Web 2.0 Data Centers Mean Big Server Growth

By Jessica Davis -- Electronic News, 9/28/2006

SAN FRANCISCO - While the IT space and more recently consumer electronics have remained steady market drivers for chipmakers such as Intel, the world’s largest maker of semiconductors has recently identified a new market driver: data centers.

Intel executives have been abuzz this week here at the Intel Developer Forum over the expected growth of data centers, driven by the coming of Web 2.0 and “software as a service” (SaaS).  Both CEO Paul Otellini and CTO Justin Rattner quoted recent statistics from YouTube, 100 million daily page views, and Yahoo, 3 billion daily pages served.

That makes for a lot of servers. Rattner noted that the three largest data center operators, Google, MSN and Yahoo, have all recently announced new server farms to be located in the Pacific Northwest.

Those gigantic server farms and their need for energy efficiency represent a huge opportunity for Intel, AMD and others who offer silicon or software.

“Software as a Service and Web 2.0 have been driving the growth of data centers, and that has become highly visible in the last six months,” said Scott Darling, a VP at Intel Capital, explaining the recent investments by Intel’s venture capital arm in companies that serve the space. Darling quoted a recent statistic from IDC – that 1 percent of data centers will represent 50 percent of all servers sold.  That’s a huge market impact.

And it’s created “an explosive demand,” according to Darling, combined with competitive pressure creating a need to control costs. Delivering on that combination is the opportunity for Intel and others.

Darling noted that data centers tend to revamp their architecture every 20 years. That cycle is upon us now he said.

With that in mind, Intel Capital is focusing on opportunities in that space too, looking at virtualization, unified management, enhanced interconnects and fabrics, standards-based storage and data management, continued proliferation of open source, SaaS and service oriented architecture (SOA), and Web 2.0 enterprise applications.