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Another quarter, another few hundred new UCS customers

About 1100 new customers, actually. Up from slightly more than 1700 customers last quarter, or 64% Q/Q growth in the customer base. Or up 2800% from when we started shipping a mere 16 months ago. Now, servers are hardly a new product category. Every single one of these customers already had a preferred server vendor, often of many years standing, and generally with deep pockets and all kinds of contractual mechanisms to help maintain stickiness of heavily commoditized gear. But they decided to give us a shot, and some 30% have already come back with repeat orders as they begin to scale out their UCS installments.

You may be wondering who those customers might be and why they chose UCS. Wonder no more.  There’s a fairly representative sample of customers over on Sean McGee’s blog, which includes both the published Cisco case studies as well as a few other public accounts of UCS adoption. His roundup encompasses a fair number of small-to-midsize enterprises, some large financials, quite a number of healthcare entities, public sector and service providers from around the world. In other words, UCS is interesting to all kinds of people with all kinds of different challenges.

One customer recently told another blogger about why they picked UCS over the field of usual suspects: lower cost (both cap-ex and op-ex), scalable (from small to very large installations), compatible with other key data center players, very easy to deploy and manage, and incredible performance improvements. As you go through the other case studies, you’ll continually see the same themes.  People who have UCS typically love it—personally, I’ve had people buttonhole me at industry events just to tell me so.

The customer example above happens to focus on performance improvements for a virtualized environment, but customers see equally strong gains with bare-metal apps. To pick one example, EMC is migrating their Oracle apps off of Sun RISC platforms to UCS. Cisco IT is doing the same (we currently have over 2500 UCS systems in production), although in our case, the legacy gear is a competitor’s x86 platform. Here are a few of the results of the Cisco IT efforts:

Service providers are typically looking at even greater economies of scale than the above, in terms of hardware TCO with UCS. And for them, speed of service delivery doesn’t just mean less-stressed IT admins and happier stakeholders, it means a competitive edge in acquiring and keeping new business.

This information about the growth of our customer base also has bearing on another recent item of industry discussion. While we have yet to formally report UCS revenue numbers to IDC or other firms, John Chambers indicated to the investor community in September that, based on UCS revenues compared to IDC’s published estimates of competitor revenues and market share, we had reached #3 in the N. American x86 blade market. This was met with some skepticism in the blogosphere, which is fair since the claim was not published by IDC itself, but some also appeared to misread the statement as “#3 in the server market” which would clearly necessitate a much larger revenue base than the x86 blade market.

Oppenheimer channel checks estimated an annualized run rate of $200-250M in revenues at the end of our Q4 (July), in line with run rate statements Mr. Chambers had made previously. And then we indicated a $500M annualized run rate in our FYQ1 earnings call on Nov. 10th. This is a material statement, based on existing revenue numbers and bolstered by the fact that many of our early customers (first purchased a year or so ago) are now entering full-scale UCS deployment phases. If you match the above information up with industry revenue numbers available from IDC and others, you can determine for yourself how viable Cisco’s claims to rapid x86 blade share gains are.

The Automation Imperative

So what’s with the increased interest in automation lately?  No doubt you’ve noticed there have been more than a few blogs already written on this site and others espousing the importance and value of automation.  (“Meet the Newest Member of Your Data Center Operations Team,” Tere’ Bracco, November 8, 2010 and “Mad Scientist Alert,” Christopher Kennessey, October 27, 2010) What trends lie behind this demand?  Three come to mind:

1)     Disappearing cost-benefit of offshoring

2)     Increasing skills shortage

3)     Growing adoption of virtualization/cloud technologies

And each of these deserves a bit more exploration. Today, I will focus on offshoring and leave the other two for future blogs.

Moving IT operations to low-cost parts of the world has been a very lucrative exercise for the past two decades.  However, the financial benefits that were obvious 10 years ago are mostly gone thanks to increasing salaries in India, China, and other emerging countries combined with rising hassle costs (compliance, regulations, security, communications, language, and management) associated with off-shoring.  Here is a quote from Sramana Mitra who wrote a very well publicized and much debated article in 2008 titled “The death of Indian outsourcing” (  She writes “Rising wages in the most popular offshore centers (especially Bangalore), are eroding the cost advantage that drove this business to India in the first place. When the practice began, there was a 1:10 cost advantage. Today, this has dropped to 1:3. Over the next 5 years, perhaps, it won’t make sense to send work to India anymore.”  Further complicating the offshoring play is the 20-40% attrition rates seen in many of these low-cost countries.

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Who to follow for Cisco UCS?

Last week this question popped up on Twitter, so I thought it might be helpful to pull all the responses together into a concise list.These are the ones that are frequently sighted for sharing information, problems and solutions with the broader community.

I’m sure we’ve missed many people, blogs or other great sites for information, so please help us by adding more in the comments. You can follow this via a Twitter list.

NOTE: The content on the blogs listed below are not official Cisco statements or opinions, but often contains in-depth technical details and experience from live UCS deployments. Official Cisco UCS content: such as Products, Case-Studies, Documentation, Developer Community is available via

Cisco Customers
@colovirtColoVirt blog (Service Provider)
@ThomasMaurerThomas Maurer Blog (Service Provider)
@mikestanley – Desktop Virtualization
@bigmike2002 (Insurance)

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New Whitepaper: Cisco UCS, Citrix XenDesktop, and Atlantis ILIO

Published this week: this new whitepaper discusses the joint solution built on Cisco UCS, Citrix XenDesktop, and Atlantis ILIO – designed to deliver stateless VDI desktops with a shared master disk implementation, providing storage IOPS offload, reduced up-front CAPEX, and increased desktop/application performance.  The Atlantis ILIO solution has been tested for interoperability and scalability with the Cisco UCS and Citrix XenDesktop Validated Design (CVD), to deliver faster desktop boot times, logon, antivirus scanning and overall desktop performance.  The whitepaper is available for download here

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Bringing Virtualized, Multi-Tenancy to Data Center Networks

Over the last few weeks you’ve probably seen several announcements about expanded delivery from Cisco and our ecosystem partners in the area of Integrated Compute Stacks; specifically around SAP and VMware View 4.5 support on VCE Vblock, and E-SMT support on FlexPod for VMware. These solutions are allowing companies to take the next step in a journey towards Private Cloud and delivery of Better IT services for their business and customers. By simplifying the ordering, sizing, deployment, automation and integration of virtualization within the Data Center, customers are beginning to see the transformation from a 70/30 environment focused on maintenance to one that can free up capital and human resources to drive new innovation. Read More »

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