With Sales Booming, Dell Sees a Micro Server Future

It wasn’t so long ago that bigger was better when it came to server design, but the advent of Web 2.0 and its principles of scaling out and designing to fail have brought about something of a sea change in how companies buy servers. For evidence, one needn’t look any further than Dell (s dell), which has been making a killing over the past couple years selling stripped-down server designs, or micro servers, to both the world’s largest web properties and the startups that want to grow into that title. And it’s just getting started.

No one outside Dell (s dell) knows for sure how big the company’s micro server business is, but the company assures us it’s huge. In fact, says Drew Schulke — a director in Dell’s Data Center Solutions group, which sells custom-designed servers to the likes of Facebook, Microsoft (s msft) and Salesforce.com (s crm) — if Dell were to separate its DCS and PowerEdge C (its line of micro servers for mainstream customers) sales from the rest of its server sales, they would be enough to create the world’s fourth-largest x86 server vendor. The companies ahead of it: HP (s hpq), Dell and IBM (s ibm).

He added that Dell will eventually break out its server sales by product line, and “it will become readily apparent how huge a part of Dell’s business this is.” IDC’s latest statistics gave Dell a 21.1 percent of the overall x86 market (by volume) in the fourth quarter of 2010, in between HP at 38.5 percent and IBM at 19 percent. Dell grew 0.9 percent year over year. For the year, IDC estimates Dell grew its overall server revenue by 34.2 percent, almost doubling its closest competitor in terms of revenue growth.

However, although DCS gets much of the attention because of its high-profile customers, Schulke says the PowerEdge C lineup is making ground in a hurry. PowerEdge C came about, he explained, because DCS doesn’t scale well; there are only so many companies operating at the scale that require that personalized experience. So, in March of last year, Dell launched its PowerEdge C servers to target smaller web companies that require scalability, density and efficiency, but not at the levels necessary when talking about tens of thousands of servers in a data center.

Schulke says Dell only sees the micro server movement growing through 2014, thanks in large part to the uptick in certain application types and workloads. Specifically, he cited web applications, low-end online gaming and big data as types of workloads that sit in a place between constantly worrying about Moore’s Law on the one end and being capable of running ideally on virtual resources on the other end. These applications just need lots of server-grade processors, even if they’re not the most powerful ones available. As in high-end cloud data centers, the real magic is in the automation software, which is why Dell has been hot on software lately, striking OEM deals with companies such as Joyent and seemingly always talking about who it will buy next.

Going forward, though, energy efficiency will become even more important as scale increases, which is why Schulke thinks movements such as Atom- and ARM-based (s armh) servers and Facebook-style minimalist servers could catch on. Dell’s current micro server lineups are built on low-power Intel Xeon (s intc) and AMD Opteron processors, but Schulke says Atom processors will become far more appealing when Intel rolls out its server-grade version sporting 64-bit processing and ECC memory.

As for ARM-based servers, which have been a hot topic over the past year because they represent a legitimate threat to the dominant x86 architecture, Schulke said the industry still needs a lot of education and a software ecosystem has to build up around the ARM chips. But he didn’t rule out the possibility of ARM-based Dell servers, simply stating the “we have not announced anything” on that front.