Grids and commodities
Perhaps I just don’t get it, but I cannot find the value behind Sun’s Rent a Grid.
With more fanfare than today’s Superbowl, Sun announced the availability of their grid for hire. Sun’s strategy is to make computing horsepower like an electrical utility - you buy as much juice as you need, and only when you need it.
In their recap of the announcement - and unrelenting public bashing of the competition - Sun admits that their initial market is limited, but allegedly growing. In the hear-and-now, the market consists of high power users that have non-perpetual needs - ” . . . in our crosshairs, from risk analysis to movie rendering, data warehousing to reservoir simulation.” But Sun thinks the market will grow because ” . . . we also know that’s where the network’s headed - that more traditional apps are spilling into the grid, and the market’s growing.”
What weakens this near religious belief is that the rest of the industry is heading in the opposite direction. Instead of creating competing electrical companies, IBM, Dell, HP and others are delivering affordable power plants for the back yard. And with the advent of some incredible virtualization technology, customers will have their own mini nuke facilities.
So where does Sun’s advantage lay? The only ready buyers will be those who can model grid-aware applications, then deploy them for short periods of time. Digital animators like Pixar might be suitable, as well as some private scientific research facilities. But few others will buy since their computing needs are more frequent and recurring, and because the bottom continues to fall out of the hardware market. A lovely intersection of need, speed and greed.
What is the difference is between a utility and a commodity? A utility converts commodities into more useful services (an electricity provider converts radiation into alternating current). Since the cost of building an electrical generation plant, mining and converting raw materials, and monitoring the systems 24X7 is huge, very few people build their own power plants.
But what if those steps were already covered? What if the uranium was already enriched and available at the corner store. What if you could buy your personal nuke plant at Home Depot and it included self-monitoring capabilities? And what if Junior - that bright young kid of yours - knew how to assemble and operate the reactor? Then your set-up and operational costs would be low enough to make energy self-sufficiency a Good Thing ™.
That is precisely the case in IT today. IT has the trained staff. Vendors provide cheap raw materials (commodity servers, blades and Linux). And technology is packaged such that it requires less and less tinkering to get it all working well. Given the deepening commodity nature of the industry, buy vs. rent decisions quickly devolve to price comparisons.
And Sun’s Rent A Grid program ain’t cheap.
Sun’s charging $1/CPU Hour. Pretty good if you use their grids a few times a year and want to avoid the capital expense and setup of your own data center. But even in a worst case scenario, it is much more expensive.
I scouted around the net and priced blade servers. Adjusting for the number of processors, and assuming that analyst are right in that for every dollar ($1) of hardware you spend seven dollars ($7) in manpower and software, the math looks good for buying and not renting. My spreadsheet shows that the equivalent hardware at the inflated 7X rate would buy 1.6 years on Sun’s grid.
Given that this is below the traditional three-year breakeven point many IT buyers use for decision making, then Sun’s Rent A Grid is over priced by a factor of two. If we take the lesser cost - just hardware - then for the price of your own hardware you would get a mere 2.8 months on Sun’s grid.
Once buyers do the math, Sun’s plans may just become gridlocked.
