Will Bullion turn corporate IT bullish on Bull?

As could be expected after the launch of its HPC-oriented systems, Bull also applies its server platform technology to « mainstream » commercial servers. Arriving amidst a flurry of product announcements based on the new Xeon 7500 (Nehalem EX) chips, the new servers do offer a unique set of characteristics that make them relevant for key business applications. Nevertheless, the announcement did not make it clear how Bull will give the new product the market exposure it deserves. Duquesne Group believes that Bull will need to take some additional steps to re-establish itself as a leading supplier of large commercial server infrastructures.

The MESCA architecture provides the basis for scaleable SMP servers, with design choices that appear reasonable: for example, sticking to the 2 TB memory capacity that Intel presents as the upper "standard" limit for Nehalem EX-based systems. 2 TB should be more than sufficient for most users, while avoiding excessive complexity.

The Bull servers also offer advanced features in terms of availability and reliability as well as energy efficiency. They definitely leverage the company's long experience of critical systems and address the current key requirements of the market.

In a more unusual way, Bull has elected not to offer these new servers as bare Windows or Linux platforms, but exclusively as virtualisation platforms, with VMware 's vSphere ESXi installed. Bull intends to market Bullion as the platform of choice to implement production-oriented virtualised environments, with a strong focus on mission critical applications such as ERPs, especially SAP.

Even though most organisations have not yet opted for virtualisating their most critical applications, many now have sufficient experience to envision extending this technology to a much broader share of their IT infrastructure. While some issues remain, the benefits are compelling, from both the cost and the manageability standpoints. Appropriate solutions will combine highly reliable and manageable platforms with proper support and services.

Besides Bull itself, some other large services suppliers have started to promote virtualised infrastructures and implementations for SAP (e.g. Deutsche Telekom's T-System). Duquesne Group expects virtualisation of mission-critical applications to become mainstream over the 2010-2013 time period. Indeed, some already virtualised applications (like many collaborative environments, often presented as typical “virtualisation candidates”) are in fact extremely critical to an organisation’s operations and performance!

The NovaScale Bullion announcement therefore appears to be timely. However, Bull's own resources and capacities will not be sufficient to impose the platform as a market leader. Creating a true ecosystem around Bull's offering will be key.

Bull has clearly acquired expertise on virtualising mission-critical environments, and it has also developed consulting and value-added services capabilities. However, since the market targeted by Bullion is much broader than the HPC market, Bull will not succeed here by simply replicating its HPC strategies and tactics. In the HPC “niche”, Bull was able to reach “critical mass” based on its own capabilities together with the targeted acquisition of smaller, specialised companies, and to develop effective, intimate cooperation with select clients. While the latter will be very important also in the high- end commercial server market, Bull cannot expect to achieve – by itself - the critical mass and momentum that is needed for success, if the objective is to acquire a significant, defendable market share.

As a result, finding ways to make Bullion attractive to large ISVs as well as large service providers and integrators will be critical. Instead of attracting expertise and knowledge towards Bull as was done in HPC, the company will need to learn how to disseminate its own “crown jewels of knowledge“ across a true ecosystem of partners – many of these as large, or larger, than Bull itself. This will be a difficult cultural exercise, but it is required to make Bullion a success in the mainstream commercial server market.

As often in the history of Bull, with the Bullion announcement the company demonstrates its strength at designing, engineering and manufacturing high-end servers... and remains weaker when it comes to defining, articulating and executing its go-to-market model. Addressing this challenge will be essential if Bull hopes to move from being a capable “survivor”, which even remains profitable in difficult times, to becoming a “growth leader”, able to transform its expertise into market development beyond its own walls.