Virtualization enables –and suffers from—increasing power density

According to the Forbes article, The Death of Hardware, what Amazon physically has a lot of is not books – those are stored at book distributors such as Ingram – but servers. There are certain peak sales times of the year such as Christmas when Amazon’s servers are used at something close to their maximum, and the rest of the time they hum along at less than capacity.

With the advent of server virtualization one system host does not require one dedicated server – if a hosting system doesn’t require all of a hardware server’s bandwidth, the rest of the bandwidth can play host to one or more completely separate systems, depending on the hardware’s capacity and the bandwidth needs of the hosting system. So it turns out that the clever people at Amazon, who rather than being book specialists are IP technology whizzes, saw a new business in renting out these virtualized servers as overflow for large corporations’ IT needs, as well as hosting all IT needs for many smaller companies.

Amazon, which buys its servers in bulk at the dirt cheap price of $300 each, rents time to its web services customers at the rate of 10 cents/minute. If a customer’s processing needs spike because of a sudden influx of web traffic, they buy more server time from Amazon at the rate of 10 cents/minute, which Forbes claims is as little as one tenth the fee charged by hosting companies such as Equinix or Rackspace. While the cost is greater than if the customer housed its own IT hardware for the task, companies are willing to absorb the cost increase to keep their capital free, and also avoid the headaches that an IT function can bring.

I’ve read differing points of view on IT blogs about the riskiness of trusting one’s crunch-time IT work to a company that is not a 100% hosting service – if your computing needs spike at Christmas, who gets access to the servers? But Amazon’s customer’s seem to be happy with Amazon as an IT tech company; Amazon is predicting that within the near future its IT services business will rival its retail side.

The point? Virtualization is enabling increasing compute density and its Siamese twin, power density. With behemoth server farms run by the likes of Google and Amazon, where a year’s worth of electricity will cost more than the server hardware it powers, these corporations will force new power efficiency requirements on data center infrastructure.