Dell loses orders as Facebook do-it-yourself servers gain | business | Hindustan Times
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Dell loses orders as Facebook do-it-yourself servers gain

business Updated: Sep 12, 2011 12:45 IST
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When Facebook Inc. set out to build two new data centers, engineers couldn't find the server computers they wanted from Dell Inc. or Hewlett-Packard Co. They decided to build their own.

We weren't able to get exactly what we wanted, Frank Frankovsky, Facebook's director of hardware design, said at a conference on data-center technology last month.

Hewlett-Packard, Dell and companies that sell the computers off the shelf are losing sales in a key market because Facebook and larger rival Google Inc. are leading a switch among Internet companies to do-it-yourself servers. These customized machines now account for 20 percent of the U.S. market for servers, which generated $31.9 billion

globally in last year, said Jeffrey Hewitt, an analyst at Stamford, Connecticut-based Gartner Inc.

As sales of personal computers slump and consumers shift to tablets such as Apple Inc.'s iPad, computer makers are becoming more dependent on servers. Dell and Hewlett-Packard lose out when they're shunned by large customers such as Facebook, which are outfitting data centers with thousands of servers.

It's definitely a threat to the traditional business model, said Jim McGregor, chief technology strategist for researcher In-Stat in Scottsdale, Arizona. Customers are finding solutions that the industry wasn't ready to provide.

Buyers say custom servers provide a cheaper, more efficient way of meeting the boom in demand for personal data shared via the Web. A lot of that demand can be met by less expensive machines shorn of the components, upgrades and backup services that server makers traditionally offer to large corporations.