Amazon bought more than $86 million in servers from Rackable Systems in 2008, surpassing Microsoft as the server maker's largest customer. The investment in data center hardware is likely tied to the growth of Amazon Web Services, the retailer's fast-growing cloud computing operation. Amazon (AMZN) doesn't break out any revenue data for its AWS operation, but recently noted that its S3 storage service now stores 40 billion objects, an increase of 11 billion from October and three times the volume from a year ago.
Amazon spent $56 million on servers with Rackable in 2007, but boosted that to $86 million last year, as first noted at TechFlash. The growth of Amazon's business with Rackable has bucked a trend in which the vendor's other marquee customers, Microsoft and Yahoo, have reduced their spending.
Microsoft (MSFT) bought about $126 million in Rackable equipment in 2007, but just $35 million in 2008, according to data from Rackable's latest 10-K filing with the SEC. Yahoo (YHOO), which accounted for a quarter of Rackable's revenue in 2007, no longer makes the list of the company's largest customers.
Rackable (RACK) was an early innovator in energy-efficient high-density servers, and its business has been highly concentrated among the largest Internet companies. In October Rackable reduced its revenue guidance for the year, citing an “abrupt slowdown” in corporate purchasing.
While Rackable didn’t explicitly name the customers that had cut spending, it said orders from its two largest customers plunged $100 million, and that the delay of large-scale construction projects had hurt server sales, and had a specific negative impact on Rackable’s data center container business.
But Amazon has continued to buy even as its cloud-building rivals throttle back on server spending. It's one more reason why server vendors are focusing on boxes optimized for scaled-out cloud platforms.