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To: pgerassi who wrote (138817)	7/9/2001 9:06:33 AM
From: Mary Cluney	Read Replies (3) \| Respond to of 186894

Dear Pete: <<<Have you ever written such an application? Did you install a system for such an application? Did you administer such a system? Did you purchase server hardware?>>> How did your medical billing system using the tape library system work out? Did you deliver the system on time and within budget? How was the response time from the end user’s perspective? Did your client feel they received a good return on their investment? Of course, none of this is any of my business. My point, I guess, is that if you are in an elevator and it is in a free fall, you don’t have to be an elevator mechanic to know that there is something drastically wrong. In any case, I am not challenging your technical knowledge, your knowledge of client management, hardware selection methodology, computer systems design, applications program development, systems programming, or any of the other myriad tasks involved in large enterprise systems implementation. (Although I’ve always thought that it took large teams of people, each with their own areas of in- depth expertise.) But, I am questioning your ability to reason with respect to knowing the size and scope of the server market - exactly what makes up the definition of a server, as shipped from first tier manufacturers, and what shows up on that invoice. My contention has been that of the reported 4M servers shipped each year, the total value is approximately $60B. I expect the growth in this market over the next several years to be at about or near 15% and that the total market size will reach $90B within three years. Further, I contend (my WAG) that the CPU cost of these systems shipped is closer to 25% rather than the 1 or 2 percent and sometimes .1 or .2 percent that you allude to. As for example, I went to the Dell website and very quickly configured three low end servers. These examples follow: 1. A small business starter server configuration PowerEdge 300SC. Single processor 800 mhz/256k cache PIII with 128MB SDRAM 10 GB HDD, Red Hat Linux with 3 yr service support. (no monitor) Server cost $1010.00. CPU cost $400.00 2. PowerEdge 4400 dual processor system Dual PIII Xeon 1ghz/256k caache, 128MB SDRAM 73 GB HDD, 3 yr. Hardware Support. Server Cost $5449 CPU cost $1400.00 3. Scalable Enterprize Server PowerEdge 6400 Quad Xeon 700 mhz w/2m cache, 8GB RAM dual 73GB Raid HDD Windows 2000 Server 5 Client License Server Cost $30,228 CPU cost $10,450 The other common sense point I want to make is that if you are going to spend $1M on a system, you will not risk the reliability of your system by spending only 1 percent on the heart of the system with the lowest cost processors that you could conceivably get away with Of course, we can go back and forth like this forever. You could come back with a number of configurations that sound reasonable where the cpu component is only 1 or 2 percent. But, in order to pre-empt that, I offer the following 2% example: The 2002 Winter Olympics in Salt Lake City has a budget of $1.2B. $300M will be spent on computer technology to track and report all the events. Most of that will be spent on systems integration. My guess is that they will spend something like $50M on hardware. Further, my guess is that for 5,000 workstations and notebook computers and 500 servers they plan to purchase, they will spend almost $25M. The cpu content will cost in the neighborhood of $6M. That will give you your 2 percent cpu cost vis a vis $300M spending on Information Technology. Theoretically, you could reach the .2 percent level if you offer the Olympic committee an all AMD single processor solution with an ASP of $110. FWIW, Mary