Facebook Pokes Dell, Jilts Rackable?

For the past few days we have been getting pinged by the press folks from Dell who want us to attend a joint event next week with Facebook, to announce a new cloud-computing project. That Round Rock, Texas-based Dell and Facebook of Palo Alto, Calif. are getting cozier shouldn’t come as a surprise. Facebook is seriously “server hungry” and has been on a spending spree to beef up its infrastructure. Dell, on the other hand, has been increasingly seriously about cloud computing, working with online companies and building bespoke solutions for companies like Facebook.

In my conversation with Michael Dell, he said: “Our view is that there is definitely enormous opportunity in cloud infrastructure. A few years ago, we were out there selling our servers and found that some of these new companies had unique requirements that were really different from the general-purpose servers.” Dell has been trying to get closer to Facebook. Dell has worked closely with Joyent to offer a cloud service that offers free services to Facebook app developers.

A few days prior to our Structure 08 conference, I met with Facebook’s VP of Technology Operations, Jonathan Heiliger, and we discussed the issues with current server designs and how today’s startups need a whole new class of machines. I am pretty sure the announcement is along those lines.

The pending news can’t be good news for Rackable, which had been banking on some of the dollars Facebook was spending on its infrastructure. Rackable’s 10-Q filings show that at the end of the second quarter 2008, Facebook accounted for less than 10 percent of Rackable quarterly revenues of around $76 million. A quarter earlier, Facebook contributed about 24 percent to Rackable’s Q1 2008 revenues of $68 million. Rackable is trying to streamline its operations and recently announced that it is divesting its Rapidscale clustered storage business.

Bonus reading: Check out Facebook’s blog where the company explains why it needed to build its East Coast infrastructure. It is a fairly elaborate description of its entire architecture and worth reading.