Hosted service prices are about to take a big dive

Why are hosted server prices about to fall drastically?

The answer is Moonshot from HP.

It is not often I get excited by new technology anymore. After 24 years of working with the X86 server platform there has not been much that offers a significant step forward. This week, I was asked to watch a video where David Donatelli, executive vice president enterprise group at HP, announced the upcoming release of a significant new server platform, the HP Moonshot System.

This is exciting stuff that will change the IT environment significantly.

Some of the stuff about being able to fit 450 to 1800 servers into one conventional server rack won’t mean much to a company that only runs a few servers but the following comparison may catch your attention.

Compared to a DL380 server, that we sell today, the performance specs on a Moonshot server are: 80% less space, 89% less power and costs 77% less to buy for the same compute power.

How this translates to useful for small and medium businesses is that we are currently keeping our servers in large spaces and paying as much as $500 per year for the electricity to keep them running 24 hours a day. We may also be paying to air-condition the space the servers are in.

So when a new server will cost as much as a PC and fit in a small space and only cost $55 per year in power, we will be able to get an ROI on the new server in just two years just on the power cost of the server. However, it also means I can run hundreds of servers in a small and low powered data centre for my clients.

With NBN giving us high speed access to these servers, we really could see the end of any need to have server rooms or server racks in mid-market businesses. This also means that in the last 18 years of my working life, servers have reduced from a cabinet-style box costing $40,000 each to a small box the size of a micro PC costing $1500 each with hundreds of times the compute power of the $40,000 machine.

This is clearly going to lead to massive motivation to replace ageing IT systems that cost a fortune to keep running and keep cooling.

We are not yet able to sell these solutions, but we do need to factor them in to our strategic planning for the next few years.

My hunch is that these will not be released to consumers or to small businesses in the first instance. They are designed for datacentres to be configured in high density environments. What this is suggesting to me is that we will see a rapid change in the data centre business model.

There have been some limiting factors for data centres for a while now:

• Floor weight
• Power consumption
• Cooling for hot processors
• Floor space

This new breed of servers is going to mean we have lots of spare rack space in data centres. Smaller data centres will become highly effective but still not as effective as larger centres.

Data centres that can replace old servers with these new ones and will increase compute power by a factor of 10, with a reduction in power consumption and a reduction in heat load. This will rapidly drive costs down for hosted server solutions. This may be the step that makes a hosted server cheaper than purchasing and maintaining your own physical in-house server. We can expect to see some data centres that are over-invested in current technology that just became obsolete and expensive to maintain go bust, as new orders go to datacentres with new cheaper servers for sale.

On the flip side, datacentres with a bunch of old servers that need replacing will get a massive boost.

This is a step change that will drive different price points and solutions across our SME market place.

In turn, this will drive more migration projects and more upgrade projects across industry. There are also significant steps coming in data storage capabilities, with disk arrays capable of supporting more data at a lower price point. That can be a subject for another day.

I would like to finish this by saying carbon footprint is not very trendy at the moment, as the world has gone off the carbon problem as we focused on getting through the GFC, but it is a big problem that is not going away. This new server technology will become important as the world gets back to focusing on reducing power consumption and greenhouse gas emissions. So the green aspect of this computing platform is also significant to business decisions in the near future.

If it is time for you to review your technology roadmap, please talk to an expert with a view of the future.

David Markus is the founder of Combo – the IT services company that ensures IT is never an impediment to growth.