Another clueless (paid) journalist…

Google’s Costly Rebellion: Financial News - Yahoo! Finance According to a story published in today’s edition of The New York Times, Big Goo builds its own servers and could even get into the business of creating its own chip designs.

There’s already plenty of hubbub over whether these initiatives will be good for the company or the industry at large. I have my opinions, but I’m loath to share them. I believe doing so would detract from the larger issue at hand – namely, that Google has dramatically altered the competitive dynamics in its industry. And that may prove to be really, really bad.

Put yourself in Google’s shoes. You are continuously buying new servers, both to expand capacity, and to replace older servers that are no longer useful. Profitability for your company is critically dependent on:

  • Minimizing initial cost per unit of performance for your applications.
  • Minimizing replacement costs for failed hardware.
  • Minimizing ongoing power and cooling costs.
  • Maximizing performance for your applications.

Google has bought and continues to buy large amounts of hardware. Big customers get special treatment from hardware vendors. Big customers can and often do require changes to the vendor’s stock offerings.

Now if I were in Google’s shoes, I would carefully benchmark each hardware vendor’s offering with my applications. I would also be looking for features to add or eliminate that would make a significant difference to my applications. I might find that I need more (or less) memory in each node. I might find that better network connections (more or faster NICs) are an advantage in my application. I might find that some CPUs (cough, AMD and Sun Niagrara, cough) suck a lot less electricity and yield better performance.

Doubtless I would share my results with interested hardware vendors. The guys willing to best change their stock offerings to suit my needs - at the best price - are most likely to get my business.

Now the question comes down to what Google actually makes. They are not going to get into the business of manufacturing CPUs, memory, or disk drives. The racks they can get custom-fabricated locally … no need to get each server individually wrapped.

They might get their power supplies custom-designed. I’d guess a smart designer with a few extra dollars in the parts budget could turn out a more reliable and efficient power supply. This expertise is fairly specialised - not too likely Google would do this in-house. Power is a big deal in a Google-scale server farm.

I would bet that the hard-drive maker with the best power consumption per drive (Western Digital?) gets big orders from Google.

They might get the motherboards custom-designed. They can eliminate features they do not need, specify parts with the best cost-effective reliability, and add bits as needed. I would guess that having two or more NICs on each motherboard might be a win for many of Google’s applications. (Think fewer ethernet collisions…)

They might get semi-custom designs out of the fabricators of “glue” chips. Not sure if this is worth the effort - but something to look at.

All the above are simply guesses about why Google makes servers for their own in-house purposes, based on what makes sense given the current market and technology. Digging a bit further, came up with…

A Search Engine That’s Becoming an Inventor | “Nobody builds servers as unreliably as we do,” Mr. Hölzle said in a speech last year at CERN, the Swiss particle physics institute. Google is reducing cost while maintaining performance by shifting the burden of reliability from hardware to software individual hardware components can fail, but software automatically shifts the local task and the data to other machines.

While Google’s servers are built on inexpensive parts, the designs it uses have been modified every year or so, to improve their efficiency and increasingly to customize them to Google’s applications. The current generation uses the powerful Opteron chip from Advanced Micro Devices, which uses less power than the Intel chips Google had used.

Google is among Advanced Micro’s five largest clients, and the largest that does not make computers to resell, according to a semiconductor industry executive with knowledge of Advanced Micro’s business.

Oddly enough Dell just announced they will be building server hardware with AMD chips.

Google is increasingly doing business with Sun Microsystems as well. Sun, known for systems that are both reliable and expensive, would not seem a natural match for a company that emphasizes economy and self-sufficiency. But Eric E. Schmidt, Google’s chief executive, is a former Sun executive, and Sun has developed a new microchip that is especially efficient in electricity use.

Moreover, Google increasingly needs systems that are less likely to fail than those it uses for its search engine in order to handle important information, like e-mail and payments in its new Google Checkout service. Beyond servers, there are signs that Google is now designing its own microchips. The company has hired many of the engineers responsible for the Digital Equipment Corporation’s well-regarded Alpha chip.

Mr. Hölzle said Google had considered custom semiconductor design, but he declined to say if the company had built any. He said that, in general, Google did not want to build anything from scratch if it could buy something that was just as good.

We build our own servers because it’s more efficient: Google Energy efficiency is a subject Hölzle speaks passionately about. About half of the energy that goes into a datacentre gets lost due to technology inefficiencies that are often easy to fix, he says.

The power supply to servers is one place that energy is unnecessarily lost. One-third of the electricity running through a typical power supply leaks out as heat, he says. That’s a waste of energy and also creates additional costs in the cooling required because of the heat added to a building, he says.

Rather than waste the electricity and incur the additional costs for cooling, Google has power supplies specially made that are 90% efficient.

“It’s not hard to do. That’s why to me it’s personally offensive [that standard power supplies aren’t as efficient]”, he says.

While he admits that ordering specially made power supplies is more expensive than buying standard products, Google still ultimately saves money by conserving energy and cooling, he says.

In a sense, none of this is rocket-science. Google is simply covering all the bases.