Dell's bespoke server unit pushes over $1bn of tin
Five years old, and growing like a weed
It has been five years since Forrest Norrod and his colleagues at Dell drew up the first custom server design on a napkin at a bar at the Driskill Hotel in Austin, Texas, getting the server maker into the tailoring business. Dell now custom fits servers for very precise workloads and can cater to the tight data center power and cooling requirements found at hyperscale web operators.
The tailoring unit, called Data Center Solutions (DCS), has now grown to over $1bn in sales, says Norrod. Norrod was vice president and general manager of the unit when Dell first started publicly talking about its operations back in October 2008. He is now general manager of server platforms at Dell, and tells El Reg that the DCS business is now a "greater than $1bn a year business," adding: "We beat that a while ago."
DCS was founded originally to chase the world's top 20 hyperscale data center operators, and creates stripped-down, super-dense, and energy-efficient machines that can mean the different between a profit and a loss for those data center operators. These DCS machines were not aimed at general purpose server users, whose workloads generally run on one machine and who need RAID disk controllers, service processors, and other high availability features because all of their eggs are in one basket (if not literally, then there is one server per workload – so it amounts to the same if you are looking at it at the app level). The DCS custom designs were built for companies running parallel workloads that have redundancy, data replication, and failover built into the software stack – so a regular PowerEdge server would not just be overkill, it would be plain stupid.
Facebook was the poster child for the DCS business before the social media giant decided to launch the Open Compute project last April, open-sourcing its own server and data center designs and going straight to original design manufacturers (ODMs) to build its gear.
Dell struck oil with this custom server thing, but Google builds its own gear, and now so does Facebook. Even fellow Texan Rackspace Hosting is using whitebox servers to get more server for the dollar.
But a year before this all happened, Dell saw the writing on the bespoke server wall and did a smart thing: it partially commercialized some of the DCS designs and took them to market as the PowerEdge-C machines. But you can't just log into the Dell site and buy a PowerEdge-C machine, you have to engage in a formal sales process so Dell can make sure you get the right iron.
"Our aim with the PowerEdge-Cs was for the next 1,000 customers who needed DCS-style machines, and we have blown way beyond that," brags Steve Cumings, executive director of marketing for the DCS unit. And while Cumings won't talk specific numbers, he adds "it is not 1,001, either".
In the Dell lingo, the custom machines are known as the DCS "classic" boxes while the other cloudy boxes are called "PECs" after the abbreviation of their formal name. The PowerEdge-C machines not only traditional multi-node bare-bones servers in 1U and 2U chassis as well as a 3U chassis that can cram up to a dozen single-socket microservers into a 3U chassis. Dell has even built mini-servers based on VIA Technologies' X86 processors for hosting customers looking for cheap, dedicated nodes. In all cases, these servers have shared power and fans and precious little else but CPUs, memory, and disks.
The DCS unit has another part of the business, which is the modular data centers built from the shipping container or from other modular components. Microsoft is a big Dell customer for modular data centers. Cumings says these containerized data centers are only available to the top-end hyperscale customers because there is so much demand that Dell can't meet it. Of course, demand is a relative thing. Cumings estimates that worldwide, there are on the order of several hundred containers being used as data centers among the hyperscale crowd. "Our impression is that we are comfortably number one in that market," says Cumings.
Whether containerized data centers can go quasi-volume, as the PowerEdge-C servers did with several of the DCS custom server designs, remains to be seen. A lot depends on how radically customers are prepared to change their data center operations, how outdated their glass houses are, and how quickly they need to upgrade.
Dell has not broken out shipments and revenues for the DCS unit in the past, but it has hinted that this stealthy part of its business would have been among the top five server shippers in 2008 – and that in some quarters would have ranked as high as number three. This ranking would also depend on the shipments for Dell's other stealth server business, its OEM Solutions Group, which OEMs Dell's traditional PowerEdge servers for appliances, kiosks, and other interested parties. Three years ago, the OEM Server Group was twice as large, in terms of revenues, as the DCS unit. The gap has probably closed significantly since then.
Back in October 2008, the DCS unit had 200 employees, mostly engineers and sales people who helped craft machines and the houses they run in for hyperscale customers. Three-and-a-half years later, DCS now has 400 employees. Both then and now, DCS relied on other parts of Dell for back office functions, parts acquisitions, and manufacturing. Norrod says that while DCS uses the same manufacturing facilities as the general-purpose PowerEdge machines, they tend to have dedicated lines because the DCS run is usually 10,000 or more of the same thing, rather than a handful of similar machines built on demand for one set of customer orders that day, followed by a complete new set of machines with different configurations once they are built. You have to tool and run a DCS line differently from a PowerEdge line, he says – and in some ways, it is easier.
If the employee count is any guide, then it looks like the DCS biz has at least doubled in that time and is probably about the same size as the Dell OEM Solutions Group. Dell had about $8.2bn in servers and networking revenues in the trailing four quarters, and it is not unreasonable that these two stealthy server units could account for around a third of Dell's server revenues.
In the latest server number out of IDC, which covered the fourth quarter of 2011, density-optimized servers like those sold by the DCS unit accounted for 132,876 units (up 51.5 per cent) and generated $458m (up 33.8 per cent). Dell had 39 per cent share of shipments of these boxes (that's 51,821 machines) and 45.2 per cent share of sales (or $195m). IDC says that this was double the revenue and shipments of the nearest competitor in this category. Clearly, IDC's definition of a density optimized machine and DCS' sales SKUs don't overlap completely for DCS to be pushing more than $1bn in sales per year. But Dell wanted to brag about the IDC numbers just the same.
ARMed ... and possibly Tilera'd and FPGA'd
Dell Enterprise Products Group, which makes the PowerEdge line, has been monkeying around with ARM-based servers for years now, and Cumings says that the DCS engineers took another stab at it with the latest rev of ARM chips from unnamed suppliers in the past year – just to keep up to speed on what is possible with these ARM chips in terms of performance and thermals.
"If we see a market develop, we are ready to go," says Cumings. "We have done a good job in seeing potential markets coming. But we are not shipping a product now and I can't tell you when we might."
The DCS engineers have done some research on many-core processors from Tilera, but Cumings concedes that Dell has "spent less time looking at this".
That said, when it comes to the DCS classic designs, Cumings says that Dell will "look at any technology that will solve a customer's problem".
That could mean field programmable gate arrays, GPU coprocessors, and all kinds of weird stuff someday. (That's El Reg speculating, not Dell DCS talking.)
For now, the DCS unit is focused on five key markets: hyperscale web, big data, cloud, hosting, and high performance computing. The latest projections from IDC show CPU shipments in the cloud segment to be growing at a compound annual growth rate of 15 percent between 2012 and 2015, with HPC growing 7.3 per cent compared to shrinkage of 1.2 per cent in the traditional, general purpose server space. Cumings says that Dell's DCS business in the five key growth areas is larger than the sub-markets at large, and won't be specific about how much larger because this is a competitive advantage for Dell.
"The growth is significant enough that DCS was created with its own resources to chase the opportunity," says Cumings. "Dell believes in this business and it continues to grow."
This means we won't hear about any defections from Facebook or any other name-brand hyperscale customers who don't talk about where they get their servers. ®