Rackable Systems (RACK) makes energy-efficient racks of servers for datacenters. Microsoft is a known client. Rackable has designed and built server farm units that fit in 40 foot standard shipping containers, calling them ICE Cubes. So imagine the disappointment of investors like myself when Microsoft announced that it would fill its new Chicago datacenter with servers in chipping containers - but not ICE Cubes. Apparently Microsoft decided to make its own customized containers, which it calls CBlox. Microsoft had installed a few of Verari Systems Forest containers in another location, and liked the overall design concept enought to plan to scale it out in Chicago. Sun also makes containerized server systems. Doubtless others will enter the fray.
Rackable has disappointed investors a number of times in the past couple of years. It is an innovative company that created a new space, the super-energy efficient datacenter. But once bigger players like Sun, IBM, HP and Dell saw what was happening, they sometimes underbid Rackable with their own less energy efficient designs and have raced get Greener in this expanding market.
One factor in the Microsoft decision was probably that Rackable does not use blade servers. So far management has been resolute in refusing to go the blade server route, claiming that such servers are actually inefficient compared to Rackable's half-depth server rack systems (with some data to back up that assertion). In any case the CBlox design, as well as Verari's, does use blade servers.
Rackable's stock has been mostly going up the last few weeks despite the Microsoft loss. Part of that is that the overall market is up due to increased liquidity. RACK's price was way low in the first quarter of this year, in my opinion. I suspect also that Rackable has its hands full with customers for its Eco-Logical servers and storage systems, and is going to sell plenty of ICE Cubes too. Most companies can't do their own engineering the way Microsoft can. One ICE Cube would go a long way for most corporations; few need to build hundreds of the things, as Microsoft does. I suspect the ICE Cube is much more portable than Microsoft's CBlox. The Pentagon will be wanting some to move around, and you can put one in a parking lot. Hook it up to electricity and the Internet and it will function just fine, without the expense of a building.
Of course we won't know more until Rackable announces its Q2 2008 results, which won't be until July. In the meantime see my summary of the Rackable analyst conference for Q1 2008.
My main Rackable page