Dell heads for the cloud

Dell hasn’t yet rolled out its trailer computer, but this week it did make clear that it aims to compete with the likes of Sun, IBM and Rackable in supplying the heavy metal for the big-ass data centers of the future. On Tuesday, the company announced that it was setting up a Data Center Solutions unit to serve Internet companies and other firms that “are building out fleets of servers with power, thermal, and density issues of such a massive scale that they invite new approaches for optimization.” The new unit’s debut offering is dubbed the “Cloud Computing Solution,” which VP Forrest Norrod calls “a computing solution for ‘Hyperscale’ data center environments including ‘design-to-order’ hardware, planning and deployment expertise and customized services targeted to address key needs generally not met by traditional hardware vendors.”

Although Dell claims that the new “design-to-order” business is a logical “next step” from its traditional “build-to-order” operation, it’s hard to see much of a connection between the two. Designing and outfitting customized high-end data centers is about as far removed from cranking out cheap boxes as you can get. This is another clear sign that Dell is abandoning the old “don’t innovate; commoditize” mantra that served it so well for so many years. Having watched competitors like Hewlett-Packard eat away at its cost advantage in the generic PC and server markets, Dell is now trying to follow other hardware makers up-market into more specialized (and profitable) machines and services. That will require bigger investments in R&D and, in turn, a different kind of cost structure – as well as a new and very different positioning and image in the enterprise market. It’s a tough challenge.

There’s also the larger question of how big the “hyperscale computing” market will turn out to be. Will there be a lot of companies building next-generation data centers, or just a few giant Google-like utilities with a lot of purchasing clout (and a lot of homegrown engineering talent)? The supply side’s already getting crowded, and the demand side is still pretty, uh, cloudy.

I do have one recommendation for Dell, though. When it gets around to introducing its trailer computer, it should let the guys at its Alienware subsidiary design the sucker. I would like to see some Alienware trailers barreling down the highway.

UPDATE: Adding to Dell’s challenges, the company announced today, after the stock market closed, that an internal investigation into accounting irregularities revealed “a number of accounting errors, evidence of misconduct, and deficiencies in the financial control environment.”

UPDATE: Larry Dignan follows up with an interview with Forrest Norrod. Norrod doesn’t get into details, but he does give an intriguing hint that in the end this may turn out to be another commoditization play for Dell, as the design of “hyperscale” data centers evolves toward a few standard setups:

Here’s the [current] process: Big customer comes to Dell for data center services and gives the company its specification and infrastructure plans. From there, the customer’s plan is discussed to address everything from power supplies to processor requirements to cooling to software to network capabilities. “We go through discovery of requirements and constraints,” said Norrod. “We come back in about a month with a [custom hardware configuration]” …

The big question is whether this model could scale for Dell. Norrod acknowledges that there are “limits to scalability,” but over time these [hardware configurations] could be mass produced. Dell’s [Cloud Computing System] customers currently all have different solutions to data center design, but some commonality is emerging. For instance, a large Web company that is a Dell customer cooked up a data center design that looked a lot like what a financial services firm was attempting. “Today the equipment is relatively diverse, but there is some commonality. Classes of applications and infrastructure philosophies will wind up being common for approaches,” said Norrod.

Of course, isn’t that what Sun and Rackable are already doing with their trailers – creating common hardware components at the data-center level rather than the server level?

3 thoughts on “Dell heads for the cloud

  1. MarcFarley

    If there is a sufficient market for trailer park computing, the vendors that succeed there will figure out the mix of hardware and systems software that customers need to utilize the resources optimally. Again, this is not Dell’s strength as a technology follower. Once upon a time I thought Dell was the GE of the technology industry and that they could move into any related business they wanted to. I don’t think so any more, they have never had a Jack Welch running the show.

  2. Sam Johnston

    Interesting… this article (and the activity and Dell blog post it refers to) were both in the week following Dell’s now infamous trademark application for ‘Cloud Computing’. If only we’d been paying a little bit more attention to this announcement back then…

  3. Nitika Saini

    The details are still being worked over but the idea would involve a range of high-end services delivered through the cloud, like remote infrastructure management, or the ability to monitor and proactively deal with malfunctioning assets on a computer network.

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