Today HP announced its new Extreme Scale-Out (ExSO) portfolio, a modular architecture designed to address Web 2.0-type horizontal scalability needs.  Of course every major vendor announcement touts ground-breaking cost savings (absolute lowest CapEx and OpEx!), energy savings (100% fewer watts consumed!), and density (more sockets, less space!). But we think this really is a very interesting product, and a particularly well-timed strategic move for HP.

Instead of putting a slightly new spin on blades or their existing rack-mount servers, HP took a clean-sheet approach. The result is an extremely lightweight rail and tray design that replaces the usual chassis + rack – a significant advantage over existing gear. HP also is offering servers in three different flavors to handle different needs. The first is the SL 160z, which sports two sockets, 18 memory slots, and room for two drives. The 170z trades memory slots (it has 16 rather than 18) for storage, upping the drive count to a max of 6 3.5” SATA or SAS spindles. The third server is the 2x170z, which is the most computationally dense configuration – two 170z servers on a single tray, each with 16 DIMM slots and a single drive.

Extreme x86 computing, marked by very lower power systems packed into very small spaces, is the low-cost answer for large-scale Web 2.0 (and ‘old’ Web 1.0) customers. More and more traditional corporate customers will find systems like these to be the low-cost solution for their scale-out needs as well. Another interesting market is HPC, where cycles per sq/ft and cycles per watt are increasingly important – and the HPC market is the highest growth computing segment right now. It’s obvious that HP did quite a bit of work devoted to really understanding the unique needs of this market. The impulse for most vendors is to put more and more stuff into their servers to, for example, increase hardware RAS. However, the usage model for these customers is rip and replace, meaning that their solution to a HW failure is to simply replace the entire server.

Throughout every sort of economic turmoil in recent memory – the deep recession in the early 80s, business downturns in the early and mid-1990s, and even the dot-com crash in 2000, there’s been one constant that you could take to the bank every time: Microsoft would continue to grow. No matter what, the company steadily became larger and more powerful. Until now. In April, Microsoft announced that, for the first time, quarterly revenues were significantly lower than the preceding quarter.  In January, the company also announced the elimination of 5,000 positions, 1,400 of which took place immediately; an additional 3,000 layoffs were announced today.

How bad is this? Do we put on our face masks, crawl into the bunker, and start living off of our canned food stockpile? Naw. We don’t see these layoffs impacting what MS can do in the market or creating a negative effect on the company as a whole. On the contrary, this might actually be a good thing for MS. Over time, even the most successful and efficient company builds up a layer of fat – projects that they really shouldn't pursue, areas that have more staffing than necessary, etc. Of course a layoff is painful to both employees and management. But if it's done correctly, it can be kind of like corporate angioplasty: it clears out vital company arteries. Intel, HP, and IBM have done this over the years with great success, and we expect that Microsoft will too. It’s kind of like how Clemenza explained Mafia wars to Michael Corleone: “This stuff has to happen every seven years or so..it clears out the bad blood…” Not a great comfort to the guys who get whacked or to the people who are taking the hit in the Microsoft layoffs, but it’s what needs to happen every once in a while. With the revenue shock and the layoffs, Microsoft becomes mortal – just like every other company in Techland.