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UNIX closes the price gap

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In this article:

Why UNIX vendors prefer to focus on “revenue figures” and Microsoft prefers “units shipped”

Who’s doing the processing?

Most businesses want to run critical applications reliably and work with a server that is both easy to manage and serviceable, not to mention cost effective.

Until now, the sweet spot for Windows NT servers has been in the $3,000 to $25,000 price range, with UNIX servers typically selling for $25,000 to $100,000 or more. However, the recent availability of lower-cost UNIX servers is slowly closing the price gap between NT and UNIX operating system platforms. New servers from Hewlett-Packard, IBM, and Sun are starting to challenge NT, with prices as low as $3,495 to $5,000 for an entry-level configuration.

In 1997 and by 2002, the revenue percentage of UNIX servers will remain fairly constant (from 38% to 39%), while the revenue percentage of NT servers will grow dramatically (from 11% to 28%). On the other hand, the percentage of units shipped will show a trend toward NT (from 34% in 1997 to 49% by 2002) and away from UNIX (from 19% in 1997 to only 12% by 2002).
Source International Data Corp.

All three suppliers acknowledge the price reductions on UNIX servers are in direct response to NT. New low-end RS/6000 servers released in the past year “have effectively replaced comparable servers that debuted in 1994, offering higher performance at less than half the price,” says Rick Cole, product marketing manager in the entry systems segment, for IBM’s RS/6000 in Research Triangle Park, N.C.

It was primarily because UNIX scales so much farther than Windows NT that Baker Boy Bakeshop in Dickinson, N.D., replaced its two-year-old NT server last January with an AIX-based RS/6000 when the company decided to switch to a new software package designed for food production businesses. Baker Boy manufactures frozen bakery products that are sold to food service distributors nationwide.

The RS/6000 43P server costs about $25,000 when fully configured, which is comparable to the cost of an equivalent NT server, according to Jason Yoder, computer operations manager for Baker Boy. And while he thought AIX would be far more difficult to learn, it’s not that different from NT. “We’ve had a few different command lines to learn, but nothing too difficult. And the concepts behind the programs are very similar,” he says.

AT A GLANCE: Baker Boy Bakeshop

The company: A privately held food production business, Baker Boy manufactures frozen bakery products that are sold to food service distributors nationwide.

The problem: Wanted a system the company could grow into, rather than grow out of over time. Scalability of UNIX considered greater than NT when the company decided to switch to a new software package designed for food production businesses.

The solution: An AIX-based RS/6000 server, IBM’s entry-level model 43P.

The IT infrastructure: An IBM RS/6000 43P runs food production business applications developed by Stolz Enterprises Inc. An NT server is used for file and print serving. And a Data General MP 2000 minicomputer still runs payroll, though that is slowly being migrated to the RS/6000.

In business since 1979, privately held Baker Boy had at one time run its operations on a Data General MP2000 minicomputer. While it also had experience with NT, in the last four months, Yoder says UNIX has won over the 10 users currently on the system. “UNIX’s multitasking capabilities enable us to do our work, such as adding printers or users, without disturbing current applications processing.” The NT server had to be rebooted each time a new device, user, or software patch was added to the system, he explains.

While Baker Boy decided to keep the NT server for file and print applications–and for electronic mail–Yoder now believes UNIX, especially AIX, is best for the company’s mission-critical applications.

An attractive alternative

Currently, a growing number of organizations are finding that for critical or high-availability applications, UNIX-based servers now avoid the cost penalty relative to NT in terms of scalable growth. UNIX servers also have the ability to run multiple tasks simultaneously and to continue operating even when certain hardware or software components fail or are swapped out of the system. For these reasons, analysts are revising their predictions about the steady migration to NT servers. International Data Corp., for instance, predicts the revenue derived from UNIX server sales will hold steady through 2002.

At the same time, however, NT server sales will grow from 11% of the market in 1997 to 28% in 2002. The growth potential for NT servers is largely due to the expansion of the low end of the server market, says David Floyer, research director for IDC (see chart, ““Why UNIX vendors prefer ‘revenue figures and Microsoft prefers to focus on units shipped”,) This is the segment that encompasses small- to medium-sized businesses–the 4.5 million companies outside the Fortune 2000, and often less than five years of age–that are increasingly turning to technology to help run their businesses. Low-cost servers lower the threshold for small- and medium-sized businesses to automate their operations.

Still, analysts increasingly maintain that the ability of the UNIX operating system to run both NT and other networking applications makes it an attractive alternative to the more proprietary NT operating platform on a price-performance basis. “The problem is that UNIX is fighting an uphill battle with Microsoft’s advertising and promotional campaigns positioning NT as the small-business server choice,” says Bob Sakakeeny, an analyst with the Boston-based consulting firm Aberdeen Group. He contends that when it comes to cost, UNIX and NT are in the same ballpark.

Lessons learned:
UNIX server prices have dropped to match NT prices, and that enables users to choose systems by application or workload rather than by price considerations.

UNIX is stronger for mission-critical, high-availability applications, while NT is optimized for file and print serving.

Scalability is considered a key UNIX attribute, and NT is still considered limited to four-way implementations (NT is not considered market-tested by users).

Stability and reliability are key features of mission-critical applications that require round-the-clock availability. UNIX provides this far better than NT.

Market perceptions that NT is easier to learn and use are helping to drive NT’s success in the low-end server arena. But users who’ve worked with both operating systems say UNIX’scomplexity is not much greater than NT.

And the ball is in Sun Microsystems’ court. As the largest server maker to offer only UNIX, and not NT, the company will need to get better at selling UNIX, observers say. “UNIX’s ability to run NT applications is critical to its success in the lower price ranges,” says Sakakeeny. “Users must understand that the lower price of UNIX servers today gives them the opportunity to sample a more mature, robust, and reliable operating system that can scale as their organizations grow.”

When opportunity knocks

For Coastal Federal Credit Union when, opportunity knocked, the Raleigh, N.C.-based financial institution opened the door. “If we had to do it over, we would definitely choose a UNIX server again,” says Larry Wilson, president and CEO of Coastal Federal.

Although the credit union is still struggling with minor application software debugging problems that require investing valuable IT staff time to correct, there is no question about the server operating system platform chosen.

With $700 million in assets, Coastal Federal Credit Union needed to provide its 80,000 customers with a home banking application that would track payments and provide personal account information online. The mid-sized banking institution already uses an IBM ES/9000 mainframe for most of its critical operating functions, but chose an AIX-based RS/6000 server, IBM’s entry-level model 43P, to run the home banking application because of the need for security, reliability, and 24×7 availability, says Wilson.

Because Coastal Federal is a nonprofit institution, any competitive advantage gained depends on keeping costs down. Being a small credit union in a market dominated by all kinds of banks, Coastal Federal must be able to keep its prices low to attract and keep customers. That is why the credit union is dedicated to offering home banking and making the system as efficient as possible to access and use.

“UNIX’s multitasking capabilities enable us to do our work, such as adding printers or users, without disturbing current applications processing.”
–Jason Yoder, Baker Boy Bakeshop

IBM recommended the 43P, which is priced from $4,995, just a year ago. Wilson estimates the total cost of the system at over $20,000. But it has been the software and maintenance costs–not the costs of the hardware/operating system–that have dominated the attention of Wilson’s IT staff.

The software, developed by IBM with help from Coastal, is a text-based application that uses a three-color layout and minimal graphics to enable home banking customers to quickly access their accounts. In addition to checking payments and transferring money, customers can order copies of checks and statements and enter stop-payment orders.

“The server is fast, reliable, and very easy to maintain,” Wilson says. And because of its performance capabilities, the IBM RS/6000 can accept three times the 25,000 hits per day it currently receives before Coastal Federal will have to consider upgrading to a larger model.

Luckily, the UNIX-based server was designed so that if the application fails, it automatically recovers itself. That’s because Coastal Federal is still tinkering with the application to make it faster. And such failures occur more often than the credit union would like, Wilson admits.

Constant availability

Downtime is increasingly difficult for many companies to tolerate. This is especially true for organizations that have applications that serve customers or are supposed to provide constant accessibility to information. To combat this problem, industries such as banking, insurance, and telecommunications–even Internet service providers (ISPs) and the variety of other Web-based businesses cropping up–are largely opting for UNIX servers to support their needs.

Take two-year-old Net-Temps, a Tyngsboro, Mass.-based Internet job posting service that has been growing at a rate of 20% per month for the past 26 consecutive months. The company is now running a Sun Enterprise 450 server with four CPUs, 1GB of memory and four 4GB hard disk drives. Since its inception, the company has upgraded its server hardware three times. “We’ve bought each of our Sun servers thinking it will work for up to a year or more, but so far we’ve been upgrading our server just about every six months,” says Gregg Booth, president of Net-Temps.

That dramatic growth, combined with the need for constant online availability, has made Sun’s UNIX platforms shine in the eyes of Net-Temps executives. “Each of the UNIX-based Sun servers we’ve purchased has been manageable, stable, and reliable,” Booth says.

The servers have also been reusable. The server used before the E450 is now running the company’s e-mail application, and the server prior to that is handling the company’s résumé bank database.

If we had to do it over, we would definitely choose a UNIX server again,” says Larry Wilson, Coastal Federal Credit Union president.

Net-Temps’ Web server must be up and running 24 hours a day, seven days a week, and be powerful enough to accept 500,000 to 700,000 hits per day. “When customers can’t access our résumé bank to search for job applicants, for example, the phone lines light up quickly, and we can’t tolerate unhappy customers,” says Booth.

For a fee, Net-Temps posts jobs for temporary services companies and employment agencies. These firms pay Net-Temps a monthly subscription fee that enables each to send information on job openings and current job candidates’ résumés to Net-Temps over the Internet. Net-Temps then distributes that information to about 100 other Web sites that list jobs.

Company vice president Kevin Strange had experience working with UNIX and Sun systems at a former job and decided to purchase a Sun server to run the company’s online application after evaluating both Microsoft NT and Digital Equipment’s Alpha servers. “NT is simply not as stable. We can’t afford downtime, and with an NT server, if a mouse breaks the server goes down,” he says.

Choosing a UNIX server over an NT server, or another server, is not always a price-sensitive decision. At Net-Temps, there was more concern for online availability, uptime, and reliability than for any difference in the price of the platforms.

AT A GLANCE: Coastal Federal Credit Union
The company: A financial institution with $700 million in assets and 80,000 customers.

The problem: To provide customers with a home banking application that would track payments and provide personal account information online.

The solution: An AIX-based RS/6000 server, IBM’s entry-level model 43P.

The IT infrastructure: An IBM ES/9000 mainframe is used for primary bank production applications; IBM RS/6000 43P for online banking application.

The ability to add more Sun CPU modules without reconfiguring the network was also key for Strange. With a steady growth rate of 20% per month, “the ability to add CPUs without interrupting service to subscribers is one big advantage,” Strange says.

In all, Net-Temps’ current system cost about $55,000, but Strange expects to add another two or three E450 modules in about six months. A similarly configured NT system would have cost roughly the same, Strange says, although he’s convinced UNIX performs more reliably for this type of application.

Booming business demands

A UNIX-based server has also been the answer for business applications developer Emerging Technology Solutions. ETS has increasingly become aware that only a UNIX-based server can provide the scalability and reliability needed to run its booming business. The still privately held Denver-based company has doubled in size every year since it was founded. It now has 25 employees and growing investor interest.

Last summer, the five-year-old developer of Web-enabled general business applications, including its turnkey “Business in a Box” application software, switched from running its operations on an NT server to a UNIX server–an IBM RS/6000 entry-level model 43P, running AIX.

IT organizations are increasingly looking at an operating system’s specific capabilities to determine which one will work the best in a given environment.
Source International Data Corp.

According to company president Bud Brasier, the software ETS sells is “operating system agnostic.” The programs run under UNIX, NT, OS/2 and IBM’s O, but because of ETS’s dramatic growth, concerns about the stability and growth potential of NT servers have cropped up. “We’re growing so fast, we didn’t want to run into problems scaling NT for our applications, some of which require round-the-clock availability.”

In Brasier’s opinion, “NT still isn’t scalable enough for most mission-critical applications. Most businesses are finding that, unlike UNIX, they can’t install multiple NT servers for tens of thousands of users and make the systems work cost effectively.”

So after testing ETS’s business applications on IBM’s AIX server, Brasier made the switch to UNIX—both to run ETS’s business and for his customers who ask for suggestions about which operating platform works best with ETS products. “I try not to get involved in any religious battles with customers who have an obvious bias toward another operating system. But for those who don’t, or who aren’t sure which operating system is best to run their company’s mission-critical applications, I recommend UNIX,” Brasier says.

Looking ahead

With the price differential of UNIX going away, it’s increasingly the application or workload that determines which server platform is best. The other drivers, such as an application that will only run on one type of operating system, or a company’s dedication to a single operating environment are steadily decreasing in importance, says IDC’s Floyer. Instead, “IT organizations are starting to see each type of operating system environment as a specific tool in an ever-growing toolbox they need to do their jobs.”

For instance, Floyer says NT maps well with file and print services as well as collaborative computing applications such as e-mail. UNIX, while also used for collaborative computing, is well-tuned for high-availability workloads, transaction processing (which has been dominated by mainframe operating systems), and decision-support applications (see chart, “Who’s doing the processing?“). Basically, UNIX offers better price-performance for mission-critical applications where size and speed are important. In fact, says Floyer, now that UNIX is coming down in price, Microsoft must scramble to add scalability to remain competitive.

For more information…

Also in this issue of PlugIn Datamation:
“Make NT work for you — even if it’s not your only OS”
IT managers are learning to make good use of Windows NT server, sometimes running it side-by-side with other operating systems in a quest for the least expensive, most effective use of computing resources.

And in a few years, when vendors are able to offer systems featuring the Merced chip, which can run NT and UNIX on the same microprocessor architecture, the server operating system choice will be even more clearly defined by the application or workload to be deployed. (Merced is being designed to upgrade the performance of NT and UNIX running on a single platform.) But that hybrid processor technology is not expected to be available from partners Intel and Hewlett-Packard until late next year at the earliest. “It’s still too early to judge the impact Merced will have on the market,” says Aberdeen’s Sakakeeny.

In the future, analysts believe both NT and UNIX servers will continue to dominate their current pricing sweet spots. While users favor NT for PC-based, low-end servers, UNIX will remain the popular choice for servers in the $25,000-and-up price range. That’s because most of the small- to mid-sized businesses in the low-end server arena are more familiar with Microsoft, having used Windows. And the vast majority of these companies see NT as technology that is easier to learn than UNIX.

The reason behind this thinking is that many users still view UNIX as too complicated, while NT is easier to learn and use as a server operating system. But UNIX users and software developers say the problem really lies in a lack of UNIX training to match the number and quality of NT training courses currently available. “Just as many businesses still need training in NT just as they would in UNIX to run their businesses, so the complexity tradeoff isn’t really a valid point,” says ETS’s Brasier.

However, once smaller organizations start to add applications that require 24×7 availability, or they need to scale their systems beyond clusters of four CPUs as NT does, UNIX becomes a more attractive choice, analysts say. //

Barbara DePompa Reimers is a freelance writer and editor based in Germantown, Md.

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