Enterprise Computing Jumps on the Supply-Demand Curve

The traditional enterprise computing server suppliers are in an ever-faster game of musical chairs with cloud computing competitors. Recent cloud price cuts will accelerate enterprise adoption of the cloud, to the economic detriment of IBM, HP, Oracle Sun.

Many IT executives sat down to a cup of coffee this morning with the Wall Street Journal opened to the Marketplace lede, “Price War Erupts in Cloud Services.” Cloud computing from the likes of Amazon, Google, and Microsoft is “changing the math for corporate executives who spend roughly $140 billion a year to buy computers, Internet cables, software and other gear for corporate-technology nerve centers.” This graphic begs the question,

50 Million Page View Web Site Costs“Gee, maybe my data-center computing model for the company needs a strategic re-think?” And while there’s a very active consulting business by the usual business-transformation consulting suspects, the no-cost answer is: yes, cloud computing is a valid model that most enterprises and applications should move to over time.

This blog post, though, is not about the nuances of cloud computing today. Rather, we need to take a look at how the supply-demand curve for enterprise computing must impact the traditional enterprise server business — hard. (And yes, I am breaking a vow made during Economics 101 to never mention economics in polite company).

Cloud computing is sucking the profits out of the traditional server business.

For over fifty years, in the case of IBM, the traditional server companies including HP and Sun sold big iron, proprietary operating software and storage, and lots of services at high margins. In the past two decades, Intel’s mass-market silicon evolved into the Xeon family that took away a large percentage of that proprietary “big iron”. Yet the Intel specialist firms such as NCR and Sequent never could beat the Big Three server suppliers, who took on Xeon-based server lines of their own.

Cloud computing is sucking the profits out of the traditional server business. IBM is selling its Xeon business to Lenovo, and is likely to considerably reduce its hardware business. Oracle’s Sun business looks like a cash cow to this writer, with little innovation coming out of R&D. HP is in denial.

All the traditional server companies have cloud offerings, of course. But only IBM has jettisoned its own servers in favor of the bare-metal, do-it-yourself offerings from Amazon, Google, and lately Microsoft.

Price-war-driven lower cloud computing prices will only generate more demand for cloud computing. Google, and Microsoft have other businesses that are very profitable; these two can run their cloud offerings lean and mean. (Amazon makes up tiny margins with huge volume). To recall that Economics 101 chart:

Supply-Demand Curve

The strategic issue for IT executives (and traditional-supplier investors) is what happens over the next five years as lower server profits hollow out their traditional supplier’s ability to innovate and deliver affordable hardware and software? Expect less support and examine your application software stacks; you’ll want to make migration to a cloud implementation possible and economical. The book isn’t even written on cloud operations, backup, recovery, performance and other now well-understood issues in your existing data centers.

Meanwhile, what are your users up to? Like PCs sprouted without IT blessings a generation ago, cost-conscious (or IT schedule averse) users are likely playing with the cloud using your enterprise data. Secure? Regulatory requirements met? Lots to think about.

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Wimpy Cores Are Not IT’s Answer to Data Center Power Limits

Using lots of “wimpy cores” like Intel’s Atom instead of “brawny cores” like Xeon is a growing topic in data center discussions, especially cloud-computing giants like Google and Microsoft. What everybody wants is more computing at lower kilowatt hours. That’s gospel. But this analyst does not see wimpy-core servers playing a role in most enterprise data centers over the next five years. The computing science and economic hurdles are huge.

The Wimpy-Core Pitch
I picked up the arguments for a new approach to some data center workloads with a worthwhile white paper by Google’s Urs Hölzle, where he described “wimpy cores” as having low compute capabilities with commensurate low power requirements, as opposed to “brawny cores” with high electrical loads in traditional data center servers.

Lots of wimpy-core servers, the argument goes, running the appropriate work loads could get the job done at a much reduced electricity budget.

And make no mistake, the Internet giants running multiple data centers for global operations are very focused on electricity consumption due to server operation and server HVAC cooling.

A hybrid argument was made yesterday by Microsoft, calling for low-power 16-core Atom servers-on-a-chip at an industry conference.

The Contestants
In the wimpy corner on the right is Intel’s Atom D525. This 45 nm processors has 2 cores and 2 threads. It runs at 1.66 GHz, consuming up to 13 watts. It supports a 64-bit operating system, but not virtualization. Without a special chipset, you’d get one OS image per server, with one socket. Note that Seamicro has clustered up to 512 Atoms in a single box with a proprietary interconnect, so building a lot of wimpy engines into a larger whole is already in the marketplace. And please note that AMD’s Brazos could substitute for Intel’s Atom in this article.

In the brawny corner on the left is Intel’s Xeon 7550 with 8 cores and 16 threads at 2.4 GHz, consuming 130 watts. The Xeon 7550 supports a 64-bit OS, virtualization, and every other Intel server technology. This chip works with a chipset that supports four processors on a motherboard, quadrupling the single-7550 specs.

Handicapping Wimpy Cores Versus Brawny Cores
Atom’s low electrical consumption is certainly attractive versus the brawny Xeon. But buying lots of Atoms today is certainly not the answer for CIOs. There are several key issues that carry more weight than chip power consumption, as I’ll outline below:

Duplicated Server Infrastructure
In order to connect the wimpy server to the rest of the IT world, the same infrastructure elements are needed: network connections; I/O connections; memory; server power connections; KVM ports and all the other nuts-and-bolts hardware that make up a server in a data center.

Expanded Management Complexity
Since it takes lots of wimpy-core servers to equal the throughput of a brawny server, the number of server nodes could easily by hundreds or thousands. That raises operational manageability questions which not all enterprises are prepared to handle today.

Microsoft’s proposed 16-way Atom is no panacea either. This chip will not run traditional symmetrical multi-processing (SMP) operating systems efficiently; too many processors and not enough horsepower per processor implies lots of SMP overhead losses. That means Microsoft needs a new OS that can separate the 16 Atom cores, and a software development system that brings everything together at the application level. Not an easy task.

Dispatch Overhead Increases
The servers that dispatch workloads are complicated when hundreds of wimpy-server destinations take the place of a handful of brawny servers.

Software Stack Costs
A wimpy server costs chicken-feed beside the likely server software stack costs. Sure, Microsoft can talk about upping its server count by an order of magnitude or two using wimpy servers, but they don’t have to pay for the OS and middleware like everybody else. Google creates custom versions of Linux depending on a server’s workload, and they maintain those OS images themselves. Is your enterprise ready to drop Red Hat service and support and roll-your-own Linux? That’s what it will take to make software economics pay off in a wimpy-server world.

Atom is Made for Gadgets, Not Servers
Atom today was not designed for a data center environment. Here are some server must-haves that are not available with an Atom-based wimpy server:

  • 64-bit OS and virtualization together. You can have one or the other.
  • Server memory with error-correction;
  • Server redundancy and chipset-level error correction;
  • Other technologies like AES encryption and AVX scientific instructions.

Increased Latencies
With a slower core, work takes longer to get done. If a user is waiting for a response, how much added latency can be tolerated? If the wimpy cores are running in parallel, the latency goes way up when one wimpy core falls behind the rest.

Picking the Right Workload
Perhaps the biggest hurdle to harnessing wimpy server will be selecting the right work loads. There is not much literature or vendor experience today to assist IT planners. A lot of computer science and measurements are still in the future. Making the wrong choices will lead to obvious costs in delays, rework, training, and everything else that happens on the bleeding edge of technology. Moreover, the right answer will include the business process owners, not just the systems architects, with the following example.

One wimpy server workload that comes to mind is stock option self-service in the human resources department. Most employees log in only occasionally, so work loads per employee are predictably light (and if the company is acquired and everybody wants to cash out, they can wait). There are only a couple of dozen columns and a couple of rows per option grant per employee. It’s easy to imagine this database sitting in memory all day long. If all the application does is display the employee’s option holdings, a wimpy server seems workable.

But if the self-service includes updating the option database through an option exercise, then all the rules and controls of an enterprise accounting application fall into place. Sarbanes-Oxley is in play, which means the CFO could go to jail if the wimpy server corrupts data or fails with accounting-level recoverability. As stated above, Atom is not ready for enterprise server duties, so any application remotely mission-critical shouldn’t prudently be run on a wimpy server.

Wimpy Servers Are Not Ready for Enterprise Prime Time
All of the above leads me to conclude that wimpy servers are not up to the tasks of the vast majority of enterprise work loads.

My recommendation to CIOs is to track the technology in 2011, and follow early-technology companies like Seamicro for early-adopter success stories. What applications and work loads can actually deliver lower Total Costs of Ownership using wimpy servers?

The Rest of the Story
For the foreseeable future,  IT planners can lower electrical consumption — the raison d’etre of using wimpy servers — by purchasing the latest server technology early in its life-cycle. Fact is, huge improvements have been made in server power management over the past five years, and more is coming in 2011. I’d look to buy new brawny servers before dabbling in wimpy servers.

If  Atom isn’t going to make it in the data center soon, I don’t see how ARM-based servers have a snowball’s chance in hell due to the massive software migration needed.

Over the next five years, it’s likely we will see:

  • Even lower power levels, especially at idle and with partial loads. Intel and AMD hear their customers loud and clear;
  • Microsoft will get its Servers on a Chip, but they won’t only be Atom-based; expect Xeon too;
  • Lower overhead for virtual work loads, making virtualization more attractive as an alternative to wimpy servers;
  • Smaller, more configurable operating system kernels that enable better wimpy computing.

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