid deployment of services that are ready to run apps, as distinct from the IaaS modus operandi of rolling one's own servers.

Overall, Bluemix also offers IBM middleware and new services tailored to big data. The marketplace itself is a SaaS shopfront blending IBM's own software and that of its partners.

IBM has hinted at most of this for several months already, and the fact that it has now launched the service is a milestone rather than a revelation.

But this places Big Blue in the cloud game like never before and does so in a powerful way-- the likes of AWS have reached out to independent software developers to help them deliver cloud subscription services, but IBM has been helping that market get ready for several years.

Combining PaaS, IaaS and SaaS also gives IBM plenty of depth, again a useful distinction. And another element in IBM's favor is its deep roots in enterprise IT departments.

Cloud contenders have clearly done well with startups, those that need to operate at web scale and pockets within IT departments.

IBM can now satisfy those users' needs but also conduct conversations that go well beyond infrastructure simplification and cost-cutting.

And of course, IBM has to be in this market-- it's very clear that IT departments are letting go of their on-premises software and equipment at a rapid rate.

However, it will be interesting to see how much marketing muscle IBM swings behind its new cloud capers and how it positions them against its competition.

In other IT news

Chinese hardware maker Huawei said today that allegations the company provides backdoors for espionage in its communications equipment remain unproven and would be commercial suicide.

“The hypothesis that our equipment could be used for espionage by the Chinese government has never been proven,” spokesman Scott Sykes said at the company’s annual global analyst event in Shenzen.

“If it were ever proven, we would lose 65 percent of our business overnight. That would be corporate suicide,” he added.

As the world’s third largest networking equipment supplier, Huawei has raised several concerns in the internet community.

For instance, Huawei was banned from bidding for contracts for the Australian national data backbone.

But documents disclosed by Edward Snowden this year suggest that Huawei may be more sinned against than sinner. The United States National Security Agency’s ‘Tailored Access Operations’ managed to break into Huawei’s corporate servers, and by 2010 was reading corporate email and examining the source code used in Huawei’s products.

“We currently have good access and so much data that we don’t know what to do with it,” boasted one NSA briefing. Worse, the slides also disclose the NSA intended to plant its own backdoors in Huawei firmware.

A report by Britain’s Intelligent and Security Committee in 2013 was critical of British Telecom, which uses Huawei for its C21 network, for not informing ministers of its decision to use the supplier for what it regards as critical national infrastructure.

But like the U.S. Senate’s report the previous year, the committee offered no evidence of existing back doors.

“The Security Service had already told us in early 2008 that, theoretically, China may be able to exploit any vulnerabilities in Huawei’s equipment in order to gain some access to the BT network, which would provide them with an attractive espionage opportunity”, the committee reported.

Overall, Huawei now works with second and third tier phone companies in the United States. It abandoned an attempt to purchase 3Com and says that it doesn’t plan on making any acquisitions in the next ten years.

“Broadly, we have an impeccable track record with 500 telcos in over 150 countries. There's never been a security issue of any kind,” Sykes told the press. “We wouldn't be a $40 billion company if we're not good at building secure networks. It simply would not be possible. About sixty-five percent of our business is outside China,” he added.

Source: LSI.

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