In the June 2007 Metal Market report, enterprise-class application server hardware prices from major online vendors scattered from 2006’s tight convergence at the $6,000 mark. In this January 2008 report, IBM prices rise considerably while Apple and Dell drop. Include Apple when investigating comparable HP and IBM servers.

The Metal Market

The Metal Market reflects Info-Tech’s regular survey of server vendors offering online ordering and customization. According to Info-Tech Indaba research, 52% of Info-Tech IRD members purchase servers from OEMs. Of these server purchases, 25% are conducted online, increasing to nearly 30% when enterprises acquire servers to expand infrastructure.

In January 2008, standard application server prices generally dropped when compared to last June. January’s survey reveals a price-spread of over $3,500 on a standard server build (see below), $500 broader than in June 2007. However, the average price decreased by about $90.

Vendors shaved up to $1000 off previous prices, with the exception of IBM. IBM prices rose significantly, with pricing on its previously ultra-discounted AMD server increasing by $2,000.

Apple slashed $800 from the price of its Intel Xeon-based Xserve. Allowing $800 for a comparable Windows OS purchase, Apple’s Xserve is now within $250 of HP and IBM pricing.

This January 2008 report standardizes the service offering selection to 365, 7x24, 4 hour onsite (e.g., Dell’s Silver service level). Previous Metal Market reports allowed some variation in this selection. Gateway now appears as Gateway Pro, an MPC brand, following MPC’s acquisition of Gateway’s server business in October 2007.

Price Comparison

This pricing comparison uses an industry standard database/application server configuration to illustrate relative cost differences between vendors. The baseline configuration calls for a 2U, 2-processor, dual-core server with 4GB of RAM and 292GB of hard drive space. The baseline system specs for the January 2008 comparison remain unchanged from June 2007. We priced the following system (exceptions noted in the text below):

• (2) Dual-core Intel Xeon 5160 3.0Ghz processors – or – (2) Dual-core AMD Opteron 2212HE 2.0Ghz processors.
• 4GB RAM (4x1GB).
• (2) 146GB 3.5” SAS HDDs.
• CD-RW/DVD Combo Drive.
• Dual Ethernet NIC.
• Redundant power supply with appropriate power cables.
• 3 years, 7x24, 4-hour on-site response service plan.
• Windows Server 2003 Standard Edition R2 w/5 CALs, preinstalled.
• No mouse, keyboard, or monitor.

* The Apple Xserve is a 1U rack-mount and does not ship with Microsoft Windows. For equivalence, $800 is added to reflect the cost of the Microsoft OS w/5 CALs.

^ The Intel-based Gateway Pro/MPC model does not offer an equivalent CPU option. $300 is added to adjust for the cost of a quad-core processor equivalent to the two dual-core baseline processors.

Because configuration options from competing vendors vary, server pricing comparisons present something of an apples-to-oranges comparison. For example, Gateway Pro (now a division of MPC) no longer offers an option for two Intel Xeon 5160 Dual-core processors. We selected a single 2.6Ghz quad-core processor. To compensate for the difference, we add $300 (a rough estimate of the cost difference for an equivalent processor) before finalizing our price ranking.

Gateway was split up and purchased by Acer and MPC in October 2007. MPC acquired Gateway’s Gateway Pro server division. Gateway Pro servers are available from MPC’s Web site, but will be merged into MPC’s product line by October 2008. Interestingly, MPC’s Gateway Pro pricing is far more competitive (and in-line with Gateway’s previous pricing) than MPC’s own core NetFRAME brand.

Acer acquired Gateway’s Desktop, Notebook, and consumer-oriented product lines. Acer also offers a 2U rack-mount Intel-based server in this category, the Altos R720, but pricing is not available online from Acer – US buyers will need to go to CDW, Tiger Direct, Best Buy for Business, or sites like Buy.com.

Key Takeaways

1. Determine the required server configuration. Flesh out specifications before approaching online configurators for pricing. Adjust the pricing model where online pricing reveals better options. In other words, if a 300GB 3.5” HDD costs less than a comparable 2.5” form-factor, consider redefining the desired system specification to a 3.5” drive-bay configuration. Be sure to recalculate for all vendors.
2. Develop configurator skills. With dozens of options, lots of fine print, and a mathematics text full of numbers and symbols, online configurators can numb even the sharpest minds. Watch out for these pitfalls:

• Taking shortcuts when configuring. For example, many vendors provide several options for configuration within the same class of server. One of these options may be the base option, but others may already have the desired processor combination selected. One such vendor, HP, charges nearly $400 more for the exact same system when built using the pre-selected processors option instead of starting from scratch.
• Configurator default settings. Some online configurators default to choices that may overserve the enterprise and increase costs. Confirm each selection on all pages of the configurator form.

3. Shop for the lowest price. IT managers will need to weigh slight performance differences and management software compatibility against bottom-line price differences. Most mid-sized enterprises are safe to select based on lowest price. In early-January 2008, buyers should price AMD Opteron-based units and look to Gateway Pro/MPC and Dell for the lowest prices.

Bottom Line

Info-Tech’s January 2008 Metal Market report sees continued deep discounts on AMD-based servers, as well as increasingly competitive Apple Intel-based server pricing. IT buyers pricing x86 application servers should look first to units based on AMD Opteron processors from Gateway Pro/MPC and Dell.