Dell division will design Web 2.0 datacenters

Newly launched division targets 'major Internet players' with its build-to-order large-scale server farms

Dell on Tuesday announced it has launched a division to design customized datacenters for companies that rely on servers to run their businesses, such as Web 2.0 firms or Internet search engines.

The company famous for direct sales to customers is looking for salvation in a new corner of the market -- the world's largest corporations. Dell is struggling to regain its footing after poor financial results and accounting investigations led founder Michael Dell to dismiss Kevin Rollins in January and return as CEO.

Dell's new DCS (Data Center Solutions) division will extend the company's build-to-order business model from individual PCs to large-scale server farms. The division will optimize entire datacenters with the best power and cooling, networking, motherboards, form factors, and packaging, said Forrest Norrod, vice president and general manager of DCS.

Dell hopes to sell the service to only the largest Web-based companies, the top dozen or two dozen hyper-scale datacenters of the business world, Norrod said. Potential customers include finance firms, online retailers, government and academic agencies, petroleum producers, and major Internet players, such as, Google, Microsoft, and Yahoo.

Until now, companies with large datacenters have had to design their own networks with general-purpose products, Norrod said. Now, Dell is offering them optimized networking equipment, storage, and rack-mounted servers. Dell has already enrolled about a dozen customers and has shipped prototype or production-level equipment to half of them.

Despite the small number of customers, the market sector is quite large. The top two dozen companies alone buy nearly 10 percent of servers by volume and are growing fast, Norrod said.

Dell's earliest customers have asked for help in minimizing latency or increasing memory and I/O so that they can guarantee fast and reliable Web services. To reach those goals, DCS engineers have worked on approaches such as installing multicore processors and increasing virtualized computing. But the most common theme among these companies is diversity, Norrod said -- he has seen at least six different OSes used in the first dozen datacenters he has analyzed.

That makes sense because these datacenters are so large that the companies building them had no models to follow, one analyst said.

"The Googles of the world were pioneers. They were masters at taking a bunch of commodity hardware and customizing it, stringing it together to make a really huge system," said George Hamilton, a senior analyst with the Yankee Group. "Now there are some out there who are struggling to maintain their heterogenous environments, maybe having scalability problems. That's the risk of rolling your own -- eventually you reach a stage where it's hard to manage."

In contrast, Hewlett-Packard, IBM, and Sun have always sold systems that rely on standard components such as blade servers, he said. Dell could make an impact by taking a middle road, approaching the large companies with an offer to make their server farms a little more consistent while still maintaining their original x86-based processing environments, for example.