Monthly Archives: January 2014

The Real Value (Danger?) of OpenX

Having paid very close attention to the Open Compute Summit this week because a client was there (and a member). What I have come to see is that Open Compute IS a good idea, but not for the reasons people want to believe. Let me explain…

Open Compute is good for Facebook. How doe we know? They saved $1.2B implementing Open Compute Hardware. That’s a great stat to be able to share. For Facebook. But what about other companies with say 1,000 employees whose size or revenue is less than $1.2B – what’s in it for them? How does Open Compute solve for their challenges? I for one am still waiting for an answer to THAT question.

I get standards, they have proven useful since before the metric system or the 8″ vs 5 1/4 inch floppy wars, or VHS vs BetaMax format. What Open Compute is working against is an entire industry that has developed and built to standards for 30 years. Power voltages, rack sizes, programming languages. Throwing the baby out with the bathwater is not gonna happen quickly, if at all because there are not enough companies at the size and scale to shave $1.2B off of their costs – and will spend to do it.

That said, the notion of Open Compute that I do like is that it can foster similar approaches in figuring out what DOES work for your company, over whatever period of time makes sense to adapt to standards that work today and will likely work in the future. In other words, you don’t HAVE to be like Facebook but you CAN  work with your vendors to figure out what does make sense, is interoperable, and will likely remain interoperable for your company. You have the standards to augment what isn’t standard and still save money based on what you want to do/spend to fix it. It still may be a solution looking for a problem.

The alarm bells that are going off as a result of seeing where this can end up is astounding. I haven’t quite figured out if they are a new business model, a foregone conclusion, or electronic socialism.

What appears to be happening is that there is a rush to commoditization up and down the stack of what delivers value and makes stuff work. Data centers, servers, storage, operating systems, networking, all going ‘open’. Open Stack, Open Source, Open Compute. I call it OpenX. All these ‘opens’ are telling me that the race to bottom of cost is happening in the name of innovation. Innovation itself is a cost, not revenue. Is R&D in the cost or revenue side of a business? If you’re innovating something that will wind up being free or difficult to charge money for how do you pay people to keep making free stuff. Innovation doesn’t pay the mortgage. Or employees.

 When we get to the bottom, what’s left? Apps. Mobile apps, desktop apps, endpoint consumed apps. I believe it’s why IBM bought Softlayer, IO got into the cloud space, and Microsoft bought Nokia. You can argue about the financial reasons for these deals all day long, but the market force reasons are this – if you don’t have an integrated stack – data centers, servers, storage, operating systems, networking, and cloud – you miss out on being valuable to the only things that will make money – applications. And capturing, washing, and understanding data, but that’s another post.

Think about it – when we commoditize things – wheat, corn, computer chips, the things with the value are food, fuel, and applications. The successful commodity businesses are those that operate at scale, with high risk, and razor thin margins. Look at Lenovo. They just staked their claim in the hardware business. They will make hardware and a ton of it. At scale, low margins, high risk. They will also own enough of the market to reduce the risk of innovation that’s not theirs.

Time will tell how it all shakes out – it always does. Keep your eyes focused on how to make money delivering vale – it’s still the only yardstick that measures how your business is doing. And there is no app for that.



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Zooming out

I don’t get sick a lot. I wash my hands often, carry hand sanitizer, eat well, and get 7-8 hours of sleep a night. Not the ‘I got 8 hours of uninterrupted sleep during hell week’ kind of sleep either. Well, last week I got sick – just a cold – first one I have had in a few years. I am a big baby and an awful patient when I get sick and prefer my solitude vs. being fussed over or cared for. It is in this solitude that I get a chance to feel different and by extension think differently.

It hit me after the third Emergen-C cocktail before lunch as the Advil was wearing off that my rants and unwavering belief in modular data centers being the next major evolution in the industry have far less to do with the data center industry that I thought and have led many to believe. Feel uncomfortable=think different.

Modular data centers are about advancing the reality that computing is the next (6th?) utility vs modular data centers being better traditional ones are. I believe the latter is also true by extension of the former, so we’ll focus on the utility of computing.

Utilities are commodities. Cable, phone, power, sewer, and water are all utilities, and by extension, commodities. They operate at scale and are consumed my millions of people worldwide when available in industrialized countries, and delivered inexpensively because of their scale. I will focus on the US for this post because it is where I have spent the bulk of my career.

There are similarities across all of the utilities – electricity, cable, telephone, sewer, and water and it is these similarities that has led me to the belief that computing is the next utility. In fact it’s already here, it’s just not being sold that way.

With electricity, the power company doesn’t care if you plug in a hair dryer, a 40 watt bulb, or weed wacker. It provides the electricity over infrastructure required to support the end points/devices. Cable is the red headed step child because the cable companies DO care what cable box you plug into their cable and they in turn control what you can and see. The similarity here is that they don’t care how may ‘i’ or ‘p’ your tv has – you can watch what you signed up for. Telephone companies don’t care what brand of phone you plug into their wires either – corded, cordless, speakerphone are all ok. Sewer and water don’t care if it’s a toilet or a faucet connected to their lines, and the downside if you get these confused is evident immediately so sewer and water have built in idiot proofing.

Computing uses power and cable or telephone to make another commodity – data – useful. Internet service providers – whether they use cable, copper or fiber – provide networks to our businesses and homes and they don’t care if we have an iPhone, iPad, laptop, or Galaxy tablet connected. The power company delivers the electricity to power the devices used to consume the commodity – data.

Data centers are the new treatment plants, the new substations, the new central offices for this utility of data. There is a subtle shift going on as data center companies understand this and that the business they are in is a commodity business. It wasn’t for the past 30 years – it took that long for us to get where we are, and the changes in the last 5 have been more numerous that the 25 before them. So as this rapid change happens around the data centers the change is happening with the data center industry as the realization settles in that data centers are in a commodity business. Real estate isn’t a commodity, but data centers are. Paying more for a commodity isn’t a successful business model. Supply and demand drive pricing which are the controls in commodity businesses. A freeze in Florida means orange juice prices skyrocket because there are fewer oranges.

The point?

The point is that in the next two to three years data center companies will be retooling to cut costs, the number one cost is electricity by the way. So to cut electricity costs you look at efficiency of the facilities you have and get them dialed in. Expansions happen where there is cheap power, and to get really cheap power you dial in workload to stabilize electricity load. Tenants will look at restructuring leases because they will be more efficient, or at least they should, otherwise they are paying more for their inefficiencies while the landlord improves their efficiency and laughs all the way to the bank.

One thing is certain, the company that understands AND realizes that they are in the utility business will win the commodity game. The winners will shave costs, focus on sameness of product offering, with small nuances of differentiation and deliver ubiquitous proliferation of reliable service in a lot of locations and they will win the game.

Time to get a glass of orange juice and watch what happens…

mark at

Modular in 2014 – A Vision for You

This is additional coverage of a piece over at Data Center Knowledge about the adoption and competition of modular data centers heating up. Over the past 6-7 years,  as long as we have been in the modular space, we identified many issues with the options, and the biggest issues had little to do with the technology.

The fact that there is M&A activity with Schneider/AST and a pending IPO from IO bode well for putting modular options in the public arena, little has been done to look at the (addressable) challenges that still exist with ANY of the vendors:

1. Focus on product vs. solution. If you talk to the vendors as we have done for 7 years, the positioning is that these are ‘solutions’. They are not, they are products. A solution is a sign & drive experience, not a buy and then figure out where we can put these experience. IO arguably has the most seamless solution out there with their IO anywhere product, assuming you like Singapore, NJ or AZ as data center locations.

2. No place to put them. When the modular products were introduced there was a lot of attention given to the ruggedness of the containers.  They could sit outside in all sorts of climates. That’s great, only people are the ones who make these work so while the containers were rugged, the technicians didn’t like 115 degree heat in direct sunlight, or a Northeaster blowing rain sideways and being in a big box with a lot of electricity coming to it. Even NextFort (we would consider them a hybrid design) enclosed their offering which is largely built with the same materials as a Home Depot. They too realized that people are not as rugged as a product and enclosed their data center. There still is not a modular centric facility out there to support a solution. There are ‘architectures’ and ‘approaches’ but show me a building where we can roll a modular data center that we buy in, plug it in, commission it and move kit in. We want to see one that’s not on paper, we have those too already.

3. Marketed as a specific use case solution vs. platform. We don’t know how many data centers you have been in, but We have been in over 100 and for the most part every single raised floor data center looks the same. If pushed for a number we would say 95% are like that. The biggest difference at the facility is the sizes and shapes of the rooms. White walls (usually) white or off white 24″ x 24″ floor tiles, humming and or blowing sounds from the air conditioners and power distribution equipment and/or computer racks full of servers with fans in them. A container is simply another form factor to put in racks full of servers with fans in them. The biggest difference in data centers is between the airport and the front door, and that’s the stuff that is far more important than look and feel.

4. Lack of (referenceable) information. It’s a royal pain in the ass to find any data to help drive a decision on modular. For a few years no one wanted to say how many they had deployed because the answer was none, one or maybe two at best. The customers didn’t want the notoriety because then they might be called ‘out of their minds’ for using the technology that was not deployed widely and seen as risky. That stink has still not washed completely off.

So here is why we believe (and have believed for 7 years) modular makes sense:

1. They are products, not solutions. You are not locked into a particular vendor’s building, design, density, (poor) efficiency, or lack of support. You want a private cloud? Buy a container, it gives you 20-30 racks that you can run 750Kw to and that you can lock the door of the unit and the door of the container to. Your infrastructure, your container, your control. Blunt Hammer even has a design and a financial model done.

2. You can put them anywhere. Here is where the data center industry can really get interesting… I worked on a business plan for most of 2013 for investors who wanted to see what the opportunity was in modular. In detail. The findings blew many notions we had out of the water. One of the biggest was in costs. We found we could deploy a data center facility for ~$3M per megawatt. We found that we could deliver 20MW in 40,000 square feet along with electrical distribution, DR bunkspace, and a nice office or two. $60M for 20MW and a site PUE of 1.3.  I remember when $11M per MW for a used facility with a 2.8 PUE was a good deal. If I am a traditional facility, I am hoping that someone doesn’t implement this business model because no matter how low I drop my rent, my real estate and infrastructure costs can’t touch this (queue MC Hammer)… The other thing we knew but hadn’t proved was that for all of the retrofits of facilities today (we have looked at breweries, former malls, old KMarts, and office buildings) using a container was faster and 60% cheaper. I would rather have 10 new sites around the US all geographically diverse and synchronized over my own network that cost me less than 3 facilities with a single vendor in a 100 year old building with janitorial staff that can hit an EPO button while dusting and shut me down (this just happened a few weeks ago at a facility).

4. They make an awesome stable, exact same platform. Think about this –  I can have a handful of sites around the US with MY STUFF (private cloud, streaming service, gaming apps, healthcare data) running and stored. Synchronized, mitigation from disaster built into geographic failover, attached to major peering points,  inexpensive to operate. Same skillsets as a data center to run & support. Guess what, If I don’t love them then I recycle them in the next tech refresh or change to a vendor with a better mousetrap and I still cut my computing costs in half on better faster equipment for that period of time. No vendor lock past the end of the hardware lease, and I have a true common platform and piece of equipment for my operations staff to know. It’s the Southwest operations model for data centers, only instead of Boeing 737’s its a container.

So are we glad to see there is more attention in the space? Yes. What we really want is to deploy the next data center platform that is already designed, already modeled, and needs the right investors who understand utility scale.

Blunt Hammer’s vision is to help deliver the next data center platform in more places around the world and operate the utility for computing. The mission is to give the world a data center platform that fixes the issues of inefficiency, cost, and uniqueness that is holding back the ability to compute better.

Please contact us if you want to learn more about what has been done. We have the team, the designs, the locations, and interested customers in hand.

mark AT

Cloud Velocity – put them on your radar

I am not a paid arm waver for any company, including one I want to get on your radar ASAP –

Here is why I believe they are important – they orchestrate moving to the cloud, and help keep it orchestrated correctly after you’re there. One HUGE caveat (today) is that they are tied to AWS. If I were someone at Azure, Ajubeo, IBM, or any other cloud company I would be getting into their pilot program this week.

Blunt Hammer would be happy to discuss the practical application of this technology for your company. It’s a game changer.

mark at

Knowledge or Wisdom?

2013 was pretty good for us here at Blunt Hammer. Towards the end of the year, we went out to validate assessment data we had been performing remotely for a month and a half to insure that things were as advertised. They were.

There were some seemingly minor things that happened on our trip  that point to larger issues within the data center business and could be a reason behind the uptick in our business last year. They deal with credibility.

One of the meetings was with some big wheels at a client of ours. Blunt Hammer was there to validate infrastructure, data, and positioning relative to what was already in place. Too often we see that what is said or presented comes across as being the Gospel truth, when in fact the infrastructure isn’t there, and is a plan (a/k/a dream) to put something in place one a developer has enough information about what they should do. In this case, our client did in fact have the power, the fiber, and the water infrastructure IN PLACE and has two existing data centers from respectable financial services firms in their zip code as well. Clearly not a dream, clearly not something in the planning stages – this client had delivered and had two tenants there already.

You could imagine my surprise when we were discussing what mentions they may have received as a legitimate data center site and they told me that they aren’t on anyone’s radar. I was stunned. I asked if anyone in the data center  brokerage community ‘had reached out or even said anything at all’ and I was told that the city had received a negative mention at a trade show panel over the summer from someone in the data center space. My follow up question  was  ‘When were they here to meet with you to check things out?’ and the response was ‘Never’.

Imagine that! Someone saying something untrue without investigating the facts? No, they weren’t from a network news outlet either – This isn’t broadcast media folks. This is the data center industry where people die and millions are lost if we don’t do our jobs well every single day. What is more upsetting is that someone would be willing to commit credibility suicide by saying something (positive or negative) without doing their homework. Especially when you can get in your car and drive to go check it out for yourself, or in my case fly 1800 miles to make sure that before I say it’s a legitimate site, that it’s a legitimate site. Makes me wonder what else this ‘data center professional’ is telling their clients…

The second ‘minor’ thing that happened was someone passing me an article written by Wired Magazine about ‘Five Reasons Today’s Data Centers are Broken’. The author is Patrick Flynn – who works for IO Data centers – a company we are quite familiar with and genuinely like what they’re doing to evolve the data center. At the end of the day, the article should have been titled ‘Five reasons the data center business is broken’ and taken that approach. Saying that data centers are broken – which the article goes on to define – is like saying cars are broken because there was leaded gasoline in the 1960’s or because whitewalls look stupid. I understand that IO makes data centers so from their perspective saying data centers are broken I get, but Wired not taking an industry wide perspective on how modular fixes things in our opinion makes this a paid marketing placement vs. journalism. Maybe it was, in which case their credibility can now be called into question as a news magazine for tech.

The reasons cited for data centers being broken are:

1. Fear of the unknown

2. Lack of data

3. Complacency

4. Value engineering

5. Snowflake design

Our position is that it is the business that is broken, not the facilities. We could always take the easy way out and be politically correct, or we can can call a spade a spade and say it’s the business that is broken. The way data centers are financed is flawed. The way they are sold/leased  is confusing (we did a study with a third party) and are weighted towards satisfying financial projections pulled together by people whose computer of choice is still an HP. An HP 12C calculator. Ask ANYONE in finance how they actually value a data center deal and you know what the answer is? ‘It depends’. Depends are adult diapers, not decision criteria.

I have spoken to hundreds of finance people in the past 5 years starting various businesses so I can make this statement because I have been through data center modeling many and the result was the same – money would rather continue to believe their own stories, vs do their homework and make decisions based on unchanging criteria they set at the beginning of due diligence. If the criteria changes, it’s either not important or not clear what the objective is. They also trust people who haven’t walked the talk. My new favorite questions are – ‘so who have you talked to there?’ and ‘when did you validate what’s in the listing’. Try asking them yourself.

If you have seen the movie Good Will Hunting, you might remember the scene when Robin William’s character (Sean Maguire) is meeting with Matt Damon’s character (Will Hunting) on a bench at the Boston Public Garden and calls him out on his being ‘just a kid. You don’t have the slightest idea about life. It’s OK, you’ve never been outta Bahstin (Boston)…If I asked you about art, you could give me the skinny on every artist; Michelangelo, you could tell me all about him…Life’s work, political aspirations, him and the Pope, sexual orientation, the whole works, right? I’ll bet you can’t tell me what it smells like in the Sistine chapel.’ BAM! Knowledge vs. Wisdom.

There it is – you can study this industry until you’re blue in the face, read about what everybody else is doing, read 10K’s every quarter, talk to analysts weekly. But can you explain to investors what happens at One Wilshire when a submarine cuts a cable in the Red Sea and what to do in a global network event? Can you explain why two different approaches in design can be $26 million difference in price? Can you tell a client why a data center someplace they don’t have on their list makes sense, and then cost justify it?

We can, because we have. We’ll tell you what it smells like. Just because it’s a Ferrari, doesn’t mean the passenger didn’t throw up in it last night. That said, it’s still a Ferrari and we know how to get the Vodka/RedBull/Burrito smell out.

mark at