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Dell's Data Center Unit Racking Up Cloud Sales

Dell has quietly engineered 30-40 cloud server designs for major Internet companies, and those designs will eventually affect the enterprise market.

"Interest [in private cloud computing] is spiking through the roof," he said, and he predicted most new enterprise applications will be designed to run in the cloud, whether public or private. Such applications are built with scalability in mind and can take advantage of the ability of the cloud to generate more virtual machines on demand.

Norrod and other Dell officials interviewed Tuesday did not define precisely what makes a good cloud server. And Norrod said his Data Center Solutions unit would not become a purveyor of "general purpose" cloud servers. "Think of us as a custom tailor to large Internet properties, building out to massive scale," he noted.

His unit "will not build servers on spec," he said. They will build "to meet the requirements of a specific customer," and while he didn't say so, that customer will have placed a large order with DCS to get custom attention. Microsoft's Bing search engine and its Azure cloud facility opened near Chicago in September and is designed to hold 300,000 servers, taking advantage of nearby low-cost electricity.

This foray into cloud computing is somewhat contrary to Dell's previous pattern of applying sophisticated supply chain logistics to well-worn grooves in the business and consumer computing markets. For one thing, Dell, until recently, hasn't talked about it. For another, it's built a business unit that refuses to address the mass market at all.

But Norrod acknowledged what other Dell officials said as well: the lessons learned in producing servers for the big Internet service providers will be used when enterprise customers knock on Dell's door to discuss how to build out their private clouds. "Dell will bring the capabilities from DCS to the mass market," he said. That would be the role of Dell's regular server suppliers and marketers, not DCS.

The strength of sales through the DCS unit is one explanation for why Dell, like all server suppliers, saw a decline in total sales in the 2009, but Dell's drop was less than other server suppliers. Gartner said server sales slowed in the third quarter of 2009 an average of 15.5%, but Dell's decline was 5.5%.

"We will generate from whole cloth a new generation of servers," Norrod declared at one point, and at another, "We will be the skunkworks that probes the requirements for this product." Neither Norrod nor other Dell representatives, however, specified what constitutes a good cloud server design.

They are likely to be patterned on a model set by Google, which is not a customer of Dell's and builds its own servers for its search engine, its Google App Engine cloud computing, and other services. From what Google has said on the record, a cloud server strips out redundancies in the server, such as backup power supplies and fans, which add cost. Cloud management software is meant to route workloads around hardware failures in a cloud made up of thousands of servers. Google also appears to focus on well established x86 parts with proven reliability, and stays behind the leading edge in components to take advantage of lower prices.

No published figures are available, but cloud servers tend to be heavily loaded with memory, since they are meant to serve as multi-tenant hosts for many virtual machines. They also pack in I/O devices of one form or another to handle the network and storage traffic likely to ensue from multiple virtual machines.

Norrow said some Dell customers seek out the latest x86 components for cloud servers, while others "ride the trailing edge of the cost curve."

A leading edge implementer is Lawrence Livermore Lab outside of Berkeley, Calif. "Lawrence Livermore had a Nehalem (now Intel Xeon 5500) cluster up and running before Nehalem had been announced," he noted.

"Some companies have elaborate cost ownership models. It's as much about company culture as anything else," he said.

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