Facebook opts to serve itself

“We weren’t able to get specifically what we wanted,” Frank Frankovsky, Facebook’s director of hardware design, said at a conference on data-center research last month.

Hewlett-Packard, Dell and companies that sell the computers off the shelf are losing sales in a key market because Facebook and larger rival Google are leading a switch among Internet companies to do-it-yourself servers. These customized machines now account for 20 percent of the U.S. market for servers, which generated $31.9 billion globally in last year, said Jeffrey Hewitt, an analyst at Stamford, Conn.-based Gartner.

As sales of personal computers slump and consumers shift to tablets just as Apple’s iPad, computer makers are becoming more dependent on servers. Dell and Hewlett-Packard lose out when they’re shunned by large clients such as Facebook, which are outfitting data centers with thousands of servers.

“It’s by all means a threat to the traditional business model,” said Jim McGregor, chief research strategist for researcher In-Stat in Scottsdale, Ariz. “Clients are finding solutions that the industry wasn’t ready to provide.”

The market for servers

The market for servers, which increased nearly 20 percent in the second quarter, is outpacing growth in desktop PCs as companies upgrade their corporate networks and snap up the thousands of servers needed to run data centers.

Hewlett-Packard, which last month cut its profit forecast for the third time since November, can’t afford to lose momentum in one of its better-performing units. Hewlett-Packard’s revenue from the servers that are typically deployed in so-called cloud-computing data centers rose slower than the industry average in the second quarter, according to Gartner.

Dell, where sales have barely budged for two quarters, needs to keep server clients happy too. Dell’s sales of servers based on PC chips – the type most often used in cloud-computing data centers – grew 4.4 percent in the June period, according to Gartner. Cloud-computing networks store and deliver software and services using the Internet.

In one indication of the growing demand for servers that are being built from the ground up, Intel said its revenue from chips used to craft servers for data centers surged 50 percent in the second quarter.

“It’s a completely different animal” than corporate servers, said Rejeanne Skillern, head of marketing at Intel’s cloud computing division.