Rackable Plans Air-Cooled Version of Container

The interior of the Rackable ICE Cube container.

Rackable Systems (RACK) says it plans to introduce an air-cooled version of its ICE Cube data center container in the first quarter of 2009, hoping to expand the market for its portable data center.

In the company’s third-quarter earnings call, CEO Mark Barrenechea said Rackable didn’t sell any ICE Cube units in the third quarter, but has purchase orders for about $16 million in containers for delivery during the fourth quarter. Barrenechea said that “adoption is beginning now” for the ICE Cube with the 4Q orders, which are likely related to a federal government container contract announced earlier this year.

“Our goals certainly were $20 million to $50 million revenue related to the ICE Cubes (for 2008) and at this point we’re sort of anticipating being on the lower end of that range,” Barrenechea said in Monday’s earnings call with analysts.

A Closer Look At Rackable’s CloudRack

Hey, that server’s naked! Rackable’s new CloudRack has no top covers on its server trays. Leaving the metal “skin” off the top of the tray provides several advantages , making the rack considerably lighter and providing quicker access for maintenance. The photo below provides a full view of the individual server trays, which contain no fans, which have been built into the rear of the cabinet to make more room for storage drives.

CloudRack: Rackable’s Form Factor for the Cloud

The shift to the cloud is driving changes in data center design. Now it’s also driving changes in rack design. Rather than shipping individual servers for “rack and stack” installation, many cloud-builders now have servers pre-populated in racks, which are then shipped as a unit and rolled into place on the data center floor.

Rackable Systems (RACK) has designed its new CloudRack with these customers in mind, approaching the rack as the form factor, rather than the server. CloudRack’s server trays have no cover and no fans, using larger fans in the rear door of the rack to cool the equipment. The additional space is used primarily for storage, with up to eight 3.5 inch drives per tray. 

This approach allows a 44U CloudRack cabinet to support 44 trays, 704 cores and up to 352 terabytes of storage, according to Rackable president and CEO Mark Barrenechea. CloudRack is available in pre-configured configurations, or in build-to-order configurations supporting a wide variety of Intel and AMD server boards.

Rackable Emphasizes Versatility in C2005 Server

Customizing high-density server orders for big clients has helped Rackable Systems, Inc. (RACK) win business from the largest players in the Internet game, including Microsoft, Yahoo and Amazon. The company is now seeking to diversify beyond the Internet sector and win more enterprise business, and today is introducing a new server that will be a key tool in that quest.

Rackable’s new C2005 server is designed for greater flexibility and configurability than the company’s existing models. The C2005 couples Rackable’s popular half-depth design and highly efficient power supplies with a large variety of Intel and AMD base board options, low-voltage processors and low-power hard drives (including Solid-State Disks).

The 2U server has a modular design that enables Rackable to offer a wide variety of local storage capabilities and the ability to support up to five expansion slots, an option likely to be attractive for enterprise configurations like database and application servers that require expansion cards such as RAID controllers, 10 Gigabit Ethernet NICs, InfiniBand HCAs or fibre-channel HBAs.

Rackable Slashes 2008 Revenue Guidance

Rackable Systems(RACK), which makes high-density servers for the Internet economy’s largest players, has slashed its revenue and earnings projections for 2008, citing an “abrupt” slowdown in corporate purchasing. Rackable said it now expects revenue of $275 million to $300 million, a reduction of about $75 million from the company’s earlier projection of $353 million to $374 million.

“The recent market downturn has been dramatic and has greatly impacted the timing of our customers’ buying decisions,” said Mark Barrenechea, president and CEO of Rackable. “The swift decline of the economy caused a demonstrable slow down in corporate purchasing as we entered September. While we felt positive business momentum early in our third quarter, this abrupt financial and economic deterioration is impacting our ability to meet our previously provided fiscal 2008 outlook.”

Rackable is heavily reliant on orders from Microsoft (MSFT), Yahoo (YHOO) and Amazon (AMZN), which together accounted for 65 percent of the company’s revenues during the second quarter. The new guidance equates to a 20 percent reduction in Rackable’s 2008 revenue projections - meaning that either one of those big customers is reducing its orders from Rackable, or the company’s bid to diversify its revenue beyond the “big three” has been hit hard by the economic downturn. 

Rackable Shares Slide After Earnings Miss

Growing competition in the market for cloud servers and data center containers put a dent in earnings for Rackable Systems (RACK), which yesterday reported lower than expected second quarter results. In early trading on Wall Street Tuesday, shares of Rackable were trading down 19 percent a $10.13 a decline of $2.42.

Rackable’s loss, excluding unusual items, was 12 cents a share, while analysts were expecting the company to break even. But the company’s gross profit margin of 9.2 percent was a major setback compared to first quarter margins of 23.5 percent. Rackable cited higher costs for components, and the need to discount prices to win a large customer contract.

“The company won an important opportunity at lower pricing, which we believe will put us in an advantageous position for more profitable, long term opportunities,” Rackable said in a statement. Company executives said earlier this year that it intended to discontinue low-margin deals in order to improve its margins.

Rackable to Offer IBM BladeCenter in ICE Cube

Rackable Systems (RACK) will offer customers the option of packing its ICE Cube data center container with IBM BladeCenter servers, the two companies said today. The move is the latest step toward a more open approach to containers and will provide more choice to customers shopping for containers. It may also focus attention on container design as a differentiator between the growing number of vendor options.

Rackable previously had only offered the ICE Cube container with its own custom rackmount servers, following the lead of the Sun MD (Blackbox) from Sun Microsystems’ (JAVA). Subsequent products from Verari Systems and HP have offered the option of packing other vendors’ gear in their containers.

In a conference call with analysts in May, Rackable CEO Mark Barrenechea discussed the ICE Cube as a “deployment option” - another form factor for Rackable’s customers. The new agreement, in which IBM BladeCenter will be the only blade server platform available for custom ICE Cube implementations, reflects a more strategic approach to the container.

New Rackable Servers Enable Higher Density

Cloud data centers are about to get even denser. Rackable Systems (RACK) is introducing a new line of low-power servers that will enable data center operators to increase the density of their computing environments. The new products from Rackable include a server that will double the computing capacity of the company’s ICE Cube data center containers.

The next-generation servers from Rackable accelerate the arms race among server vendors chasing high-volume deals to support the growth of cloud computing platforms being deployed by the Internet’s largest companies. Rackable has been a pioneer in high-density computing, and is seeking to extend its leadership even as rivals like IBM, Dell and HP introduce competing lines of cloud servers.

“This space has always been competitive,” said Geoffrey Noer, senior director of product management at Rackable. “We don’t expect that to change. We believe we have an advantage from our close customer relationships.”

What are those customers looking for in a high-density server? Rackable’s four new servers include a generous amount of on-board storage, which Noer sees as a key differentiator for cloud builders. “Without the local storage support, we believe the extra density goes to waste,” said Noerr. “We’ve seen that going to network storage is not practical, particularly given the cost model.”

Container Prospects Boost Rackable

Shares of Rackable (RACK) are stronger today after an upgrade from brokerage Canaccord Adams, which cited growth prospects for the company’s ICE Cube line of containerized data centers. Rackable shares are 61 cents higher to $10.30 a share in afternoon trading, an improvement of 6.4 percent.

“We believe Rackable’s container business will become a key growth driver for the company,” Canaccord Adams analysts wrote in upgrading the stock from Hold to Buy. “We believe that adoption of modular data centers by Internet-based companies such as Microsoft and Yahoo will provide Rackable a differentiated product, and a path to top-line growth.”

Video: Rackable ICE Cube Container

This video features a brief tour of ICE Cube, the high-density data center inside a shipping container from Rackable Systems (RACK). Conor Malone, Director of Data Center Solutions for Rackable, provides a look inside the container and talks about the ICE Cube’s features and how early customers are using the units. There’s a lot of airflow from the cooling inside the unit, which creates some residual noise on the audio. Conor is clearly used to talking over the breeze, which helps. This video runs just over 3 minutes.

For more information, check out our coverage of the ICE Cube container, as well as our archive of stories about Rackable.