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Uptime Institute Says Power to Cost 300-2250% More Than Server Hardware; What Does This Mean?

Sun, 11 Mar 2007 22:31:00 -0400

I came across Uptime Institute founder Ken Brill's CIO Magazine article via 3tera VP Marketing Bert Armijo's blog.

Ken says while hardware prices are falling, total cost of data center ownership is headed through the roof. 5 years from now, the purchase price for a rack of servers will drop 27.5% from $138K today to just $103K. But while it only takes 15 kilowatts to power that rack right now, the energy requirement will rise to 22 - 170 kilowatts by 2012. It could cost as much as $2.3 million to power/cool $103K worth of gear throughout its 3-year lifespan.

(I'm not sure if this figure includes switches and routers and such. A recent Cisco/APC/Emerson study shows that servers/storage/cooling consume 76% of data center power, with 11% going to networking equipment, 3% lighting, and 10% power conversion losses. If Uptime's calculations didn't take the other 24% into account, Ken's $2.3M becomes over $3M!)

I've been thinking about Ken's stats and trying to understand what they mean. As a point of reference, I was looking at Dell's website, which advertises the 4U PowerEdge 6950 dual core, dual processor Opteron server for about $9K. Is Ken saying that:

(a) This particular machine will cost 27.5% less 5 years from now?

(b) 2012's late model machines will sell for 27.5% less than what's on the market today?

If we assume he means (c), and we accept Sun's claim that "server performance, power and space efficiencies are improving at up to 40% annually on average, and could double every 2 years", then 4U of space may be able to accommodate not one but 4 servers that each feature 4x more processing power and 4x greater energy efficiency.

In other words, $6,500 could buy you 16x more computing resources than that dual Opteron! If that's the case, you might even be able to afford $1M per rack per year in electricity. But only if you virtualize like crazy. No more leasing data center space per square foot or per rack. No more dedicated servers, either. The average customer won't need 4x more processing power in 5 years, which means you won't be able to justify turning on a whole entire server just for them.

You'd also have to replace hardware early and often. Sun recently announced a refresh service for swapping out your servers at least 3 times over 42 months. At first I thought that sounded wasteful, but if server power efficiency is improving at 40% per year, holding on to old gear might end up costing you more. Again, virtualization would be a must. You wouldn't want customer apps to become attached to machines that will be phased out before long.

Bert from 3tera says changes in data center economics will make it increasingly difficult for enterprise CIOs to justify operating their own facilities. But they won't outsource to traditional colo or dedicated server providers. Instead, he agrees with Cassatt CEO Bill Coleman that in the near-ish future, you'll be "paying for data center horsepower the same way you pay for electricity or gas". I think so too. How about you?

PS - On a somewhat related note, eWeek says Intel will release its "Clovertown" chips today. The quad core processors have a 50 watt thermal envelope, versus 80-120 watts on earlier models. That's a 38-60% drop.

PPS - Also, speaking of the Uptime Institute, check out this SearchDataCenter.com interview on how they've helped The Planet save $10K/month on electricity. The Planet, the article says, is looking to expand beyond Texas into the Midwest.

Selling your web host business - Act I

Wed, 27 Feb 2008 16:31:00 -0400

First we will start with an alert---because timing can be everything.

Marbles… One of the most important parts of any transaction is how many marbles you get to keep. If you are considering selling your company in 2008, 2009 or 2010 please run down (not just trott, put off til' tomorrow...I said RUN) to your tax accountant. If it would be a stock sale, which frankly you really don’t know today, you could be in trouble.

Why? The Bush tax reductions will soon start to evaporate, specifically the long term capital gain treatment which expires December 31, 2008 ---- yes a short 10 months away. In a stock transaction it could cost you another 5% in taxes.

Well it is only 5% some people may say. Yes but it takes almost 7% to make that up after paying taxes on the incremental amount you need to cover the poor timing.

So if you are considering selling in 2008 you should start earlier than later. And if you are considering 2009 ---- think again.

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Most internet connections are very fast but it still matters where the physical server is hosted in terms of speed. If I was starting an online store focusing on customers in Texas the site is going to server faster to people from Texas if it is in Texas. Similarly if you are building a site aimed at United Kingdom residents you don’t want the server to be in the United States or even Europe in some cases. By hosting in a location near your customer base you are speeding up their access time to the server. This might not seem like a big deal but in a number of studies the importance of a quick loading page can mean a big difference in the number of conversions. Or if you are hosting a game server ping time will obviously matter when you are shooting your next zombie.

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Mon, 21 Jan 2008 21:28:03 +0000

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