How much datacenter does $1 billion buy?

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How much datacenter does $1 billion buy?

Dell brought together a rich mixture of hacks and industry faces for a big announcement recently. It wasn’t a single product – no new laptop, no box to kick – but rather a whole slew of announcements that boil down to the simple statement that Dell wants to be a cloud provider in its own right. It has a huge preconfigured stack of servers, storage, switching and power which it can wheel into your datacenter on demand, called vStart, which takes care of the private cloud.

If that wasn’t quite enough for you then how about splashing out a billion dollars on cloud hosting centres? In the spirit of one of my all-time favourite books (the Tiger That Isn’t), I was minded to ask, almost the instant the announcement came from the lips of Brian Jones, head of public and large enterprise from Dell USA: a billion dollars, wow, but how much is that, really?

The money is going on datacenters. There are at least 10 candidate locations, though the Japanese earthquake has made the location of at least one the subject of one of those rushed sentences you can tell the speaker would rather you didn’t notice.  And some of the decision-making on locations for these centres has been about things that hardcore datacenter techies don’t like to see themselves bothered by, such as the legal position over government or company data and whether it can be moved outside the country it came from. A billion dollars spread across ten centres is $100m a centre (I worked that out on my own you know!) and that set me thinking: how big is a big datacenter these days?

I won’t give you all the research wedged into a few lines in a single blog entry. It’s a minefield out there, because almost nobody can see a clear reason to talk publically about just how big their datacenters are. Then there are the obviously fantastical made-up numbers for the amount of storage used by “them” to keep track of “us”: I heard the term “exabyte” used seriously as a measure of storage just this week, in connection with this kind of paranoid estimation.

Nothing in this world ages faster than investment in a datacenter

Staying away from things that aren’t finished yet, or things that are estimated but undeclared, I have found references from the reasonably recent past that suggest the top ten publicly visible data centres all across the world, are running at a rough average of $500m per location.

I’m sure there are more recent figures, or bigger deals, but the point I want to follow here has two aspects. The first is that nothing in this world ages faster than investment in a datacenter. According to Intel’s Alan Priestley, the new-generation Xeon CPUs coming on stream for rollout within vStart and other equivalent Dell platforms (including servers you can buy in the usual way) are almost 50% more efficient in power draw than their preceding generation, and 93% more efficient than kit from 2006. A funny year to pick, I hear you say – except that 2006 was the last pre-recession year, and represents the last hardware refresh for a hell of a lot of businesses out there.

Power draw

Ninety three per cent is about power draw, not about instructions-per-second or other measures of performance, and I bet it’s more to do with idle power draw than 100% loaded – but it’s also a startling figure. Work done in 8% of the time previously required, or 8% of the electricity needed, produces such a short payback on money spent that it tends to bedazzle finance directors, used to thinking about multiyear waits for the real benefit to emerge. Ninety three per cent, looked at another way, is a fourteen-times saving.

Now, I doubt that the entire of computing has shrunk at the same rate since 2006 as the power demands of an enterprise or cloud-ready server platform. Of course, disks have been getting bigger and memory has been getting cheaper per byte, but look at it like this: let’s meet in the middle and say that the scale-up advantage of starting to build a datacenter made out of all-new kit, in 2011, is seven times – that Dell’s money goes seven times further in 2011 than it would have done in 2006. This means, in terms of the kit they say we are still using in our server rooms – the quad-core, partly-virtualised architectures that the mid-field and trailing edge of the server farms out there are still using – Dell’s spend on cloud datacenters doesn’t look like a billion dollars. It’s more like seven billion.

There were parts of what Dell said which I found jarring: for example, that virtualisation was hard and lots of IT specialists were fighting shy of it. My initial reaction was if you are fighting shy of this technology then possibly you shouldn’t tick the box in the customer survey that says “IT specialist”.

I can find lots of people from each of the great virtualisation tribes who will tell you how easy it all is. Other speakers asserted that small businesses had no case to make for keeping physical servers because there was “no way they could meet the regulatory burden of keeping systems up to date”. Every small business I visit has no problem with this issue because they are frankly, utterly unexposed to whatever “regulatory burden” this speaker had in mind, and are very happy running their servers, sometimes for years without a break. But that’s a diversion.

What woke up my old banker’s mathematical instincts was the size of that investment number (a billion in today’s money: seven billion in 2006 money), and the track record Dell has for responding to customer demands, rather than taking bold and unsupported moves out into the unknown.

Surely, rather in the same way that a giant shopping centre development will advertise itself by the anchor tenants who sign up to being involved, even before the digger’s shifted the first cowpat, Dell must be propping up the $1bn with some big customer partners? Yes, it agreed cautiously, this is all based on existing customer demand. No, Dell’s spokesman said, he couldn’t say who any of those customers were.

All I know is if I had issued a ten-year loan back in 2005 or so to support one of the existing mega datacenters, then this announcement, based on all-new kit, would have me just a little bit worried.

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