Does the Supply Chain Figure Into Microsoft-Dell Chatter?

Serious Server Density: Packed racks of servers in an IT-PAC at the new Microsoft data center in Quincy, Washington (Photo: Microsoft Corp.)

Serious Server Density: Microsoft buys a lot of servers, as seen in these packed racks  at Microsoft’s data center in Quincy, Wash. (Microsoft Corp.)

Why is Microsoft interested in an ownership stake in Dell? Bloomberg reported this week that Dell is discussing a leveraged buyout by private equity firm Silver Lake, in which Microsoft may provide about $2 billion towards the deal. Early analysis has focused on pressures in consumer products like the PC and tablet, or the enterprise IT market for servers and hypervisors. Other coverage has looked at how a Microsoft investment in Dell would excite Microsoft’s channel partners but might strain relations with OEMs.

So here’s another element to add to the mix: Dell has historically played a meaningful role in the supply chain for Microsoft’s cloud computing infrastructure, supplying many of the servers that fill the company’s global network of data centers – as well as some of its modular data centers.

Dell’s Data Center Solutions (DCS) unit, which specializes in large shipments of custom servers for cloud customers, has built many of the servers powering the Windows Azure platform and Bing Maps, to name just two areas where the companies have publicly acknowledged their collaboration. Microsoft hasn’t provided a look inside its newer data centers in several years, so it’s hard to know if Dell continues to provide its servers.

It remains to be seen whether a Dell buyout materializes, and if so, whether Microsoft participates as an investor. But it’s worth noting that Dell DCS is a significant supplier to the largest data center providers, having shipped more than 1 million servers in its first five years. Here’s a video overview of that milestone:

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About the Author

Rich Miller is the founder and editor at large of Data Center Knowledge, and has been reporting on the data center sector since 2000. He has tracked the growing impact of high-density computing on the power and cooling of data centers, and the resulting push for improved energy efficiency in these facilities.

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