It started out as a controversial idea inside Facebook. In four short years, it has turned the $141 billion data-center computer-hardware industry on its head.
Facebook’s extraordinary Open Compute Project is doing for hardware what Linux, Android, and many other popular products did for software: making it free and “open source.”
That means that anyone can look at, use, or modify the designs of the hugely expensive computers that big companies use to run their operations — all for free. Contract manufacturers are standing by to build custom designs and to build, in bulk, standard designs agreed upon by the group.
In software, open source has been revolutionary and disruptive. That movement created Linux, which is the software running most data centers around the world, and Android, the most popular smartphone platform in the world. Along the way, massively powerful companies like Microsoft, Nokia, and Blackberry were disrupted —some to the brink of extinction.
OCP threatens to do the same to decades-old hardware companies like Cisco.
Since it launched in 2011, OCP has:
- Saved Facebook $2 billion.
- Cut Fidelity Investments’ data center electric bill by 20%.
- Nabbed Microsoft as a board member, meaning Microsoft is using OCP hardware in its huge data centers and contributing back to the designs.
- Ditto for Apple.
- Created better careers for hardware designers, who can now collaborate instead of being forbidden to share trade secrets.
- Launched an ecosystem of products and startups.
- Created a more than $1 billion business for at least one Chinese manufacturer.
- Put networking giant Cisco on notice.
- Convinced HP to stop fighting the movement and join it.
Jonathan Heiliger dreamed up OCP in 2011 back when he was leading Facebook’s infrastructure team. Those are the people who oversee the technology that keeps Facebook up and running. (Heiliger is now a VC.)
LinkedIn/Jonathan HeiligerJonathan Heiliger.
It started off with Facebook’s data centers.
A data center is a huge warehouse-like building filled with thousands and thousands of computer servers and various other pieces of hardware, like racks and switches, that connect them.
Most companies lease space in already existing data centers. But for huge tech companies like Google, Microsoft, Apple, and Amazon, it’s more efficient to build their own.
In 2011, Facebook joined that club.
The computers in Facebook’s data centers ARE Facebook. Everything you do, every picture you store, every status update you post, is computed and stored there.
The trouble was, in 2011, data centers were becoming known as one of the dirtiest, carbon-spewing parts of the tech industry.
Facebook built its state-of-the-art data center in Prineville, Oregon, where it invented ways to use less electricity. So Facebook published the Prineville designs to contribute to the green data-center movement.
Then it occurred to Heiliger: Why not share all of the Facebook’s hardware designs?
“I wrote a short paper, circulated it to Zuck and the rest of team,” he remembers, referring to Facebook CEO Mark Zuckerberg. Heiliger argued that the technology, particularly the hardware, “is not our competitive advantage.” and that “open source should be a core tenet at Facebook.”
There are some huge advantages to making hardware open source.
Hardware engineers, no matter who they work for, could collaborate. Ideas would flow. New tech would be invented more quickly. Difficult tech problems are fixed faster. And everyone would to share equally in the results.
It would be 180 degrees from the classic culture of patents and lawsuits and trade secrets that has ruled the tech industry for decades. But Facebook didn’t make hardware, so there was no risk to its business.
Zuck was in. One argument was particularly persuasive: “A company in Mountain View thinks their tech was a differentiator. We didn’t believe that,” Heiliger says, referring to the fact that Google builds much of its own hardware and a lot of its own software and keeps most of that stuff a closely guarded secret.
Google’s top guy is not terribly impressed
Now that OCP has become a phenomenon, Google’s top hardware-infrastructure guy (a legend in his world), Urs Hölzle, offers a begrudging respect for the project.
When asked about OCP, Hölzle told us, “It actually makes a lot of sense because it’s open source for hardware. It’s relatively basic today,” he said. “It could be the start of something a little bit deeper.”
But he simultaneously pooh-poohed how important OCP will ultimately be.
“I think in the long term it’s less important because most people should not use their own racks even if it’s Open Compute. It solves a short-term problem, so for a while it will be relevant because there are a lot of legitimate use cases where you don’t have another choice. In that sense, it competes with the Dells of the world … It will be relevant only for the very, very large companies — for the Facebooks, the Ebays, the Microsofts.”
He doesn’t think its useful for businesses beyond huge internet companies, even those that run their own data centers today, like Citibank.
“Not even Citibank. I think five years from now, my goal is that all the CIO’s of the Citibanks of the world are GCP [Google Cloud Compute] customers. Not because they were forced to but because they realize it’s far better than doing it themselves. … We have financial customers — they are some of the eager adopters, not reluctant adopters.”
Three smart moves
Hölzle is turning a blind eye to the fact that the financial companies are already involved in OCP in a big way today.
That’s because Helinger did several smart things when he started this project.
First, he hired Frank Frankovsky away from Dell to help Facebook invent hardware and to lead Open Compute Project. Frankovsky quickly became its face and biggest evangelist.
FacebookFacebook open-source hardware guru Frank Frankovsky.
Next, he got Intel, a much older company with lots of experience in open source, on board. Intel’s legal team set up OCP’s legal structure so that all companies could share technology without fear that they would forced to share secrets they didn’t want to expose.
“Intel, their legal team are incredibly savvy about IP law,” Frankovsky says. After they set up that up, Intel signed on as a founding member.
Then, he asked Goldman Sachs’ Don Duet to join the board.
Duet tells us, “We knew the team at Facebook for several years, before people like Frank and others joined. In 2007 and 2008, Facebook was starting to grow and they called on us to help and advise them on how to run infrastructure.” (Goldman Sachs helped Facebook raise a late-stage investment round and was one of the bankers involved in its IPO.)
Duet liked the idea of OCP. He thought the hardware industry was lagging because it was dominated by a few huge hardware vendors. “It felt bespoke,” he describes.
He knew they were onto something almost immediately at OCP’s first conference.
“We thought maybe 50 people would show up.” Instead over 300 came. “That was incredible,” he remembers.
Flash forward to March 2015: Over 2,500 people came to US conference held at the San Jose Convention Center, OCP’s new full-time CEO Corey Bell tells us.
The financial industry is on board
Goldman has been happy to buy OCP servers.
Goldman SachsGoldman Sachs managing director Don Duet.
“We started at mid-point last year purchasing OCP servers,” he says. Now Goldman has committed that “80% of its servers would be OCP.” It will only buy regular commercial servers for oddball, outlier applications, where it doesn’t make sense to spend time on custom designs.
Duet says Godman will never go back to buying servers the old way. “We’ve been clear to the vendor community. There’s no reason to go backwards. We didn’t go back after adopting open-source operating systems.”
With Goldman as a marquee user of OCP, Frankovsky shrugs off Hölzle’s slam.
“If you’re using 100 to 200 computers, that’s 80% of everyone on the Internet, you should use the cloud. The question always comes up, when should you exit the cloud? When you’re spending enough money on your cloud bill that a small fraction of that should pay for an engineering team.”
For instance, Citibank, Goldman Sachs, and other financial services companies will spend nearly $200 billion combined on tech in 2015 alone.
“The fascinating thing is that industry most ravenous to adopt OCP has been the finance world,” Frankovsky says.
In fact, another huge financial tech firm recently went public with its use of OCP: Fidelity Investments. Fidelity says OCP hardware has reduced its data center energy bill by 20%, among other benefits.
A $1 billion business in just a couple of years
By 2013, just two years into the project, Heiliger knew it would be a hit.
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