INDUSTRY

According to a report in Business Week today, supercomputing technology buyers want innovation. Soon after Jeffrey Skolnick took over as head of the Center of Excellence in Bioinformatics at State University of New York at Buffalo in 2002, he bought 2,000 low-end servers from Dell. The center needed a new supercomputer for the massive calculations required for drug discovery, and Skolnick was happy at what he thought would be huge savings. "I was very optimistic," he recalls. Turns out, it wasn't that simple. The servers crashed regularly, and Dell's tech support didn't fix the problem. A Dell spokesman declined to comment on Skolnick's complaint but said other customers at the university were happy with its products. One year later, Skolnick ordered new servers -- and this time he looked for more sophisticated technology instead of low prices. He bought an IBM system comprised of 500 "blade" servers. While pricey, blade servers save on space and electricity costs. Another big advantage is IBM's software, which keeps the blades working in concert so none sit idle waiting for the next task. Skolnick expects the gear to cut his operating costs by 70%. The moral of the story: Innovation is making a comeback. During the technology downturn, buyers scooped up bare-bones servers and made lean-and-mean Dell the fastest-growing server supplier. The $46 billion server industry looked on course to follow PCs, moving inexorably toward commoditization. But that vision turned out to be simplistic. True, Dell continues to thrive and servers are built increasingly on top of standards such as Windows, Linux, and Intel chips. But just as hiring a slew of composers won't get you a Mozart symphony, there's still a need for engineering ingenuity to accomplish complex jobs. "Standards are good," IBM CEO Samuel J. Palmisano said in a recent speech. "But there's incredible room for innovation." That's having a major impact on computer makers -- especially Big Blue. A Feb. 27 report from researcher IDC shows IBM, which spends more than $1 billion on server research and development each year, is thriving in most segments of the market. It dominates the blade market, the fastest-growing server sector, with a 35% share. Most surprising, IBM is growing faster than Dell in key segments of the low-end server market. According to the IDC report, Big Blue had the fastest percentage growth for the past eight quarters in the market for Intel servers, which cost $1,000 to $25,000. One key reason: IBM sells servers with 8 to 16 Intel chips, while Dell has stopped selling those more complex systems. IBM is using it’s know how in 16-chip servers to deliver other innovations: Customers can rent supercomputing power from Intel clusters in IBM's new hosting centers. Sun and Hewlett-Packard are making their own bets on innovations. This summer, HP will start selling a high-end server that has 128 processors, up from 64 chips. Meanwhile, Sun has been investing heavily in what it calls "throughput" computing. These are servers with a chip that can run two programs at once -- leading to an 80% improvement over processing one job at a time. The company expects to introduce the first throughput server this summer. No question, cost is a critical factor in our industry. But buyers such as Skolnick are showing that once again, innovation is important, too.