In my VC role I focus on technology investments – specifically Internet infrastructure and services (networking, servers, storage) for both the enterprise and service provider markets. Although not as hot as web2.0, there are a lot of startups building interesting technologies in this area. To filter potential investments further, I’ve recently taken an approach where I only look at companies that leverage commodity computing. In other words, if the startup is focused on Internet infrastructure and services and is basing it on proprietary computing, there is a very high bar to jump over before I become interested.
If you look at some of my previous posts here, I think you can see a pattern. CDNs leverage commodity computing for delivering Internet services, femto cellular products are going to connect to voice switches running on commodity hardware, Dell’s online backup and data protection is designed to offer personal service for their PC customers, Vyatta is using commodity computing to attack the proprietary networking vendors, and so forth.
In my opinion, for the foreseeable future, x86 commodity computing has won (I’m not an expert on Intel or AMD, so I’ll not choose a winner there). So, why shouldn’t Internet infrastructure and services leverage the large efficiencies of the commodity compute market that is being driven by the PC manufacturers? We all know about Moore’s Law and how compute power is getting cheaper and faster all the time, so why fight the feeling? In June 2005, Apple ditched the PowerPC processor and partnered with Intel and last week Sun, home of the proprietary Sparc processors, announced that they are also partnering with Intel.
Today, the x86 architecture features quad-core processors that are quite powerful and cost-effective. Recently, Intel announced research that is working on an 80-core chip that is basically a supercomputer on a chip. That is a huge amount of compute power coming to the commodity compute market over the next few years.
I’ll absolutely agree that x86 is not destined to be the only processor on the planet – the ARM does nicely in mobile devices and digital cameras. If you need to have several 10Gbps interfaces for a core Internet router then you need more than an x86 (maybe even use an Intel IXP network processor) and if you’re running a large financial system then you may want to pay up for a proprietary compute system. So, at the low and high end of the market, I suspect that there will be a need for proprietary processors to achieve desired performance. At the same time, I would point out that those segments of the market that are not being served by commodity computing appear to be shrinking. For example, I’m seeing commodity compute combined with virtualization (see Liquid Computing, Platform Computing and others) take market share from high-end proprietary platforms.
I hear arguments against commodity computing from companies looking for funding on a regular basis: the x86 is an old processor than is burdened with features and inefficiencies, the PCI bus is too slow, the x86 is expensive to operate because of heat and power concerns and that software needs to be modified to take full advantage of the multiple cores. While all of these are true to some degree in the near-term, these issues are being solved by Intel (see the New York Times coverage) and AMD, if not in real products then in marketing messages – and that might be enough to get the market to wait.
So, with all of that said, if I invest in a company that is in it’s early stages today, I’m willing to bet that by the time the company brings products or services to market that advances in processing power, new bus technologies and chassis solutions like ATCA will nearly eliminate the need for proprietary architectures.
The question I ask startups all the time is – if you can buy an 80-core x86 processor for a few thousand dollars in the near future, how do you plan on using that power to build better Internet infrastructure or services?
Allan Leinwand is a venture partner with Panorama Capital and founder of Vyatta. He was also the CTO of Digital Island.