Multinational financial services giant Goldman Sachs had good reasons to get actively involved with the open hardware movement.
Goldman Sachs has a massive, global IT footprint, with more than 118,000 systems holding more than 500,000 compute cores and running more than 4,000 applications, all housed in 68 data centers worldwide.
The firm also has been a longtime member of the Open Compute Project (OCP), the industry consortium started by Facebook in 2011 to push the idea of open-source hardware in the data center.
Goldman Sachs officials, intrigued by the idea of using the same open-source philosophy for hardware that fueled the rise of Linux in software, saw the chance to reduce capital and operational expenses in their IT infrastructure while continuing to drive performance, agility and scalability. To do their part, they helped work on such areas in the OCP as hardware and firmware.
Starting last year, the company began buying OCP-based servers, and now officials are determined that 70 percent of the servers that Goldman Sachs buys this year will be OCP systems. Eventually, 80 percent of the firm’s servers throughout its data centers will be open-source systems.
“We’ve been clear to the vendor community,” Don Duet, managing director at Goldman Sachs, told Business Insider recently. “There’s no reason to go backwards. We didn’t go back after adopting open-source operating systems.”
Vendors are listening and the drive behind open hardware is gaining momentum. At the hyperscale level, where companies like Google, Facebook, Amazon and Microsoft run tens or hundreds of thousands of servers in their data centers, power efficiency, flexibility, performance, scalability and affordability are at a premium. These are things that server designs from the likes of Dell and Hewlett-Packard can’t always address.
Some, like Facebook and Google, have instead taken off-the-shelf components and leveraged in-house engineering skills to develop their own hardware that can address their particular needs. Some have partnered with server vendors. For example, Microsoft and Dell have entered a partnership to deliver hardware integrated with the Microsoft Cloud Platform System.
Other industries also are looking at open hardware solutions. Goldman Sachs is part of a growing list of financial services firms—such as Fidelity Investments, Bank of America and Capital One—that are taking advantage of the trend looking to garner the same benefits that the Web-scale organizations see.
For example, Bank of America officials say they want 80 percent of their systems to be open-source by 2018, while Fidelity officials at the Open Compute Summit in March also reportedly expressed interest in bringing in open systems. Fidelity was an early OCP supporter.
“IT, for a specific set of customers, is becoming their business,” Ashley Gorakhpurwalla, vice president and general manager for Dell Server Solutions, told eWEEK, noting that the technology they use can be a significant competitive advantage.
The idea of more open and standard data center hardware can be traced back to the introduction of x86 processors into servers, according to Charles King, principal analyst with Pund-IT. Operating systems at the time were tied to the servers they were running on—like AIX on IBM’s Power systems, Solaris on Sun Microsystems’ SPARC servers, etc.
Servers powered by x86 chips from Intel and Advanced Micro Devices have come to dominate the market in large part by enabling less expensive servers to run a range of operating systems, such as Windows and Linux.
Open Hardware Movement Changing the Game for IT Vendors, Enterprises
King also noted that Dell was among the first to organize a business unit dedicated to working with hyperscale organizations when it launched its Data Center Solutions group eight years ago.
“The changes happening now were happening before Facebook jumped into the market with Open Compute,” he told eWEEK. “The trend toward hyperscale data centers like Facebook and Google, Apple and others started well before Open Compute started as a concept.”
Google, like Facebook, was building its own data center hardware to better meet its needs. However, unlike Facebook, Google engineers kept what they were doing under wraps. Facebook—after spending two years working on ways to scale its infrastructure while making it more economical and efficient—brought the open hardware push to the forefront when it launched the OCP in 2011, focusing first on servers and then rapidly expanding to networking, storage and other areas of the data center.
In the four years since, the Open Compute Project has grown to include a broad array of top-tier tech vendors, such as Intel, Dell, HP, Cisco Systems, Microsoft and Apple. It has brought together 200 companies in all including large enterprise customers, such as the top financial services firms that have signed on.
Facebook officials also have said the social networking company is proof that the concept can work, since the social media company has saved more than $2 billion in infrastructure costs over the past several years by leveraging open hardware designs.
As further proof of the momentum behind OCP, officials pointed out that at the second Open Compute Summit, attendance nearly hit 3,000.
“We have passed the tipping point where OCP gear is no longer an experiment,” Frank Frankovsky, a former Dell executive who came to Facebook to help with the infrastructure development and became chairman and president of the OCP Foundation, wrote in a post on the organization’s blog in March.
“Major companies and vendors have pivoted from proprietary interests and are working together to bring open datacenter technologies to market. We saw the open source model work for software, and now we know it can be done with hardware,” Frankovsky wrote.
The group got a significant boost in March when HP announced a new family of basic, low-cost systems designed to give Web-scale operations like those run by Google, Facebook and Amazon an alternative to the vendor’s proprietary line of ProLiant systems. The Cloudline systems are being built in partnership with contract manufacturer Foxconn and embrace standards developed within the OCP.
The Cloudline servers are part of a larger effort by HP to work with its growing network of partners to offer more open data center resources. A month before HP introduced the Cloudline, company officials announced a partnership with Accton Technology to build new HP-branded software-independent switches that will run Cumulus Networks’ Linux networking OS and target hyperscale environments and service providers.
“It’s a noticeably different approach [to developing] next-generation systems,” John Gromala, senior director of hyperscale product management at HP, told eWEEK.
Patrick Moorhead, principal analyst with Moor Insights and Strategy, said he was impressed with the Cloudline effort.
“Keep your eye on this space,” Moorhead told eWEEK. “I think this approach is a good one for HP.”
Open Hardware Movement Changing the Game for IT Vendors, Enterprises
There were three key drivers for starting the OCP, according to Jonathan Heiliger, a onetime Facebook official who now is a venture capitalist with Vertex Ventures.
It became clear that designing data center hardware in unison with applications could lead to greater efficiencies, as proven by the work Google was doing. “We stood on the shoulders of their ideas to imagine a new path,” Heiliger wrote in a recent post on the Vertex blog.
In addition, cost savings were important given that hardware vendors were reluctant to reduce prices much, he wrote. Also, “everyone builds software using all kinds of weird techniques. Why not hardware? We believed other companies had similar challenges and by sharing our inventions with the world, it would inspire other companies to collaborate,” Heiliger wrote.
The collaboration aspect is an important one for the OCP. Both King and Moorhead said they were unsure how much demand there has been for OCP systems. More likely companies are taking designs being developed through the program and modifying them to suit their specific needs, Moorhead said.
The Open Compute Project’s influence has been in helping shape the discussion around open hardware and showing how such collaboration can work, he said, comparing the group’s impact on open hardware to what Google has done in software. It also is enabling hardware developers to leave the confines of their respective vendors to work together on technologies and designs that will have a larger impact in the industry. Dell’s Gorakhpurwalla agreed.
“The real benefit [to OCP] is the collaboration effect and education effect,” he said.
King said the OCP also has helped drive other open hardware efforts, such as IBM’s OpenPower group, which is designed to enable third-party developers to leverage the Power architecture and move it into new areas.
“Open Compute is a really interesting concept,” he said. “It’s worthwhile. When Facebook started it a few years ago, it was really a precursor to other projects.”
It’s also not the only place where vendors are working on more open systems and collaborating with others, HP’s Gromala and Dell’s Gorakhpurwalla said. Trends like greater mobility, the cloud, big data analytics and software-defined everything are changing how businesses are looking at their infrastructures and how vendors are building them.
Gromala noted the work HP is doing with Accton on the networking side as an example. In addition, the HP’s Moonshot server modules can run a variety of operating systems and can be powered by either x86 chips or ARM-based processors.
Both Gromala and Gorakhpurwalla pointed to their companies’ focus on using industry-standard technologies in their systems as examples of their efforts to create more open products. Gorakhpurwalla said he equates industry standards with openness.
When vendors adopt such standards as x86 computing, SAS, Fibre Channel, PCI-Express and DDR4 memory, “you come to the point where you have an open platform for everyone to innovate.”
It’s what Dell does with its servers as well as through its Open Networking initiative, where the company offers switches that can run third-party software, such as Cumulus’ networking OS, Big Switch Networks’ software-defined networking (SDN) technology and Midokura’s network virtualization offerings.
Open Hardware Movement Changing the Game for IT Vendors, Enterprises
“For us, [open hardware is] very, very important from a concept standpoint,” he said, adding that demand from most customers is moving away from closed, proprietary infrastructure offerings. “In closed systems, you’re getting the best of one vendor as opposed to an ecosystem of companies.”
However, the use of industry-standard technologies is also fueling another trend that is impacting the larger vendors. The growing demand for greater economics and efficiencies also is driving the increasing use of white boxes—inexpensive commodity systems built using industry-standard components by original design manufacturers (ODMs) rather than the likes of Dell, HP and Lenovo—not only for servers but also networking and storage.
“There’s enormous disruption happening today in the traditional server market and among traditional server vendors, especially in the general-purpose system environment,” Pund-IT’s King said. “A lot of this is being driven by server sales of white-box makers in China and Taiwan.”
In the first quarter, ODMs saw server revenues increase by 22 percent and their market share jump to 7.6 percent, according to IDC analysts. Dell’Oro Group analysts showed similar momentum in a report earlier in June, noting that more than a third of server shipments in North America in the previous quarter were white boxes.
“While the growth in servers destined for Cloud deployment has benefited various vendors, including the top U.S.-based server vendors, it has disproportionately bolstered the performance of white box server vendors,” Dell’Oro Group Director Sameh Boujelbene said in a statement at the time. “This is because most of the growth in cloud data centers during the quarter was driven by the ‘Big Four’ [Amazon, Facebook, Google, and Microsoft], who are mainly deploying white box servers.”
While Dell, HP and other top-tier vendors continue to move toward more open, standards-based systems, ODMs remain a threat to them, according to analysts King and Moorhead. The white-box makers can pull together the same industry-standard components to make systems that offer similar performance and economics that those from the larger players.
“They’re really afraid of it,” Moorhead said of HP and Dell. “In their minds, this is one of the biggest threats they see today.”
HP’s Gromala noted the rise of white boxes in the industry, but said that companies like his and Dell can offer support, services, trusted brands and scales of experience and supply chains that ODMs can’t. In addition, the “brite box” approach the vendors are initiating—such as the Cloudline servers and Accton-built switches for HP and the Open Networking effort by Dell—will further help take some of the steam out of the white box push.
Still, the white-box makers are leaving a mark, King agreed.
“You may see ODMs skimming off only about 5 or 6 percent of the market, but they’re doing it in the corners of the market” where massive numbers of systems are sold, he said. “That’s going to hurt.”
What’s got to be particularly galling to the likes of Dell and HP is that many of these ODMs are the overseas contract manufactures the OEMs have used for years to build their branded systems, King said. Those companies now have the skills to make their own servers as well.
“It’s a story of unintended consequences,” he said.