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1/20/2010
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Global CIO: Dell And The Pursuit Of Google

Huge buyers such as search engines have reshaped the top end of the server market. That's forced Dell to turn its traditional mass-market business model on its head.

Google designs its own servers. When InformationWeek editors visited Dell's campus recently, Dell exec Tim Mattox made the case for why, he hopes, that won't last forever. "When they start getting rid of the executive chefs at the Google campus for employees, that's when they probably start saying 'You know, we probably don't need to design these servers ourselves,'" says Mattox.

That's the punch line. What follows is the substance of how Dell's pursuing the modern mega-buyers of computing power, from search engines to research facilities. It's a pursuit that turns Dell's traditional mass-market business model on its head.

The effort centers on a business unit called Data Center Solutions--a group with only about 20 customers that, Dell says, would be the No. 3 seller of server units in the U.S. last quarter if it were a standalone company. The group claims every major search engine except Google as a customer, as well as giant computing consumers such as Lawrence Livermore Laboratories.

Dell formed the Data Center Solutions group about three years ago, in recognition that an emerging class of companies--primarily Internet companies such as search engines and social networking--was going to reshape the highest end of the server market. At the time, the top 20 buyers of servers made up about 5% of the total server market. Today, the top 20 is more than 10% of the market, Dell says.

Dell made its name selling standards-based computers that buyers could tweak to their needs--selling one type of machine to many. And its original vision for the Data Center Solutions group was something like that. Dell planned to craft the perfect server for about five vertical markets--the perfect box for search engines, another variation for social media, another for grid environments. That didn't work at all. One search engine didn't have anything like the same needs of another.

So DCS became more like a custom tailor -- or like a concierge catering to high rollers at the Bellagio, says Forrest Norrod, VP and general manager of Dell's Data Center Solutions. "We say 'yes'," explains Norrod. Now DCS will design a server completely from scratch to meet the very specific needs of the biggest server users. A server design might have only one customer--but a customer that buys many thousands of that one design. "It's almost a service, not a product," Norrod says.

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Customizing servers to a specific environment is critical to driving down total cost of ownership for these giants. Norrod offers an example: one search provider had a 20 megawatt data center and calculated it would run out of space before the company could build a new one. The search company had a multi-room facility, and each room held about 10,000 servers. Dell worked with the company to redesign cooling systems, change the airflow within the server racks, bring in new containments, and remove some cooling systems. By using servers designed entirely for that building's power, space, and environmental conditions, the company could put 22,000 servers per room. "That's the kind of problem we like to solve," Norrod says.

Dell has learned that, while two search engines might not be interested in the same server design, the design still may get re-used--by a big user of computing in another industry, such as an oil and gas company doing exploration modeling, or an investment bank doing financial market simulations. So now it has 30 to 40 base designs, and each is typically sold to about five customers.

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