Dell is carving out a new enterprise business focused on the fast growing data center market that’s not quite as large hyperscale companies, but requires similar performance, customization and flexibility.
The privately-held company’s Datacenter Scalable Solutions (DSS) just came out of stealth mode, having already had customer engagements with service providers, telecom companies, oil and gas companies, research-driven enterprises and web technology firms in the past year.
What all of Dell DSS’s customers have in common is high-volume technology needs and supply chain requirements. The new business unit has developed an operating model that is built on agile, scalable and repeatable processes incorporating its experience in the hyperscale market; Dell launched its Data Center Solutions (DCS) to address massive scale out datacenter market eight years ago.
Brian Humphries, president of Dell Enterprise Solutions Sales and Strategy, said there is a growing market just below the hyperscale segment that have similar needs but don’t have the engineering resources to build everything in-house. It’s a market that is growing at three times the rate of the traditional x86 server market, he said, representing about US$6 billion of the total addressable market, according to the company’s own internal research. “DSS is one of the fastest growing segments of Dell.”
While the traditional IT market of mainstream enterprises grapple with issues such as security, data explosion and cloud computing, Humphries said IT budgets are typically flat or declining. At the other extreme are hyperscale customers, such as Facebook. The DSS market is not quite hyperscale in nature, he said, but massive in scale with similar needs. These companies operate in highly competitive environments, but can’t rapidly build custom IT infrastructure on their own.
Dell DSS will leverage its experience working with hyperscale giants, said Humphries, and from a product perspective, it will make use of its existing enterprise and DCS portfolio, including its PowerEdge servers; Dell DSS-branded products will likely appear in the fall. He said what’s particularly different about DSS is how it works with enterprises to customize software and hardware based in their specific requirements, including the use of open source. It’s also geared to helping companies that need to scale out quickly and on short notice.
Ashley Gorakhpurwalla, VP and GM of server solutions at Dell, outlined a few examples of customers it had already worked with, including one in the competitive oil and gas sector that needed to maximize performance but also minimize power consumption for its seismic processing workload. Dell worked with the company to provide a cooling alternative built on its infrastructure.
Patrick Moorhead, president and principal analyst of Moor Insights & Strategy, said hyperscale companies, such as the large web giants, see IT as a competitive advantage and literally have thousands of engineers at their disposal to respond to requirements of the business. He said the segment Dell DSS is targeting is second wave of companies that are not quite as large as hyperscale that also see IT as being essential to their competitiveness in whatever market they’re in and need help from an outside provider.
Moorhead sees DSS customers falling into a number of different buckets, including life science, finance, oil and gas, and telecom. The latter has fallen into the trap of being viewed as dumb pipe for bandwidth, and are looking to deliver more value with state-of-the-art data center capabilities. He said DSS customers are looking for more customization and using more open source operating systems and middleware such as OpenStack and Puppet.
These enterprises are also looking to scale out IT infrastructure, said Moorhead, and more times than not, there is an element of big data in their operations.
He said Dell is well-positioned to address this emerging market as a privately-held company that’s not beholden to shareholders. It can be more agile and can take advantage of its repeatable processes, existing products and supply chain. Moorhead noted that Dell DSS has already been place for a while and already driving a great deal of business from the initiative and has been doing similar work with DCS for years. “To me, this is a natural evolution of DCS.”