Dell loses orders, as Facebook servers gain

When Facebook Inc set out to build two new data centres, engineers couldn’t find the server computers they wanted from Dell Inc or Hewlett-Packard Co . They decided to build their own.

“We weren’t able to get exactly what we wanted,” Frank Frankovsky, Facebook’s director of hardware design, said at a conference on data-centre technology 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 Inc are leading a switch among internet companies to do-it-yourself servers. These customised machines now account for 20 per cent of the US market for servers, which generated $31.9 billion globally in last year, said Jeffrey Hewitt, an analyst at Stamford, Connecticut-based Gartner Inc.

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

“It’s definitely a threat to the traditional business model,” said Jim McGregor, chief technology strategist for researcher In-Stat in Scottsdale, Arizona. “Customers are finding solutions that the industry wasn’t ready to provide.”