Do generic stock servers have a future in a cloud world?

October 17, 2015

One of the things I've been reading lately is a certain amount of PR about 'the cloud' and about how most everyone with a good sized private datacenter will wind up moving to the cloud instead because they just can't compete with the economics. I don't know enough here to have an opinion, but the people here seem to make a plausible case (both about how much more efficiently Amazon can operate their servers than you can operate yours and how hard it'd be to match all of their management tools with your own software). Given that this future might come to pass, I got to wondering: what happens to stock servers?

The people running Amazon and Google and Facebook and so on are not buying off the rack Dell/HP/Lenovo/etc servers; one of the reasons they can be more efficient than you is that they use custom designs that are adapted to their exact environment. Instead, the people buying those servers in bulk are exactly the big datacenters that are supposed to move to the cloud. Currently, all of the rest of us smaller people buying servers have very likely been benefiting from the volume of big datacenters, since high product volume drives down prices and pays off custom engineering and so on; selling tons of generic 1U servers has to be part of why they've become relatively inexpensive. But what happens to the generic stock server market if that big datacenter volume goes away? As the number of people buying their own servers shrinks, will we still have inexpensive stock servers to buy?

One possible answer is that there's enough volume in the small business sector to sustain at least some of the major players and keep stock servers inexpensive and available. I don't know if I believe this, although I also have no idea how large this market segment actually is. Another potential answer is that while big datacenters in the well connected West may shrink a lot, there are plenty of places where issues like bandwidth and latency will mean that local companies (both big and small) have local servers and this will sustain the server market in general.

Or we may lose those cheap, convenient, readily available servers from companies like Dell, which would probably leave us buying more servers from smaller OEMs like SuperMicro. They would cost more, which would be a bummer, but they might not cost lots more, especially if we got 2U or 3U units instead of 1U ones. We're lucky enough to not really be rack space constrained; for everyone else, well, in the cloud-heavy future the colocation operators may drop their prices for rack space due to reduced demand.

(Before 1U servers became generic popcorn, my impression was that you paid extra for squeezing all of the necessary components into such a small space. I suspect that this is not the case today, due to the high volume.)

Comments on this page:

The questions are economics and security.

Economics: if your computing requirements are generic but fluctuate wildly over the course of a day, a cloud service that rents you run-time and has an API for spinning up and shutting down VMs (all of them do, to a first approximation) can save you money. Indeed, there are businesses where all the profit would disappear if they did not shut down instances immediately when they not needed.

On the other hand, if you have medium-to-large requirements that are predictable and continuous, running racked servers in a datacenter will be cheaper. As your size grows, you may be able to buy systems similar to what Google and Facebook are using.

Security: no cloud service provides a serious security guarantee. I define "serious" as meaning that they will sign a contract making them responsible for losses caused by their actions or inactions to a sum similar to the actual losses incurred. All non-serious guarantees involve refunding you some proportion of the money you've paid them this month.

So if you have a legal requirement for security, it is entirely possible that you cannot push that off to an insecure cloud service.

By James (trs80) at 2015-10-21 12:18:36:

Well, if you're big enough (say, US government^Wintelligence community sized), you can get Amazon to build a secure cloud just for you.

I'm surprised you say Supermicro is a more-expensive OEM, you must get some awesome Dell pricing.

By cks at 2015-10-21 12:41:56:

SuperMicro is probably not more expensive for what they're good at (and certainly we're happy with the units we have from them). But I don't think that includes entry level servers like, say, the Dell R220. Loss of entry level servers with their really cheap pricing would force us up to more capable but more expensive servers even for things that don't actually need the extra power.

(Also, SuperMicro and their VARs don't have the aggressive university discounts that Dell is willing to give us.)

My impression of the entry level server market is that the margins are so small and the competition so fierce that you need high volume in order to make a profit (and pay for the design work you need). Given this, I don't expect SuperMicro to ever really compete in it (even though I know they make some 1U cases).

By Twirrim at 2015-10-22 01:38:19:

My guess is the systems integrators that Google, Facebook, Amazon et al likely use will find a sales channel, taking advantages of the huge economies of scale they'll have.

That will likely mean the introduction of a few new players to the server market, but also more standardised specifications, rather than the level of customisation that we've been able to get through Dell or HP in the past.

By James (trs80) at 2015-10-22 02:03:43:

Supermicro and others also OEM for various appliances, eg Nimble and Nutanix, so there's some market there at least. And Dell and IBM OEM appliances of other vendors we use. So that's another market, at least if those sorts of appliances remain hard to move to the cloud.

Written on 17 October 2015.
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