Most companies buy computers from the Dells, HPs, and IBMs of the world. A few really big cloud providers will cut out the middlemen and go to direct to the companies that assemble systems for the big server-makers -- obscure Asian manufacturers with names like Quanta Computer and Wistron. But there's one company that does things its very own way. Google goes direct to Intel, and then assembles the hundreds of thousands of servers that power its data centers all by itself.
Intel sells about 90 percent of the world's server chips, and it's been making a lot of money as internet companies build massive data centers to host the web-based applications that consumers -- and corporations -- love.
But there's no one quite like Google, according to Diane Bryant, general manager of Intel's Datacenter and Connected Systems Group. "Google is the only cloud service provider that's building their own server-storage-network infrastructure," she says. According to Bryant, Google has been buying parts direct from Intel for at least five years.
That's been a bit of an open secret among data-center geeks, but neither Intel nor Google have confirmed the relationship on the record until now. It's been secret because Google views its data-center technology as a key competitive advantage. Reached via e-mail, a Google spokeswoman declined to comment on the Intel relationship, saying, "We work with a variety of vendors to manufacture the equipment we use in our data centers."
"It's certainly not anything that the companies involved discussed openly, so it is kind of a big deal that they said something on the record," says Dean McCarron, who runs Mercury Research. McCarron reckons that about 10 percent of the approximately 16 million server chips sold each year go to big internet companies that are skipping the mainstream server vendors.
One of the reasons that data center operators are so hush-hush about their purchasing decisions is that they don't want to tip their hand whenever they're adding capacity. That can drive up prices for other components of the build out -- bumping up costs for everything from real estate to networking gear.
But recently, Google has been a little more open about its data-center techniques and its dual life as an internet company and hardware maker. That's because it's trying to convince the world that it can turn around the $12.5 billion Motorola mobile phone business it acquired this year.
Two months ago Google Chief Financial Officer Patrick Pichette said that his company was probably "one of the largest hardware manufacturers in the world."
Intel's Bryant doesn't necessarily think that a lot of cloud companies are going to follow Google's lead and start buying chips direct from Intel. But she sees Google's move as a sign of the cloud boom that's going on in cloud computing these days. "This market is growing at such a rapid rate because the innovation cycle is so intense in the cloud service providers," she says.
It's a boom that's been pretty good to Intel. Bryant won't say how much money the cloud business is bringing in, but she expects it to grow at 25 percent each year for the next four years.
And it's becoming a more diverse marketplace, too. "Five years ago the top five cloud service providers ... made up 75 percent of the cloud market," Bryant says. "Today they make up less than a third. So you have many, many, many cloud service providers."
This story has been updated to include comment from Google.
