Making Money around the Data Center

Even before the economy turned sharply downward, selling servers had become a tough proposition thanks largely to the advent of virtualization. Every where you turn these days, customers are focused on getting more out of their existing assets so that means the order of the day is to increase the utilization rates of servers that typically hovered around 25 percent or less.

Now to make matters even worse, customers are husbanding their access to capital, which means using that money to fund additional server purchases is not high on the list of capital expense priorities.

There are, however, three ways, to continue to make money selling technologies and services around the server:

Data Center Renewal: As many customers move to increase the utilization rates of their servers, they are finding that first they don’t have enough access to electricity to power servers that are demanding more energy. That creates an opportunity for solution providers to come in an essentially rewire a data center to help the customers make more effective use of their power resources. Eaton, for example, is now telling its partners that it will give them the resources they need to do power assessments for their customers on the assumption that the assessment will probably lead to more sales of racks and power supplies.

Energy Upgrades: In certain areas of the country, the cost of the power to run existing servers has become more expensive than the cost of replacing those servers with nits that contain more powerful processors that are more energy efficient. That means, for example, a Xeon 5500 series Nehalem server could replace several existing servers and actually draw down less power. In effect, the savings on power could pay for most of the upgrade over a three year period.

Data Center Movement: Even in these tough times, there is still a lot of interest in either consolidation data centers or simply moving them to another location that has access to comparatively cheap power resources. For example, there is a fair amount of activity associated with moving data centers closer to rivers to access sources of inexpensive hydroelectric power or moving to cooler climates where outside air can be used more effectively to cool the data center.

Regardless of the state of the economy, the move towards multicore processors running inside very dense blade servers that are going to have very high utilization rates because of virtualization is going to force all kinds of ancillary issues around the data center. In fact, the convergence of server, storage and networking technologies around a new generation of integrated server platforms is going to make a pretty compelling total cost of ownership story that most customers will find tough to ignore because integrated servers mean fewer people are needed to manage the data center. And as any customer will tell you, the biggest cost associated with managing the data center is not the cost of the equipment, but rather the cost of all the people needed to manage it.

For solution providers, that means the opportunity to gain expertise in how to manage the next generation of data centers more effectively is now. In the short term, the opportunity is clearly focused on helping customers be more efficient, but within the next 12 months as the economy continues to improve, customers are going to figure out that running legacy server equipment is costing them a lot more than the price of a new server.