HP Forms Hyperscale Server Venture With Foxconn
The hyperscale server market is growing fast and everybody from incumbent server makers to original design manufacturers who used to work for them all want a piece of the business. To get its cost of manufacturing more in line with the ODMs, Hewlett-Packard is forming a partnership with Taiwanese contract manufacturer Foxconn, famous for the myriad consumer devices it makes but also a player in systems.
HP and Foxconn have been partners for decades and the companies are pretty secretive about that relationship. They have already been working together on server manufacturing in Europe but now they are taking on the hyperscale giants, which include public cloud providers like Amazon Web Services, Microsoft, Google, and Rackspace Hosting, the largest sites on the Web such as Google, Facebook, Yahoo, and Twitter, and other service providers such as telecommunications firms that are building large-scale datacenters to run their applications as well as infrastructure clouds in many cases.
“This partnership reflects business model innovation in our server business, where the high-volume design and manufacturing expertise of Foxconn, combined with the compute and service leadership of HP, will enable us to deliver a game-changing offering in infrastructure economics,” said HP CEO Meg Whitman in a statement announcing the joint venture.
HP already sells a line of systems aimed at scale-out customers, called the SL6500 series, which are popular among traditional supercomputing customers looking for density as well as the ability to cram lots of accelerators based on GPUs, FPGAs, or DSPs near the CPUs in the system. The Moonshot 1500 microserver design is also aimed at hyperscale customers but has fairly modest compute nodes even if it can jam 1,800 nodes into a rack. As EnterpriseTech previously has reported, while some of these hyperscale customers will use such designs, about 70 percent of the machines they deploy are still based on rack enclosures, generally with one or two nodes in an enclosure with one or two sockets per node. All of the major hyperscale customers have a few things in common: they buy servers in lots of 10,000 or more, they want minimalist designs that only have components they need in their system, and they want the lowest price possible. They also generally go straight to ODMs who implement their designs and make the machines and stack them and rack them. Quanta Computer, WiWynn, Supermicro, and just recently contract manufacturer Jabil Circuit are all now selling straight into datacenters, bypassing the tier one server makers like IBM, Dell, and HP.
These ODMs now account for about 20 percent of server shipments worldwide and Quanta thinks the penetration will hit 40 percent by 2017; IDC thinks it will take until 2019 to reach that level. But either way, the writing is on the wall. To compete against these ODMs, HP has to enlist one of them to be its ally and leverage that company’s supply chain and its speed of engineering.
“This is HP’s big opportunity to gain share in the scale-out datacenter market,” technology analyst Patrick Moorhead, of Moor Insights & Strategy, tells EnterpriseTech. “By combining forces with one of the largest, lowest-cost manufacturers, HP, if they can reach the right cost and innovation points, can potentially unseat companies like Quanta at Google.”
The deal between HP and Foxconn is a non-equity joint venture, which HP says comes “in the form of a strategic commercial agreement.” That is just a complicated way of saying that HP will be leveraging Foxconn to help design and make a whole new line of systems aimed at precisely these hyperscale shops. This joint venture will take effect on May 1, and HP plans to announce more details on when it will ship the new hyperscale machines and what they will cost later this year.
HP was pretty tight-lipped about its plans, but sources tell EnterpriseTech that the new machines will constitute a new product line entirely separate from ProLiant rack and blade servers, Moonshot microservers, and Scalable System SL6500 machines. HP added that the new hyperscale machines “will be in multiple datacenter rackable form factors,” and did not clarify further. It is possible that HP will offer server and storage based on the Open Compute Project designs put forth by Facebook and its technology friends in addition to whatever custom gear hyperscale datacenters need. It is almost certain that HP will use the Foxconn partnership to manufacture the server design that Microsoft contributed to the Open Compute Project back in January and uses internally. HP and Dell slug it out for Microsoft’s server business each quarter and to win the deals, HP needs a lower-cost manufacturing operation presumably. If this were not the case it would not be partnering with Foxconn. (HP actually showed its variants of the Microsoft chassis and server design during the Open Compute Summit back in January, and the machines are called the ProLiant SE2140W and SE2240W.)
HP did not answer any questions regarding what processors would be used in these machines, but clearly they will start with X86 processors, certainly from Intel and possibly from AMD if there is demand. (Dell’s Data Center Solutions custom server division sells plenty of AMD-based systems into hyperscale shops, even though it generally can’t talk about it.) If the hyperscale shops take a shining to ARM processors, these could appear in the forthcoming HP-Foxconn hyperscale line. It would not be at all surprising to see HP and Foxconn also come up with minimalist storage array designs, cold storage like Facebook has created for its monstrous photo archive, and bare-metal switches that hyperscale customers will increasingly want.
While HP can say that these hyperscale products will sit alongside existing ProLiant and Moonshot machines and complement them, the fact of the matter – and a founding principle of EnterpriseTech – is that Global 2000 enterprises will want similar gear once it is proved out and a sufficient manufacturing base exists to supply that gear in a reliable and affordable fashion with the appropriate warranties and service. This is what the Foxconn-HP partnership seems to be about: Putting HP’s sales and support atop machinery made by Foxconn with HP and customer engineering input.