May 19, 1999
Internet Fuels Revival of Centralized 'Big Iron'
Computing
By STEVE LOHR with JOHN MARKOFF
CHAUMBURG, Ill. -- As Walt Grom tours his domain -- row upon
row of hulking black computers -- he speaks of the importance of
"fundamental engineering disciplines" and "brute force experience."
The vast room is spotless, brightly lit and chilled by air conditioning, an
austere interior designed for the care and feeding of big computers.
The huge datacenter, run by IBM, is one of the engine rooms of the Internet,
powering the World Wide Web sites and electronic commerce operations of
some 400 companies and organizations including BankAmerica, Macy's,
Goodyear and the National Hockey League.
Such computer centers, known
as server farms, are the
unglamorous side of the
Internet revolution -- a world
apart from the young, urban
culture of Web design artists
with their tattoos and earrings.
Here, a no-nonsense style
prevails, and the hallways tend
to be populated by big, beefy
men with beepers.
"We're happy to do the
plumbing," said Grom, who
runs IBM's server farm in
Schaumburg.
Internet datacenters are
sprouting up across the
country in a sure sign of the
trend toward once again
housing information and computer power centrally -- a seeming reversal of
the last two decades of computing.
The personal computer has defined the industry's recent history and how
computers were used. As personal computers spread rapidly in the early
1980s, they were seen as engines of individual empowerment and
decentralization of information. Millions of islands of information were
suddenly stored on desktop machines -- knowledge residing in the
spreadsheet, word processing and database programs of individuals. It was a
technical and social repudiation of the previous three decades, dominated by
mainframes and minicomputers, a computing formula based on "big iron"
machines that held all the information.
But in an odd alliance, the Internet -- hailed as the technology behind a new
economics, tearing down old hierarchies and flattening corporate
organizations -- is fueling a recentralization of information and a revival of
big iron computing.
The Internet holds the promise of anytime, anywhere access to information
and entertainment delivered over powerful networks to an array of
information appliances like handheld devices, cell phones with screens and
television set-top boxes, not just personal computers.
That makes the present round of information centralization very different
from the old days. The glass-house datacenters of the 1960s were controlling
gatekeepers, with information rationed from the center. Today's modern
server farms, by contrast, are powerful nodes on the Internet, making
information more readily available to individuals.
There are, to be sure, privacy concerns raised by the prospect of creating
increasingly large digital storehouses of personal information. Those
concerns, technology experts say, require clear-cut corporate and public
policies to protect privacy as collecting, storing and distributing information
becomes easier and cheaper in a digital economy.
Still, even personal computer pioneers generally regard the shift to
Internet-based computing as an irreversible step toward efficiency rather
than a retreat from the information democracy they sought to foster.
"People want to own their own information but they don't want to maintain
it, and that is driving the shift toward centralization," said Adele Goldberg, a
member of the team at Xerox Palo Alto Research Center in the early 1970s
that created the founding concepts of personal computing.
Because of the Internet, companies are starting to embrace centralized
computing again for the first time in decades. "A real mind shift is under
way in corporate America," Scott Winkler, an analyst at Gartner Group, a
research firm, said.
In some ways, corporate America is following the Internet leaders. For
behind an America Online or an Amazon.com is a massive arsenal of
computing power. America Online Inc. supports its service to more than 16
million subscribers -- with a million people using the system simultaneously
on many evenings -- with two vast server farms in Virginia and a third one
planned, a $520-million project announced in March. (Such datacenters are
known as server farms because they are veritable crop-rows of big
computers that send, or serve, data out to users.)
"The good old economics of scale really do apply when it comes to server
farms," Marc Andreessen, the chief technology officer of America Online,
said.
The new model of computing -- a proliferation of information appliances
linked by the Internet to server farms -- has been called the "post-PC era."
For the post-PC vision to be fully realized will take years, and billions of
dollars of investment to build ultra-fast digital networks, wireless technology
and new kinds of handheld and other devices.
And to say that computing appears to be heading toward a post-PC era is not
to say the PC will become obsolete anytime soon. Indeed, the PC industry
has benefited from the rise of the Internet so far because the PC today is the
principal access device to the Net. Desktop alternatives to the PC like the
"network computer," or NC, running only a Web browser for tapping into
the Internet -- first proposed in 1996 by Lawrence Ellison, chairman of
Oracle Corp. -- have not yet slowed PC sales.
But the evolution toward the Internet model, most analysts agree, represents
the most significant change in the industry since the PC replaced the
mainframe as the center of gravity in computing two decades ago. The shift
represents a daunting challenge to the big winners of the PC industry,
Microsoft Corp. and Intel Corp., whose software and microchips are the
essential technology in most PCs. Their high profit margins are expected to
erode as consumers increasingly use simpler, lower-cost devices to tap into
the Internet.
Both companies recognize the challenge and are responding. As one step,
Intel announced in April that it was planning a big move into Internet
services by building and running server farms. The move seems a big
departure for Intel, whose microprocessors serve as the electronic brains of
most PCs. But Intel sees the server farms as part of its future of moving
beyond the personal computer to become a "building-block supplier" to the
Internet economy.
"The PC industry is changing drastically," said Andrew Grove, the chairman
of Intel, "and when it's over it probably won't even be called the PC
industry. It will become the Web infrastructure industry."
Microsoft is preparing for the day when people may keep much of their
personal and professional information on large servers with an initiative
called Megaserver. The concept is that a person will be able tap into a large
central database via the Web to get e-mail, personal schedules, news, weather
updates and other information anywhere, anytime.
Even Microsoft concedes the access
device will not always be a PC. "While
the PC will stay central, we realize
there is demand for computing on
non-PC devices," said Steven Ballmer,
the Microsoft president.
An early test bed for the Megaserver
concept is Hotmail, a Web-based e-mail
system, which Microsoft bought for an
estimated $300 million in January 1998. Since then, the number of users of
the free e-mail service has jumped from less than 10 million to 40 million.
With Hotmail, a person can retrieve e-mail from anywhere with any PC or
other device equipped with a Web browser instead of being required to use a
particular machine loaded with one's own e-mail software.
"Hotmail has served as a big wake-up call for us, and we're delighted that we
bought it," John Ludwig, a vice president of Microsoft, said.
Hotmail is supported by four large datacenters, and Microsoft is using them
as incubators for developing the heavy-duty software needed to run server
farms, thus improving the capabilities of Windows NT, the company's most
powerful operating system. But Microsoft, Ludwig notes, is also working to
improve the software the user sees, making it easier to use.
"There's more software to write than ever before -- that's the good news for
us," he observed.
Microsoft added another centralized information service in April when it
acquired Jump Networks Inc., a Web-based calendar and datebook system.
Microsoft's move came a few weeks after America Online purchased an
Internet calendar service, When Inc., for an estimated $150 million. The
start-up, which stores personal scheduling information on a Web site, started
its fast-growing service just four months earlier.
Both companies are headed in the same direction, though from different
starting points, one a software giant, the other an online service. Clearly, the
line between software and services will increasingly blur as the shift to
Internet-based computing proceeds.
In an internal memo last fall titled "The Era Ahead," Bill Gates, the
Microsoft chairman, pointed to the opportunity as software becomes more a
services business. "We get a closer relationship with customers and a
predictable revenue model because they pay us a regular fee for the service,"
he wrote.
But Gates also warned of the rising threat to some Microsoft products likely
to come from online services. "A company such as America Online is in
competition for all our information-management software, because they can
do it through their servers," he observed.
In Silicon Valley, dozens of start-ups have been created as Internet services
to centrally handle personal information. The new companies mostly focus
on e-mail, calendars and back-up file storage to insure information is not
lost when an individual's PC crashes.
"Many of these applications should be moved onto the Internet because it is
more reliable, available everywhere and cheaper," said Eric Brewer, a
University of California at Berkeley computer scientist who is a co-founder
of Inktomi Corp., a Web software company.
Building and running the computing engine rooms behind these Internet
services promises to be a good business for years to come. Yet this
behind-the-scenes technology business -- like the market for Internet
appliances -- will most likely be more diverse and competitive than the
bygone mainframe era, whose dominant supplier was IBM, or the current
PC era, ruled by Microsoft and Intel.
The start of the trend back to central computing has already been rewarding
for the established producers of "big iron" machines like Sun Microsystems
Inc., a leader in computers running the powerful Unix operating system, and
IBM, whose mainframes have been retooled as Internet servers. The big
Unix and mainframe server computers range in price from $100,000 to
millions of dollars.
"The big growth for us has been in everything-dot-com -- the revolution in
Internet commerce in all its forms," said Edward Zander, the president of
Sun.
Indeed, as more and more companies begin to view the Internet not as an
experiment but as a technology on which they run their businesses, they need
Web sites, e-mail networks and Internet order-processing systems to be up
and running around the clock, seven days a week. That kind of reliable,
industrial-strength computing is the traditional bailiwick of mainframes and
Unix systems.
Still, PC technology is improving steadily and PC servers -- typically using
Intel microprocessors and Microsoft's Windows NT software -- are
increasingly tackling heavy-duty computing chores. Some heavily trafficked
Web sites, handling huge amounts of business, are backed up by server
farms using mostly PC technology.
Dell Computer Corp., a direct marketer of PCs, says that sales from its Web
site are now running at a pace of $5 billion a year. "Look at our Web site,"
Michael Dell, the company chairman, said. "It's Dell servers running
Windows NT. Yes, we have a way to go at the high end of computing, but
don't bet against the PC industry."
Gary Hargreaves does not
much care about who supplies
the technology. He just wants
it to work.
Hargreaves manages an
electronic commerce project
at Goodyear Tire and Rubber
Co. -- a company Web site set
up to more efficiently
distribute and share
information with its tire
dealers.
The current system, which is
gradually being phased out, is
costly by any measure -- time,
paper or aggravation. Three
thick packets of documents are
mailed out each week to
Goodyear's 2,400 dealers in
the United States and Canada.
The company's call center in
Akron, Ohio, receives 2,500
inquiries a day from the dealers, many of which are merely to obtain routine
information on prices and the availability of tires.
All of that kind of information -- along with sales reporting -- is being
transferred to the Web site. A third of Goodyear's North American dealers
are online and using the Web site, though the rest are joining soon, and
Hargreaves is already impressed by the results. The call center is reporting
fewer routine calls, he says, and dealers say they are getting more timely
information, which helps them sell more tires and improve customer
service. The weekly mailings will be stopped at the start of next year.
For all the attention understandably focused on the meteoric rise of online
retailers and auctioneers, like Amazon and Ebay, the biggest economic
impact of the Internet in the next few years is expected to be inside old-line
companies like Goodyear -- boosting productivity by electronically
automating back-office transactions.
Though Goodyear has an in-house datacenter, it chose to let outside experts
provide the computing power for its Web site -- a role known as hosting --
and run its electronic commerce network. Many companies are making the
same choice. That is why the Web hosting business of both established
companies like IBM and AT&T, and newcomers like Exodus
Communications Inc. and Verio Inc., is projected to grow from $696
million last year to $10.7 billion in 2002, according to International Data
Corp., a research firm.
Internet companies like America Online, to be sure, will have their own
server farms. But others increasingly view computing as a utility, a service
to be purchased like electricity. Indeed, technology historians note that when
factories began using electricity in the late 19th century, each had its own
power plant. Later, regional utilities were created and sold electric service
to the factories.
At Goodyear, Hargreaves seemed to apply the same logic to his company's
decision to have its Web site for dealers managed by IBM at its server farm
in Schaumburg. "We're in the tire business," he explained. "Why run the
digital power plant ourselves?"
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