SAPonPower

An ongoing discussion about SAP infrastructure

HPE acquisition of SGI implications to HANA customers

Last week, HP announced their intention to acquire SGI for $275M, a 30% premium over its market cap prior to the announcement.  This came as a surprise to most people, including me, both that HP would want to do this and how little SGI was worth, a fact that eWeek called “Embarrasing”, http://www.eweek.com/innovation/hpe-buys-sgi-for-275-million-how-far-the-mighty-have-fallen.html.  This raises a whole host of questions that HANA customers might want to consider.

First and foremost, there would appear to be three possible reasons why HP made this acquisition, 1) eliminate a key competitor and undercut Dell and Cisco at the same time, 2) acquire market share, 3) obtain access to superior technology, resources and/or keep them out of the hands of a competitor or some combination of the above.

If HP considered SGI a key competitor, it means that HP was losing a large number of deals to SGI, a fact that has not been released publicly but which would imply that customers are not convinced of Superdome X’s strength in this market.  As many are aware, both Dell and Cisco have resell agreements with SGI for their high end UV HANA systems.  It would seem unlikely that either Dell or Cisco would continue such a relationship with their arch nemesis and as such, this acquisition will seriously undermine the prospects of Dell and Cisco to compete for scale-up HANA workloads such as Suite on HANA and S/4HANA among customers that may need more than 4TB, in the case of Dell, and 6TB, in the case of Cisco.

On the other hand, market share is a reasonable goal, but SGI’s total revenue in the year ending 6/26/15 was only $512M, which would barely be a rounding error on HP’s revenue of $52B for the year ending 10/31/15.  Hard to imagine that HP could be this desperate for a potential 1% increase in revenue, assuming they had 0% overlap in markets.  Of course, they compete in the same markets, so the likely revenue increase is considerably less than even that paltry number.

That brings us to the third option, that the technology of SGI is so good that HP wanted to get their hands on it.  If that is the case, then HP would be admitting that the technology in Superdome X is inadequate for the demands of Big Data and Analytics.  I could not agree more and made such a case in a recent post on this blog.  In that post, I noted the latency inherent in HP’s minimum 8-hop round trip access to any off board resources (remote memory accesses adds another two hops), remember there are only two Intel processors per board in a Superdome X system which can accommodate up to 16 processors. Scale-up transactional workloads typically access data in rows dispersed across NUMA aligned columns, i.e. will constantly be traversing this high latency network.  Of course, this is not surprising since the architecture used in this system is INCREDIBLY OLD having been developed in the early 2000s, i.e. way before the era of Big Data.  But the surprising thing is that this would imply that HP believes SGI’s architecture is better than their own.  Remember, SGI’s UV system uses a point to point, hand wired, 4-bit wide mesh of wires between every two NUMA ASICs in the system, which, for the potential 32-sockets in a single cabinet system means 16 ASICS and 136 wires, if I have done the math correctly.  HP has been critical of the memory protection employed in systems like SGI’s UV which is based on SDDC (Single Device Data Correction).  In HP’s own words about their DDDC+1 memory protection: “This technology delivers up to a 17x improvement in the number of DIMM replacements versus those systems that use only Single-Chip Sparing technologies. Furthermore, DDDC +1 significantly reduces the chances of memory related crashes compared to systems that only have Single-Chip Sparing capabilities”  HP Integrity Superdome X system architecture and RAS Whitepaper.  What is really interesting is that SDDC does not imply even Single-Chip Sparing.

The only one of those options which makes sense to me is the first one, but of course, I have no way of knowing which of the above is correct. One thing is certain; customers considering implementing HANA on a high-end scale-up architecture from either HP or SGI, and Dell and Cisco by extension, are going to have to rethink their options.  HP has not stated which architecture will prevail or if they will keep both, hard to imagine but not out of the question either.  Without concrete direction from HP, it is possible that a customer decision for either architecture could result in almost immediate obsolescence.  I would not enjoy being in a board room of a company or meeting with my CFO to explain how I made a decision for a multi-million dollar solution which is dead-ended, worth 1/2 or less overnight and for which a complete replacement will be required sooner than later.  Likewise, it would be hard to imagine an upcoming decision for a strategic system to run the company’s entire business based on a single flip of a coin.

Now I am going to sound like a commercial for IBM, sorry.  There is an alternative which is rock solid, increasing, not decreasing in value, and has a strong and very clear roadmap, IBM Power Systems.  POWER8 for HANA has been seeing one of the fastest market acceptance rates of any solution in recent memory with hundreds of customers implementing HANA on Power Systems and/or purchasing systems in preparation for such an implementation, ranging from medium sized businesses in high growth markets to huge brand names.  The roadmap was revealed earlier this year at the OpenPower Summit, http://www.nextplatform.com/2016/04/07/ibm-unfolds-power-chip-roadmap-past-2020/.  This roadmap was further backed up with Google’s announcement of their plans for POWER9, http://www.nextplatform.com/2016/04/06/inside-future-google-rackspace-power9-system/, the UK’s SFTC plans, http://www.eweek.com/database/ibm-powers-uk-big-data-research.html worth £313 (roughly $400M based on current exchange rates) and the US DOE’s decision to base its Summit and Sierra supercomputers on IBM POWER9 systems, http://www.anandtech.com/show/8727/nvidia-ibm-supercomputers, a $375M investment, either of which is worth more than the entire value of SGI interestingly enough.  More importantly, these two major wins mean IBM is now contractually obligated to deliver POWER9 thereby ensuring the Power roadmap for a long time to come.  And, of course, IBM has a long history of delivering mission critical systems to customers, evolving and improving the scaling and workload handling characteristics over time while simultaneously improving systems availability.

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August 15, 2016 - Posted by | Uncategorized | , , , , , , , , , ,

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