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Summary:

Rackspace’s bet on Open Compute has been taken to a new level as the hosting provider has decided to build its own servers — a move it hopes will save it up to 30 percent in costs.

Quanta's Universal Box design.
photo: Rackspace

Want to see what happens when the pace of innovation switches gear in the server market? Just watch the next year as the dominoes that Facebook and its Open Compute Project set off two years ago with the launch of open hardware continue to fall — this time at a more rapid pace. Rackspace is the first of what may be several web hosting companies that has decided to design and build its own servers.

The company announced at the Open Compute Summit on Wednesday that it will build its own servers designed for the hosting market. Rackspace has a prototype of the design in its labs and plans to test it with the idea of putting it into production before the end of this year. Unlike Facebook, which built out what it called vanity-free servers aimed squarely at its application, the technicians at Rackspace needed a server that will a bit more general purpose, but still designed for operating a cloud service as the lowest total cost of ownership.

For HP and Dell, the two companies that designed and built most of the 90,000 servers Rackspace runs today, this news will be a blow. After all, Wesley Jess, VP of supply chain operations at Rackspace, told me in an interview that the company is adding servers as a much faster rate because it is building out OpenStack based clouds in various places around the world. Jess expects that the switch to its own servers will save the company between 20 to 30 percent in the overall cost of running its data centers.

Rackspace is contracting with Wistron and Quanta, two server manufacturers that also build boxes for Dell and HP. The catch is, the Dell and HP boxes aren’t optimized for Rackspace and because of the groundwork already laid by the Open Compute Project, Rackspace can now afford to tweak the existing designs offered by Open Compute for its own use.

“We’ve been very transparent with our supply base and one of the issues we face is we have a lot of suppliers who try to differentiate themselves from others, but where they think they are adding value doesn’t really add value to me,” said Jess. “The server industry has been focused on the areas where they are innovating, but we find they are iterating on areas we don’t care about.”

With other hosting providers such as NTT and Orange joining the Open Compute Foundation, it’s pretty easy to imagine Rackspace’s work getting picked up by other companies eager to build their own optimized hardware. Not only are the plans now out there, but they are out in a forum and backed by vendors that are encouraging innovation and iteration on the existing designs. Thanks to the modularity of these designs and the openness around them, the pace of change in hardware is approaching that of hardware.

  1. Thank’s for the useful info:)

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  2. Sounds like a last ditch effort. I am an email/web administrator and I can say that I have pretty much banned any ip coming from rackspace. All of these colo outfits are just spam operations is you ask me. They are overpriced for a commercial setup and are under priced for a mom and pop hosted website.

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    1. Rackspace is not about websites/emai. I’ve looked at their prices in the past and hosting for applications… they are pretty good.

      And you are gonna get crap from pretty much any hosting company. The bigger someone is, the more likely they will have it and will have more.

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  3. Little typo at the end there.

    “Thanks to the modularity of these designs and the openness around them, the pace of change in hardware is approaching that of hardware.”

    I think you meant “…in hardware is approaching that of software.”

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  4. Well, that’s good – BUT I think Rackspace now is only focusing on new big accounts which has affected their claim of ‘fanatical support’. Many SMB customers are being ignored, like they do not get any special care or relationships anymore. Which is not a good thing for RackSpace.

    I found this article which also talks about it:
    http://www.dincloud.com/blog/NetFlix-service-outage-on-AWS-Amazon-Web-Services

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  5. Eric Pederson Friday, January 18, 2013

    Do you have a copy editor Gigaom?

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  6. Interesting that hardware can account for 20-30% of their operating costs. I can believe they will save 20-30% of their server costs, but at the expense of having to maintain a supply chain of custom boxes. What cost does that introduce? As far of Hosting’s Operational Costs there are only a couple ways to shave 20-30% operating cost: Power Cost Reductions as #1, People, Real estate. My understanding is that Rackspace Colo’s a good amount of their infrastructure with other Data Center Operators which limits their control over real-estate and power costs. If the new servers operate more efficiently (ie draw less power) then I can accept a operational savings of this proportion could be achieved, but I highly doubt this would be any more power efficient than a enterprise server offering from HP or Dell. I don’t doubt that real savings are going to be achieved, but IMHO 20-30% of operational costs seem to be misrepresented.

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