It doesn’t happen often, but here is one of those situations in life where that dismal science, economics, can be useful and fun.

First a little definition ….

Price transparency is defined as a situation in which both buyer and seller know what products, services or capital assets are available and at what price.

Now, price transparency is a way of life in the business of standards-based, x86 servers. This even includes blade servers.

Go to any of the major vendors’ web sites such as Dell.com, IBM.com, HP.com or even resellers such as CDW.com and you can freely look up at least what each vendor’s list price is. You can bet that we vendors do this all the time to ensure we are ‘competitive’ with each other. And so do all of our customers. In fact, our customers know our list price and our competitors’ before any of us set foot in a customer’s place. That helps keep us vendors on our toes to deliver better products while keeping prices lower for customers. The x86 market is a living example of price transparency.

Until you get to the newest member of the x86 server community …

Cisco claims on their web site that their recently announced Unified Computing System is “Reducing total cost of ownership at the platform, site, and organizational levels”.  The glaring omission is “minus the cost”. One would presume this includes a competitively priced set of compute, storage, enclosure, interconnect, management tool, software licenses and support components. But aside from Cisco’s word for it, this cannot be verified.

This is because Cisco, unlike the other server vendors, does not publish their UCS list price on their web site. Nor do their resellers seem to.  This makes it difficult for customers (or competitors) to independently validate features to prices in a standards-based industry.

Given Cisco’s traditionally high margins on network plumbing gear (65% vs. the 20% margins of x86 servers), vendors, analysts and customers could be forgiven if they were suspicious of high prices for UCS. In fact one could see some of Cisco’s UCS prices needing to be three times as high as industry averages to meet their business model.

So come on, how about a call for the free market and industry standards.  Are we all about the same price? Is Cisco really cheaper?

Michael P. Kendall