Utility Computing: Company in a Box
As a follow-up to my last post, here’s the turnkey model for an end-user based Utility Computing company. We’ll base the back-end on Linux running on commodity x86 hardware. The thin-client will be a SunRay since their latest software is optimized for WAN links, and the hardware is slick. Read on for this excellent business-in-a-box…
Capital Costs (approximate):
| Equipment | Qty | Cost Per Item ($) | Net Cost ($) |
|---|---|---|---|
| Dell 1855 Poweredge Blade Enclosure | 1 | 2,999 | 2,999 |
| Dell 1855 Blade (2×3.6GHz P4, 8 GB RAM) | 4 | 6,995 | 27,980 |
| Dell/EMC AX100DP (12×250 GB – 3TB) | 1 | 14,291 | 14,291 |
| PowerConnectTM 2708 (8-port gigabit switch) | 2 | 109 | 218 |
| PowerVault Tape Backup 122T (8 slot LTO-2 autoloader) | 1 | 5,349 | 5,349 |
| Total Capital Expense | 50,837 |
I went with all Dell equipment because a) it’s cheap and b) the list prices are easily available from their web site. In real life the capital costs might be a little less because of the discount versus list, on the other hand I’m sure I’ve left out some pieces you’d need so it probably evens out. Also I don’t know that Dell is the right provider for storage or networking equipment in the long run, but it’s fine to bootstrap from. Once the big money revenue is rolling in additional equipment can be brought in.
In this example we are assuming you’re using routing provided by your colocation provider. Once you’re up and running you’ll want to add additional routers, firewalls, switches, loadbalancers, and who knows what else into the mix. We don’t need that day one.
Now let’s look at our non-capital startup expenses (very approximate):
| Item | Cost |
|---|---|
| Backup Software (probably Legato or Veritas) | 3,000 |
| Windows 2003 Licenses | 5,000 |
| Citrix Licenses | 5,000 |
| Microsoft Office Licenses | 5,000 |
| Total Expenses | 18,000 |
I actually don’t know what this software would cost to license, so I made those numbers up. I think they’re in the ball-park though. I can’t do all the work for you. The backup software for this since environment should be pretty close. The others I’m not quite as sure.
You’ll also need some colocation space to put this equipment and get bandwidth. From some quick web searching I found this offer of 100 mbps bandwidth and a full rack for $4,495/mo. Sounds good to me. Let’s stick that number in. You’ll also have to provide the SunRay equipment to your end users. A SunRay 1g with no monitor or keyboard and mouse is $359 list. I’m sure you could get that down to maybe $200 in volume. Maybe less, but let’s say $200.
We’re spending all this money getting set up…I hope we can make some money at this. Let’s find out. First, what is our product exactly? Glad you asked. We’re going to take two of those Dell blades and put Linux on them with the SunRay server software. The other two blades we’re going to setup with Windows and Citrix so we can offer Windows applications as well. The base package will offer users access to the Linux desktop with free productivity apps (OpenOffice, acrobat reader, firefox, etc.). For those users who need access to commercial Windows software (Microsoft Office will probably be most popular) it will be available at an additional uplift charge (MS Office isn’t free, you know!)
For the low-low price of $50/month you get:
* A SunRay 1g thin client (you provide monitor and USB keyboard/mouse)
* Access to the Linux desktop environment
* 10 gb of storage, securely backed up to tape
* A smart-card to login
Why the smart-card? Glad you asked. For an additional $10/mo per device, users can rent an additional SunRay 1g thin client. Using your smart-card you can hot-desk between the two devices. If you’re working on a document at home and have to leave for work, no problem. Unplug your smart-card, and plug it back in to the SunRay at your office. Your desktop session pops back up. Or, if your friend or neighbor is a customer, you can take your smart-card to their house and access your desktop from there. Very handy.
The SunRay boxes will be rented, and if you cancel the service you have to return the device or else pay for it. But then again- what use is a SunRay without a server? Not much. This model works fine for cable companies with cable boxes.
How many users can we support on each of our Dell blades? Who knows. A lot probably. The CPU utilization of the dual processor 3.6 GHz pentium 4’s is probably going to scale beyond the memory. How many concurrent sessions can log into a server with 8 GB of RAM? For the sake of argument, let’s say 100. So with our two starter blades, we can support 200 users. Let’s see how the revenue works out.
With 200 users we are making $10,000 a month. And at 10 GB per user, that’s 2 TB of data storage- we have an extra TB left to grow. Not really, of course, because a lot of our storage will be sucked up by RAID parity and other fun things. But hey, at least we’re not even over-subscribed yet. We’re paying out almost half of our revenue in colocation costs, but our colocation facility will scale beyond our first 200 users. So let’s look at it a different way, how much revenue can we generate from each of our 100-user blades? Well that’s $5,000 a month. Forgetting for a moment about our initial capital outlay, that means that if we do have to add an additional blade to support user growth, we’ll recoup that capital cost in two months. Not a bad ROI at all!
Of course we’ll also need to be adding storage and eventually more bandwidth. And there will be other overhead costs in customer support, marketing, etc. But on the whole this doesn’t sound like a bad business model at all.
OK, gentle readers, let’s get hopping. Someone go implement this.