The Datacenter of the Future Is Almost Here. Here’s What’s in It for Startups

The mobile revolution has spread beyond the mini supercomputers in our hands all the way to the datacenter.

With our expanded use of smartphones comes increased pressure on servers to help drive these devices: The activity we see everyday on our phones is a mere pinhole view into all that’s happening behind the scenes, in the massive cloud infrastructure powering all those apps, photo-shares, messages, notifications, tweets, emails, and more. Add in the billions of devices coming online through the Internet of Things — which scales through number of new endpoints, not just number of users — and you begin to see why the old model of datacenters built around PCs is outdated. We need more power. And our old models for datacenters are simply not enough.

That’s where mobile isn’t just pressuring, but actually changing the shape of the datacenter — displacing incumbents and creating new opportunities for startups along the way.

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How the Mobile Supply Chain Is Eating the Datacenter

No one ever imagined when the first IBM PC with two floppy drives came out in 1981 that it would become the basis of the biggest change in datacenter technology since the mainframe. But that’s what happened: Until then, datacenters were run by Unix minicomputers. Once PC-based architectures started taking over, however, the datacenter started getting cheaper. The innovations around PC built the current datacenter model — ushering in technologies such as x86 server virtualization, Linux, and Windows Server — which became the de facto standard for cost, performance, and standardization.

Today, the mobile phone industry is where so much innovation has been concentrated — resulting in an entirely new class of components created just for this smaller form factor: flash memory, smaller CPUs, networking hardware, and so on. Which means lightweight processors (such as ARM) and low-cost, low-power mobile components are now becoming the foundation of the next-generation datacenter. In other words, the data centers powering our cell phones –from across the internet — will be remade using the same technologies that sit inside those phones.

All of this may seem counterintuitive at first. Because surely more computing power in the data center would mean bigger and bigger CPUs — not smaller and smaller parts — packing in ever more transistors? But that’s where power and cooling may have reached its limit. While Moore’s Law put immense computing power in our hands, it also multiplied the sheer scale of data, apps, and computing resources being used around the world. Things are heating up (literally) inside the datacenter; we can no longer rely on big hardware to power the mobile revolution.

Still, the significant shift here isn’t just in going from bigger to smaller. It’s about eliminating all vestiges of the proprietary hardware used in networking and storage in favor of commodity components available through the mobile supply chain. It’s about this commodity hardware performing the function of proprietary systems today.

Picture a bunch of cheap, cell-phone-like machines — all connected together with sophisticated software — instead of those power-sucking, refrigerator-sized boxes.

Ever seen a mobile phone with a fan or on-board cooling device? No, because they’re designed to operate at great temperature variations, which translates into power and cooling optimizations. Those power and cooling costs will therefore be drastically reduced from today, and these datacenters will use much less power and probably also less floor space per unit of CPU. The new mobile-defined datacenter will therefore be more efficient to operate and cheaper to make because the baseline hardware comes directly from the mobile supply chain.

Aggregating smaller parts together doesn’t mean sacrificing enterprise-level performance or processing muscle. This blueprint for infrastructure already influences the massively scaled applications and services that Facebook, Google, and Twitter operate, for example. It also means that datacenter architecture is no longer being defined by Wall Street. Why would companies want to copy the banking industry’s legacy architectures, when the likes of Google and Facebook can achieve mission-critical scale and serve billions a day using commodity hardware?

More importantly: What happens when the scale of the Googles and Facebooks now becomes much more accessible to everyone?

A Huge Opportunity for Startups

Mobile is not only changing the composition of the datacenter, but is also forming the basis for the next generation of companies.

The point is not about startups challenging Intel (though that may happen). It’s about startups leveraging different hardware (ARM processors, flash storage, and networking) to build systems that are largely software enabled — thus bypassing legacy models, where the value was in fat margins on hardware and in on-premise installations.

Due to this shift in valuing hardware to software in datacenter architecture, all businesses can now access every level of the computer-networking stack (through companies like Actifio, Coho Data, Cumulus Networks, Mesosphere; these are just the examples from our portfolio) without requiring the resources of a big player. [We’ve also invested in every level of the cloud infrastructure stack: storage-as-a-service (Actifio, Box, Bracket); networking-as-a-service (InstartLogic); infrastructure-as-a-service (DigitalOcean); big data-as-a-service (Adatao, Databricks); security-as-a-service (Okta); analytics-as-a-service (Mixpanel, Optimizely); development-as-a-service (GitHub).]

This doesn’t mean everything gets deployed from the cloud. But it does mean that everything becomes a service.

Because many of these mobile-inspired applications are delivered from the cloud and as a service (instead of on-prem), the shift to cloud infrastructure inside companies will happen almost unwittingly in many cases. The software-as-a-service (SaaS) model applied to infrastructure means enterprises can adopt these new tools at a departmental level — which means they spread without central IT departments even knowing it. Instead of slogging through long proof-of-concept phases and expensive beta tests, companies will try-before-they-buy directly from the cloud. Instead of waiting a year for product releases, infrastructure users too will now expect instant updates.

All of this adds up to reduced cycle times to adoption. Which means incumbents can’t keep up, especially because SaaS involves entirely different sales and customer service processes, revenue recognition models, engineering, R&D, and more. To avoid being passed over, legacy companies will have to adapt to the next generation of cloud infrastructure.

For startups, the combination of hardware accessible from the mobile supply chain, open-source building blocks, and SaaS means that — for the first time — the entire stack can finally be re-invented.

Before, startups had to fit into the legacy stack of computer-networking-database, with APIs at the top and bottom of every layer. If the dominant market player didn’t want a startup in that stack, all it had to do was restrict access to its APIs or cry out, “Sorry, not supported.” Game over.

Now, instead of having to slip around and get stuck inside this incumbent fat, startups can offer solutions at every level of the infrastructure stack…without having to be a part of it. They can bypass the existing stack. And there’s a whole new set of benefits for people as new startups build new applications and businesses on top of these new platforms. It’s an unprecedented opportunity.

This piece originally appeared in WIRED.