Original URL: http://www.theregister.co.uk/2007/12/06/millions_server/

The world's most fantastic, imaginary server start-up

Getting rich off Google

By Ashlee Vance

Posted in Servers, 6th December 2007 20:37 GMT

Comment Some hacks have immense amounts of ambition. I don't. And it's that lack of ambition that's keeping me from making millions of dollars in the server market.

Those of you with stronger wills and bigger dreams will want to pay attention to this story, as I'll lay out a map that could lead to untold riches. (Then again, this could be total nonsense. Take your pick.)

It would seem that any vendor of size hoping to play in the software-as-a-service game needs to ask itself some serious questions. These companies need to look at Google as one, extreme end of the data center landscape and then analyze how close their economics have to be to Google's in order to remain competitive.

Google builds its own servers. It also owns its own fiber, and builds its own switches. Most of you knew that.

Beyond crafting custom gear, Google tends to pick up cheaper parts than rivals. It uses lower power chips, cheap storage and lower-grade memory that some companies would never touch.

So, when you read about Google building a number of $600m data centers, you must take the economics behind the gear filling that center into account. And, by "you," I mostly mean Microsoft, Yahoo!, Amazon, eBay and a couple of other major service providers at this point.

Pain in the back-end

Google is about the only company willing to deal with the hassle and expense of crafting its own systems. That said, the rival service providers need not settle for "general purpose" hardware for the masses pumped out by HP, IBM, Sun Microsystems, Dell and others.

In fact, a number of the companies mentioned - Microsoft, Amazon and Yahoo! - have turned in recent years to server start-up Rackable Systems, which has a unique take on server design and power supplies. Rackable can offer fairly dramatic power savings. The problem inherent in Rackable for a larger service provider is that it has to bet on a start-up rather than a trusted vendor.

Given all that, let's get to the really tricky bits.

Does it make sense for one of the Tier 1s to start constructing very lower power systems in the spirit of Google's own gear?

My inclination is to say that it does make sense, simply because these mega centers appear all the rage at the moment. You've got Google and Microsoft spending more than $2bn on data centers in just the last year. Smaller service providers will spend less per data center, but they still represent a lot of collective demand. And this demand should only increase in the years to come.

To that point, Intel has confirmed work on custom, low-power motherboard designs that customers - be they vendor partners or end users like Google - can purchase. I've heard rumors about similar projects at Sun and HP. And Dell even has a program in place where it will do custom work if the order is large enough, crafting systems that place a premium on, say, power efficiency.

Tier 1 Compromise

Ultimately, however, I think the big vendors will decide that there's too much work involved to make such low-power gear worth their while. First off, you have the extra R&D, testing and support costs for what can be considered a niche market. Then, for this type of operation to make sense, you have to assume that enough customers will do the type of software work that takes place at Google to gear code for tens of thousands of low-power boxes and often failing components.

Even if the big vendors did decide such systems could lead to profits, they would no doubt release mediocre, compromise-rich gear. Such is the nature of the beasts.

That's why there's room for a start-up to take hold of this market.

Get rich!

You have to believe that Microsoft and others detest the idea of Google beating them from day one on data center economics. How can you do proper battle in search and Web-based apps when it costs you more than your major rivals to ship results and code to end users?

The service providers setting out to deliver so-called RedShift applications need a way of matching Google on cost. Surely, a plucky start-up could arise to serve that need by mimicking Google's approach and catering to the cutting edge of the service provider set.

Other companies such as Cobalt with its server appliances and then RLX and Egenera with their blades did something similar in the past. Cobalt made easy-to-use boxes for the web hosting set. RLX took that idea to the next level by shoving laptop chips in servers, and Egenera made systems specifically for the needs of the financial services community. (Sun bought Cobalt for $2bn; RLX kind of died before HP bought its remains for $20m; and Egenera lives on today.)

Sadly, the Tier 1 server vendors latched onto the blade concept and then watered it down as much as possible. The big boys' blades place very little emphasis on density and performance per watt gains and instead focus on cabling and management improvements.

So we still have a vacuum present for a radical web-friendly design.

The Rub

Of course, no venture capitalist in their right mind would fund a server start-up of this sort.

But the good news is that there are plenty of batshit crazy VCs.

In order to get money for this venture, you'll need to disguise the operation as a Web 2.0 firm. You show up at a VC's office, pitching a Facebook application or Google toolbar add-on, and then explain how you will beat rivals by delivering this software in the most economic fashion possible. (That is if the VC even bothers to ask.) You're going to build your own servers to host the software just like everyone's darling Google.

"Did you say, Google?"

"Yes, we did."

Grab that $30m check and get cranking on the hardware. Ignore the questions about the expected arrival of the Facebook application for as long as possible.

Should you get rich off this venture - and you will - unless you don't - then I expect a substantial payment. If you flop, I'll be sure to write about it in as humorous a manner as possible. ®

Register editor Ashlee Vance has just pumped out a new book that's a guide to Silicon Valley. The book starts with the electronics pioneers present in the Bay Area in the early 20th century and marches up to today's heavies. Want to know where Gordon Moore eats Chinese food, how unions affected the rise of microprocessors or how Fairchild Semiconductor got its start? This is the book for you - available at Amazon US here or in the UK here.