Intel Targets Telecom Server Market
Intel is offering two basic systems to makers of telecom equipment. These are based on dual-processor Pentium III motherboards. Vendors will add their own CPUs, operating systems, and interfaces to these "building blocks" to create specialized servers for service provider networks. Intel says the chassis meet Network Equipment Building Specification (NEBS) and all environmental standards set by the European Telecommunications Standards Institute (ETSI).
The new Intel kits are designed to compete with the Netra series of servers offered by Sun Microsystems Inc. (Nasdaq: SUNW), which are thought to comprise 60 percent of the market for servers used by vendors such as Lucent Technologies Inc. (NYSE: LU) and Nortel Networks Corp. (NYSE/Toronto: NT) in building carrier solutions.
Both of these telecom vendors, for instance, use Sun's Netra servers as needed to augment the setup of IP messaging, portal services, and other computing-intensive telecom applications based on their gear.
That's a piece of the action Intel covets. "Sun is selling about 30,000 Netras per quarter. We feel this is a robust market just at the starting point," says Shantanu Gupta, director of marketing for telecom platforms at Intel.
Gupta says he envisions Intel's "server building blocks" becoming de rigeur for vendors who need servers to augment a growing roster of applications for carriers. Optical networking, storage networking, and wireless infrastructure are all possibilities.
"We know there's a slowdown right now, but we also think we are nearing the start of a ten-year investment by many carriers, particularly in next-generation wireless infrastructure," Gupta says, noting that servers built from Intel's kit might take over functions such as prepaid call management, unified messaging, and location searches for third-generation wireless services, including those based on optical infrastructure.
"Our goal is to offer OEMs double the performance at half the price of Sun's [low-end Netra series]," Gupta asserts.
But it's going to take awhile for the plan to work. For one thing, Intel can't yet state that its Pentium-based servers are as fast or as scaleable as the Netra series. That's because Netra is based on more powerful RISC (reduced instruction set computing) chips.
Intel admits it's not able to compete at RISC levels yet, but just wait, say spokespeople. "There are a lot of things these servers can do right now -- storage control, authentication, and firewall servers," Gupta says. "The platforms are in trials with OEM customers for release in the first or second quarter of 2002." But the kits' real value, he says, will come when Intel adds its own high-performance Xeon and Itanium chips, which feature RISC-like capabilities, in 2002 and 2003.
Sun doesn't seem to be running for cover just yet. "Anytime a competitor comes to market it validates our approach and we need to keep on our toes," says Bret Martin, senior manager of network equipment provider (NEP) systems at Sun. But he says he's "uneasy" looking at Intel's new server building blocks -- and not because he's afraid of the competition.
"This [market] requires a whole server systems approach that includes not only the systems but operating software, middleware, network communications, all of which we offer... not just one thing." To Martin, a ruggedized chassis with a Pentium motherboard doesn't fit the bill.
Still, there is risk in underestimating a company as large and influential as Intel. And this latest move also signals the vendor is energetically seeking markets where it can offset losses in areas where the economic slowdown may be hitting hard.
It's also important to note that Intel isn't patiently sitting by waiting for future markets to materialize -- as evidenced by the company's aggressive investment in optical components (see Intel Invests in Scottish Foundry). Whether it can wrest telecom server business from Sun anytime soon, however, remains to be seen.
— Mary Jander, Senior Editor, Light Reading