IBM Aims to Transform Its HPC Business

By Michael Feldman

November 4, 2010

IBM’s HPC business unit, aka Deep Computing, has always been more about fielding cutting-edge platforms than making profits. Although the company has produced some ground-breaking supercomputing systems over the years and has captured a large chunk of the HPC server market, the business proposition was not always clear. But according to a conversation I had recently with Herb Schultz, marketing manager for IBM’s Deep Computing unit, that looks to be changing.

According to Schultz, the company is revamping its approach to its high performance computing business in several dimensions. These include new alliances, sales strategies, and solutions, as well as a shift in HPC market segment focus. Overall, says Schultz, that will involve transitioning from a model that relies on selling hardware parts to one that offers complete integrated solutions.

Schultz admits IBM Deep Computing has probably put forth this story before, but according to him the incentives are now changing. And by that, he means monetary incentives. Schultz remembers as little as two or three years ago the main metric for the HPC business was revenue. So there would be an awful lot of pressure, for example, to sell a $50 million supercomputer, even if it cost IBM $49.99 million to make. “There is really no appetite in IBM anymore — with some of the leadership changes over the last few years — for revenue that has no profit with it,” says Schultz.

At the core of the strategy shift is the realization that some of the industry’s fastest growing segments, like cloud computing and business analytics, are underpinned by high performance computing technology. Even IBM’s “Smarter Planet” campaign, which covers segments like education, public safety and retail, will draw on HPC technologies. That includes hundreds of new applications, everything from optimizing city traffic flow in real-time using video streams to managing retail inventory with RFID tracking. HPC permeates this class of data-intensive applications.

IBM has decided these new application areas position Deep Computing as a growth engine (read profit center) for the company. At the same time, even traditional HPC — science applications, financial analytics, seismic codes, bioinformatics, etc. — is poised for robust growth. According to IDC, the HPC server revenue is growing at more than twice the rate of the overall server space (6.3 percent CAGR versus 2.6 percent) and will represent 76 percent of the total market increase over the next four years.

But IBM plans to be a bit more particular about market segments. Specifically, they intend to give more attention to customers interested in “better reward for value” — in other words, verticals that are willing to pay more for premium products. In the higher education market, where IBM is traditionally strong, customers are generally reticent to pay for value; they tend to be very price-sensitive. On the other hand, the financial services industry and some manufacturing firms are much more willing to shell out some serious cash if the solution adds to their bottom line.

Schultz says Whirlpool, for example, was able to save a significant amount of money because of better packaging, modeled and designed via HPC. In this case, the number of damaged goods that had to be returned due to faulty packaging was greatly reduced. Schultz estimates that Whirlpool was able to recoup its HPC investment in a matter of weeks.

Devoting more attention to commercial HPC means the company will simultaneously be shifting the Deep Computing product mix, which has skewed heavily toward the high end. Schultz estimates that 70 to 80 percent of IBM’s current HPC revenue is derived from supercomputing systems that cost over $500,000. “They’re tremendous revenue producers, but the profit profile is not all that great.”

The goal is to move a much greater proportion of the HPC sales into the mainstream HPC market — that is, systems under $500K. According to Schultz, they’re looking to increase revenue in this area from around 20 percent today to something closer to 50 percent. In other words, become less like Cray and more like HP and Dell. This is somewhat uncharted territory for the Deep Computing folks, though. “We’ve never been really good at this,” admits Schultz. “We’ve never even tried to be good at this, actually.”

They do have products that serve that market today, namely the System X (x86 server) products, but that group is more geared toward retail and telecom, where performance is not the driving criteria. Some of the System X shift to HPC is occurring organically. For example, the iDataPlex product, a dense x86 server design, was principally aimed at the Web 2.0 market — the i in iDataPlex stands for Internet. But as it turns out, that product is garnering plenty of attention from HPC customers.

The plan is for the Deep Computing group to work closely with the System X team so that more HPC-specific x86-based machinery can be offered. Some of this is already in motion. The recent announcements of a GPU-equipped BladeCenter variant and the iDataPlex dx360 M3 suggests a more purposeful x86 HPC strategy.

But selling hardware alone is not in IBM’s interest and is certainly not where the company’s strength lies. There are already plenty of “value” server vendors out there for do-it-yourself HPC customers. From a company perspective, Big Blue has always made its best margins selling software, services and highly-integrated systems, and it wants to duplicate that model in the Deep Computing group.

High value software like IBM’s General Parallel File System (GPFS), math libraries, and Tivoli Workload Scheduler LoadLeveler have never been marketed or sold aggressively, and were sometimes just given away as incentives to buy the hardware. “We’re leaving 3 to 4 billion dollars on the table every year by not aggressively selling the system software that we’ve got,” says Schultz.

At the same time, IBM plans to implement a better go-to-market strategy for the Deep Computing offerings, using stronger channel partner relationships, as well as greater incentives with business partners and ISVs. The company also plans to find a new route to the market via large system integration firms. The idea is that commercial customers will be able to buy HPC more like appliances, encompassing compute, storage and software, rather than as individual pieces to be cobbled together on-site.

None of this mean they’ll be ceding the high-end supercomputer business to Cray. Especially for top 10 systems and future exascale machines, IBM is committed to be a player. Schultz concedes that the initial return on these elite projects is not very good, but the ROI is there for future IBM products. It’s certainly likely that IBM research projects in areas like phase change memory, 3D chip stacking, silicon photonics and advanced software technology will first show up in high-end HPC systems.

The fact that this strategy is somewhat at odds with Deep Computing’s more pragmatic business approach is worth noting, though. But the way Schultz tells it, the company is committed to getting a good chunk of this high-end R&D funded via government programs such as was done with their DARPA HPCS-funded PERCS work. Down the road, the company is counting on getting a generous slice of the more than $1 billion that the US government plans to spend on exascale technologies over the next five to eight years.

As far as the HPC product mix goes, IBM will stick with its trio of Power-based systems, Blue Gene, and the aforementioned x86 product line. Schultz thinks the Power and Blue Gene lines may converge in five years or so, but for now they’re keeping those products distinct. The first Blue Gene/Q system, Sequoia, is scheduled for delivery to the NNSA in 2011, with the main pipeline expected in 2012. Meanwhile the Power7-based servers have already been out for a year, although the first really large deployment of the souped up IH supercomputing variant of that server will be the NCSA’s Blue Water system, also in 2011.

The only product that failed to make the cut was the Cell-based (PowerXCell 8i) HPC QS22 blades, which one assumes will be phased out at some point. Although that blade was used in the Roadrunner, the first petaflop supercomputer, the Cell processor turned out to be too specialized a solution, especially as GPGPU-based acceleration took hold in the last couple of years.

Whether this Deep Computing makeover works or not remains to be seen. But every large HPC server vendor is tweaking its strategy to one degree or another: Cray is dipping into the mainstream market with its CX1 and CX1000 lines; Dell is ramping up its product line with purpose-built performance gear; HP is doing likewise. All of this is being done to tap into what looks to be a burgeoning commercial HPC market. Like its rivals, IBM doesn’t want to miss that opportunity. “This is one of the higher points for this business over the last 15 years,” says Schultz.

Subscribe to HPCwire's Weekly Update!

Be the most informed person in the room! Stay ahead of the tech trends with industy updates delivered to you every week!

SC Bids Farewell to Denver, Heads to Dallas for 30th

November 17, 2017

After a jam-packed four-day expo and intensive six-day technical program, SC17 has wrapped up another successful event that brought together nearly 13,000 visitors to the Colorado Convention Center in Denver for the larg Read more…

By Tiffany Trader

SC17 Keynote – HPC Powers SKA Efforts to Peer Deep into the Cosmos

November 17, 2017

This week’s SC17 keynote – Life, the Universe and Computing: The Story of the SKA Telescope – was a powerful pitch for the potential of Big Science projects that also showcased the foundational role of high performance computing in modern science. It was also visually stunning. Read more…

By John Russell

How Cities Use HPC at the Edge to Get Smarter

November 17, 2017

Cities are sensoring up, collecting vast troves of data that they’re running through predictive models and using the insights to solve problems that, in some cases, city managers didn’t even know existed. Speaking Read more…

By Doug Black

HPE Extreme Performance Solutions

Harness Scalable Petabyte Storage with HPE Apollo 4510 and HPE StoreEver

As a growing number of connected devices challenges IT departments to rapidly collect, manage, and store troves of data, organizations must adopt a new generation of IT to help them operate quickly and intelligently. Read more…

SC17 Student Cluster Competition Configurations: Fewer Nodes, Way More Accelerators

November 16, 2017

The final configurations for each of the SC17 “Donnybrook in Denver” Student Cluster Competition have been released. Fortunately, each team received their equipment shipments on time and undamaged, so the teams are r Read more…

By Dan Olds

SC Bids Farewell to Denver, Heads to Dallas for 30th

November 17, 2017

After a jam-packed four-day expo and intensive six-day technical program, SC17 has wrapped up another successful event that brought together nearly 13,000 visit Read more…

By Tiffany Trader

SC17 Keynote – HPC Powers SKA Efforts to Peer Deep into the Cosmos

November 17, 2017

This week’s SC17 keynote – Life, the Universe and Computing: The Story of the SKA Telescope – was a powerful pitch for the potential of Big Science projects that also showcased the foundational role of high performance computing in modern science. It was also visually stunning. Read more…

By John Russell

How Cities Use HPC at the Edge to Get Smarter

November 17, 2017

Cities are sensoring up, collecting vast troves of data that they’re running through predictive models and using the insights to solve problems that, in some Read more…

By Doug Black

Student Cluster LINPACK Record Shattered! More LINs Packed Than Ever before!

November 16, 2017

Nanyang Technological University, the pride of Singapore, utterly destroyed the Student Cluster Competition LINPACK record by posting a score of 51.77 TFlop/s a Read more…

By Dan Olds

Hyperion Market Update: ‘Decent’ Growth Led by HPE; AI Transparency a Risk Issue

November 15, 2017

The HPC market update from Hyperion Research (formerly IDC) at the annual SC conference is a business and social “must,” and this year’s presentation at S Read more…

By Doug Black

Nvidia Focuses Its Cloud Containers on HPC Applications

November 14, 2017

Having migrated its top-of-the-line datacenter GPU to the largest cloud vendors, Nvidia is touting its Volta architecture for a range of scientific computing ta Read more…

By George Leopold

HPE Launches ARM-based Apollo System for HPC, AI

November 14, 2017

HPE doubled down on its memory-driven computing vision while expanding its processor portfolio with the announcement yesterday of the company’s first ARM-base Read more…

By Doug Black

OpenACC Shines in Global Climate/Weather Codes

November 14, 2017

OpenACC, the directive-based parallel programming model used mostly for porting codes to GPUs for use on heterogeneous systems, came to SC17 touting impressive Read more…

By John Russell

US Coalesces Plans for First Exascale Supercomputer: Aurora in 2021

September 27, 2017

At the Advanced Scientific Computing Advisory Committee (ASCAC) meeting, in Arlington, Va., yesterday (Sept. 26), it was revealed that the "Aurora" supercompute Read more…

By Tiffany Trader

NERSC Scales Scientific Deep Learning to 15 Petaflops

August 28, 2017

A collaborative effort between Intel, NERSC and Stanford has delivered the first 15-petaflops deep learning software running on HPC platforms and is, according Read more…

By Rob Farber

Oracle Layoffs Reportedly Hit SPARC and Solaris Hard

September 7, 2017

Oracle’s latest layoffs have many wondering if this is the end of the line for the SPARC processor and Solaris OS development. As reported by multiple sources Read more…

By John Russell

Nvidia Responds to Google TPU Benchmarking

April 10, 2017

Nvidia highlights strengths of its newest GPU silicon in response to Google's report on the performance and energy advantages of its custom tensor processor. Read more…

By Tiffany Trader

AMD Showcases Growing Portfolio of EPYC and Radeon-based Systems at SC17

November 13, 2017

AMD’s charge back into HPC and the datacenter is on full display at SC17. Having launched the EPYC processor line in June along with its MI25 GPU the focus he Read more…

By John Russell

Google Releases Deeplearn.js to Further Democratize Machine Learning

August 17, 2017

Spreading the use of machine learning tools is one of the goals of Google’s PAIR (People + AI Research) initiative, which was introduced in early July. Last w Read more…

By John Russell

GlobalFoundries Puts Wind in AMD’s Sails with 12nm FinFET

September 24, 2017

From its annual tech conference last week (Sept. 20), where GlobalFoundries welcomed more than 600 semiconductor professionals (reaching the Santa Clara venue Read more…

By Tiffany Trader

Amazon Debuts New AMD-based GPU Instances for Graphics Acceleration

September 12, 2017

Last week Amazon Web Services (AWS) streaming service, AppStream 2.0, introduced a new GPU instance called Graphics Design intended to accelerate graphics. The Read more…

By John Russell

Leading Solution Providers

EU Funds 20 Million Euro ARM+FPGA Exascale Project

September 7, 2017

At the Barcelona Supercomputer Centre on Wednesday (Sept. 6), 16 partners gathered to launch the EuroEXA project, which invests €20 million over three-and-a-half years into exascale-focused research and development. Led by the Horizon 2020 program, EuroEXA picks up the banner of a triad of partner projects — ExaNeSt, EcoScale and ExaNoDe — building on their work... Read more…

By Tiffany Trader

Delays, Smoke, Records & Markets – A Candid Conversation with Cray CEO Peter Ungaro

October 5, 2017

Earlier this month, Tom Tabor, publisher of HPCwire and I had a very personal conversation with Cray CEO Peter Ungaro. Cray has been on something of a Cinderell Read more…

By Tiffany Trader & Tom Tabor

Reinders: “AVX-512 May Be a Hidden Gem” in Intel Xeon Scalable Processors

June 29, 2017

Imagine if we could use vector processing on something other than just floating point problems.  Today, GPUs and CPUs work tirelessly to accelerate algorithms Read more…

By James Reinders

Cray Moves to Acquire the Seagate ClusterStor Line

July 28, 2017

This week Cray announced that it is picking up Seagate's ClusterStor HPC storage array business for an undisclosed sum. "In short we're effectively transitioning the bulk of the ClusterStor product line to Cray," said CEO Peter Ungaro. Read more…

By Tiffany Trader

Intel Launches Software Tools to Ease FPGA Programming

September 5, 2017

Field Programmable Gate Arrays (FPGAs) have a reputation for being difficult to program, requiring expertise in specialty languages, like Verilog or VHDL. Easin Read more…

By Tiffany Trader

HPC Chips – A Veritable Smorgasbord?

October 10, 2017

For the first time since AMD's ill-fated launch of Bulldozer the answer to the question, 'Which CPU will be in my next HPC system?' doesn't have to be 'Whichever variety of Intel Xeon E5 they are selling when we procure'. Read more…

By Dairsie Latimer

IBM Advances Web-based Quantum Programming

September 5, 2017

IBM Research is pairing its Jupyter-based Data Science Experience notebook environment with its cloud-based quantum computer, IBM Q, in hopes of encouraging a new class of entrepreneurial user to solve intractable problems that even exceed the capabilities of the best AI systems. Read more…

By Alex Woodie

How ‘Knights Mill’ Gets Its Deep Learning Flops

June 22, 2017

Intel, the subject of much speculation regarding the delayed, rewritten or potentially canceled “Aurora” contract (the Argonne Lab part of the CORAL “ Read more…

By Tiffany Trader

  • arrow
  • Click Here for More Headlines
  • arrow
Share This