Dell's Datacenter Scalable Solutions: 10 Things Partners Need To Know About Dell's $6 Billion Opportunity

Out Of Stealth

Hyperscale pioneer Dell says it's taking what it's learned from selling hyperscale-class servers to the top 1 percent of Internet companies and is now applying those smarts to the next couple hundred of almost-hyperscale class of companies.

Earlier this week, it took the wraps off a new business within Dell's Enterprise Solutions organization called Datacenter Scalable Solutions (DSS). The new business unit specializes in what it calls the sub-hyperscale market -- a $6 billion total addressable market, according to Dell.

The concept isn't quite new for Dell. For the past year, Dell said DSS has been working in stealth mode with more than 200 web tech firms, telecommunications service providers, hosting companies, oil and gas and research organizations to deliver agile, scalable technology, and repeatable processes.

We caught up with Jyeh Gan, director, product management and strategy, DSS, and asked him what's at stake for its partners with this new venture.

What is the genesis of Dell's Datacenter Scalable Solutions?

It goes back to Dell's original success in the hyperscale market. But it wasn't until 2007 that we created DCS [Data Center Solutions] where we began to try to develop the market event further. We asked ourselves, "How do we take what we have learned in the world of hyperscale and bring the products and capabilities to other customers?"

We are talking about the next 100 hyperscale, Internet and HPC companies after the tier-one customers we had been working with. DSS represents the evolution of that strategy to take advantage of a usage model change.

In simple terms, how does DCS differ from DSS?

About eight years ago, Dell created DCS to assist the biggest of the big hyperscale customers and develop fully custom solutions for massive-scale datacenter environments. We'll continue to do that.

DSS is about working with the next 100 scale-out customers, or the next tier of customers down from hyperscale. These customers are still massive in size. This is a fast-growing market, and DSS is developing optimized solutions around Dell's core hardware to help these companies reap the benefits of having an almost-hyperscale solution.

Dell says DSS has been up and running in stealth mode for one year with 200 customers. How much has Dell's channel been involved?

A third of the DSS business is currently through the channel.

We want to work with more channel partners with DSS. Partners understand the customer a lot more. So us working together with partners is what we would prefer to do.

At the end of the day, it's about understanding what the customer needs and finding solutions. We want to work with whoever can best enable helping customers find those solutions. We'll work with whoever helps us accomplish that goal.

Why is now the right time for anyone to succeed with DSS?

In the past five years, the server usage model has evolved for a lot of customers. I think there has been an influx of many more competitors in the cloud space -- everybody wants to do something 'as a service.' So you have all these companies competing against each other. They are competing on the software front.

Having software and hardware optimized gives companies a data-center advantage. And when it comes down to it, technology is any company's competitive advantage.

With DSS, it's about red-flagging potential issues they might run into as they try to grow into something that looks more like a hyperscale model.

There are a whole lot of things we talk to them about: How much power is in their data center? How much space do they have to work with? Do their servers really need all the components that are on that board? Do they need all fans, and can they conserve power?

It's about discovering and defining a metrics for success in the data center for each individual company. It's all about optimizing for their TCO. That's what DSS is all about.

Why Dell? What is Dell's secret sauce compared to competitors going to market with similar marketing pitches?

It comes down to profitability. At the end of the day, it's still a business and the question is, 'Can they make money bringing this type of customization to these sized companies and still maintain healthy margins?' Look at Hewlett-Packard and Supermicro and how they build their products. At this level of manufacturing, companies need to consider how much inventory they need to hold, and how many SKUs are needed to be available at any given time.

Dell is more capable to deliver to those types of needs. I'm not saying they couldn't do it. I'm saying they are not best aligned to move forward and do it right now.

How Does Dell make it work where others cannot?

The other hyperscale guys are saying: 'Hey, you need a lot of servers? We'll go out and build them for you.' But they can only build so many before they start running into component and supply-chain problems internally.

Dell's approach is different. We are more consultative in nature. Match that with Dell's leadership in the hyperscale space that has given us a lot of experience with supply chain and manufacturing. Dell's hallmark has been, 'You configure the box, and we'll build it.' With DSS, we help you configure your data center, and we build it, warranty it and service it.

Talk about a typical DSS engagement. What are you doing for customers?

There are no typical DSS engagements.

An oil and gas customer came to us with unique data-center needs for its seismic processing. It had an existing global data-center infrastructure where some locations had tons of access to power and cooling, and some places the data center was the almost like a closet.

Previously, they custom-built their data center based on a unique oil liquid cooling process. Servers were located in oil-emersion tanks. They turned to Dell to quickly standardize their data centers.

They asked us to quickly re-engineer our product and have it compatible with its oil-emersion environment and have it work great. Dell said sure. We pushed ourselves to do something very different. We designed a fully customized submersible server. We collaborated with them; we fully understood their needs and designed a 100 percent custom solution.

This sounds very niche. How in-demand is these type of solutions?

I think there are lots of fast-growing markets where a reliable supply chain is a key part of their success, especially web tech companies. Many customers in web tech are unable to accurately forecast all of their needs today because they don't know how well their platform is going to do tomorrow. Our ability to respond quickly to unpredicted demand is a need that will always be there.

Are you happy with the amount of partner participation in this market?

I'm never comfortable with where we are at. We want to continue growing. We are actively working on enlarging our channel. We are working with our channel team to see where we grow together -- especially in Europe.

We are going to do a lot more with the channel and move the needle on engagements. At the end of the day, we are pretty agnostic. But we know our partners know their customers and have the established relationships and can help them build Dell solutions.

Other vendors that are taking aim at the so-called 'sub-hyperscale' market include Hewlett-Packard and Ericsson. What gives Dell the advantage?

None of our competitors do what we do in terms of the ability to optimize for custom, scalable, flexible data-center solutions. They don't have a willingness to do feature, software and hardware modifications all the way down to supply-chain modifications.

Our competitors approach the sub-hyperscale market in different ways. Some do it by trying to have as many products in their portfolio as possible. But that causes problems, such as inventory holding.

This is definitely a vacuum in IT that nobody is delivering really well. Dell, with the help of channel partners, is set to do very well in this space.