As part of its Digital Service Efficiency effort to reduce power consumption in its data centers, eBay slightly changed some of its software code so that the code would require less memory. Less memory meant more operations could be performed on the same server over a given amount of time.

The end result? eBay cut its power consumption by about a megawatt and took 400 servers out of its data centers, saving some $2 million in equipment costs.

“The ripple effect was gratifying,” said Dean Nelson, eBay's vice president of Global Foundation Services during a break at the annual conference of The Green Grid. “We just changed the application a bit to save power."

What Is Digital Service Efficiency (DSE)?

Digital Service Efficiency (DSE) is a metric that the auction giant hopes to popularize in the industry. In a nutshell, DSC divides the work accomplished by the power consumed. In eBay’s case, it divides the number of transactions and/or listings by the energy consumed. Energy used in searches is amortized across the entire operations. It is similar to the PUE (Power Use Effectiveness) rating developed by The Green Grid a few years ago, but it arguably is more targeted toward measuring power consumption and actual operations.

eBay’s figures don’t include all the crucial energy data — like how much gas gets consumed shipping a 1973-era Mattel Electronic Football game from Salt City, Mo., to a collector in San Jose, Calif. — but the numbers are still compelling. If anything, they underscore how data centers represent a more efficient way to conduct commerce than driving to the mall:

• eBay conducts 45,914 transactions per kilowatt hour. A medium-sized window-based air conditioner can consume a kilowatt hour in an hour.
• The company generates $337 million per megawatt hour.
• eBay has 52,075 servers that serve 112 million active users.
• It gets $116,716 in revenue per server.
• eBay racked up 7.3 trillion “transactions”, i.e. URL requests to buy or sell something, in 2012. That’s more than 1,000 transactions for every person on the planet.

The numbers come from eBay, so one can take them with a grain of salt, but the overall picture is pretty clear. The company serves a lot of customers fairly efficiently. At a minimum, the company is certainly doing its homework to make it as efficient as possible.

The Dell MDC server racks before the cooling unit is attached.

How Can DSE Help Save Money In The Datacenter?

eBay, for instance, has reduced the number of server configurations it will deploy down to two. Previously, it had 200 to 300 server configurations, with 15 of them accounting for 80% of the total population.) eBay now has a High Performance Computing (HPC) server designed to handle transactions. The HPC servers contain 72GB of memory and 4 hard drives. They are tuned, says Nelson, for rapid processing. A single rack can hold 96 of the servers, brining the total RAM per rack to 6,192GB.

Complementing the HPC servers are eBay’s Big Data servers, of which 48 can fit into a rack. Each Big Data server comes with a dozen 2TB drives. The Big Data servers can fit 1.2 petabytes of storage capacity per rack. The next Big Data servers may come with 3TB or 4TB drives, which would boost the total storage capacity in a rack to between two and three petabytes. Two petabytes can hold the same amount of information contained in all of the academic research libraries in the U.S. (Unlike Google or Facebook, however, eBay is not designing its own equipment in datacenters. Instead, it will buy from computer vendors.)

It has also created a showcase datacenter in Phoenix, dubbed Project Mercury, that utilizes modular containers to isolate equipment and pack it more densely along with liquid cooling. (If you can lower air conditioning bills in Arizona, you can lower them anywhere!)

An HP POD being installed next to another POD

The challenge now lies in balancing efficiency with necessary growth. Storage capacity, in particular, is set to explode.

“It is the storage, stupid,” Nelson said. “The volume of growth of storage is insane. We added 100 petabytes of capacity in the last 12 months.”

In January, I wrote a story for Forbes called Is Samsung Invincible, predicting that the South Korean manufacturer might just have carved itself a defensible Number One spot in electronics, achieving an ambition that has eluded Sony, Panasonic and many others.

3 Reasons Samsung Is On Top

1. Samsung has been one of the top three players in major markets like TV and cell phones for more than a decade. Forget those stories that claimed Samsung came into its own at CES 2013. Samsung achieved its dominance way back in 2003. $53 billion in revenue in 2012 is tough to argue with.
2. It is one of the top manufacturers of the crucial components — flash memory, DRAM, LED screens and OLEDs — that everyone else has to buy. Even when Samsung loses market share, it still wins.
3. Samsung doesn’t make mistakes. Sony stuck its neck out with Rolly. Panasonic tried to get into movies when it bought Universal. Microsoft tried to popularize the tablet in 2002 and something called SPOT that certainly resembles the fabled iWatch in 2003. Samsung makes interesting products, but it doesn’t make foolish bets. And it sells 500 Android phones a minute.

Game over. And for the cherry on top, Samsung continues to crank out some pretty funny ads, showing it has a surprising flair for consumer outreach.

This why a Wall Street Journal story claims that Google is now afraid of Samsung because of Samsung’s dominance in Android phones. The idea is that Samsung will leverage its share to gain concessions from Google.

"There is a threat from Samsung to Google that is real," Rajeev Chand, a managing director at boutique investment bank Rutberg & Co, told the Journal. "Over time, Samsung will be able to leverage market-share dominance to negotiate better terms from Google.”

(See also How Samsung Ate The Smartphone Industry – And Now Threatens Google.)

Second Thoughts On Samsung's Dominance?

So what could change all this?

Petulance.

Corporations take advantage of consumers all the time. You can feed them horsemeat burgers and lock them into credit card contracts that Sauron himself would admire. But if your success becomes too public, if it somehow looks like you’re bragging about it, they will walk.

Your mission: To Serve Man — without any hint of irony.

Dell was an invincible juggernaut in PCs until customer service and satisfaction ratings began to dip. Instagram recently risked a peasant revolt when it unveiled plans to use photos in ads. Consumers don’t have much power, but they’ve come to realize that many globe-spanning operations can be brought to their knees by collective hissy fits.

Hanna Montana. MySpace. Australopithecus. Look upon my 2003 Motorola Razr, ye mighty, and despair.

And So It Begins…

So how will the Samsung decline begin? It won’t happen for a few years. In fact, expect to see the company enjoy a temporary surge of popularity. But then you’ll see the backlash begin to sink in: Buy a Samsung? Ewwww. Don’t know why, just ewwww. An investment bank will make a prediction about Samsung quarterly shipment declines. Others will pile on.

And let's be clear: The power in the Google-Samsung relationship all sits with Google. Google has the best information retrieval system in the world. It owns a global data center that is absorbing more functions — like shopping and advertising — by the day. To undercut Google, you’d have to engage in the equivalent of medieval warfare and invest billions in infrastructure just to come close. Samsung’s value in the relationship is that it’s a slightly more upscale partner than HTC or LG. That's it.

The company will also eventually find itself on the horns of the killer product dilemma. Samsung has always been a great fast follower. It aspires to have the most feature-rich or best designed products in the majority of the high-end price bands. But it doesn’t create truly new products. Comb the company's product catalog and you won’t find a Walkman, or an iPhone, the first $1,000 PC or the first laptop. You’ll find the digital equivalent of John Kerry.

To truly become the sort of company that rivals the best of Sony or Apple, Samsung does have to create a signature product. The flexible OLED phone comes close. It rolls up! OLEDs, however, remain difficult and expensive to make in volume, particularly large format OLEDs. Companies have been trying to bring them to market for more than 10 years.

If Samsung can pull that one off, here’s to another ten years on top. If it even slightly misses the mark, let the dog pile begin.

The big question is, how many companies can come up with a hit on demand? That is Samsung's problem.

Image courtesy of Shutterstock. Samsung logo from Samsung

Why do I like the hardware industry?

It's the melodrama. One day, you're an unheralded company with clunky, me-too products. (We're the first company to deliver a smartphone specifically designed for bass fishermen!) Three years later, a few analysts and reporters note that your company has moved from number 27 to number 8 in market share. A year later, BusinessWeek prints a breathless account of the danger sports—windsurfing, bull baiting, extreme whittling—the CEO enjoys to keep himself tuned. You're number one in your chosen markets and your company is expanding!

And then comes the final act: excess inventory, bloated product lines,  tight margins and feature stories bemoaning your big bet on those touch screens.

Look at Packard-Bell, Compaq, Palm, AST, Digital, Acer, and all those people that made Internet Appliances back in the late 90s. These companies weren't stupid or mismanaged. In most cases, they touched the Golden Fleece... right before sliding off a cliff.

And now comes Vizio. It's one of the great success stories in digital television. At the Consumer Electronics Show this week Vizio unfurled smart phones, tablets and Windows 8 PCs.  (Vizio started trickling out the PC strategy in 2012 but this year's CES has been the launch pad.) The desktops will have large 24- and 27-inch screens while the laptops will emphasize thinness. Still, even with the accent on design it can be seen as a strange move. PC sales are flattening out and most phone companies are struggling in the shadow of Samsung and Apple. Given a choice between trying to interest consumers in Windows 8 or trying to earn a living giving massages at street fairs, you might be temped take Option B.

But, ahh... the history. Vizio has defied the odds before. Founded in 2002 by LCD veterans William Wang, Ken Lowe and Laynie Newsom, the Costa Mesa, Calif.-based company started as a consulting firm serving PC makers trying to break into the TV market. It helped Gateway release a 42-inch plasma TV system. It cost $2,999, but comparable systems at the time sold for upwards of $6,000. Although Gateway's momentum in TVs petered out, it enjoyed a surge of sales. Gateway sold 4,000 in the first month.

Soon after, it joined a new crop of new-name TV manufacturers like Westinghouse, Polaroid, and Syntax-Brillian - HP and Dell even thought they could make it big in TVs. Vizio's strategy was to produce the lowest price TVs in the mid- to high-price bands, a plan which allowed it to compete on price while avoiding the most challenging segment of the markets. It also specifically targeted what then were new channels for TV makers: Costco, Sam's Club and home shopping channels. Electronics retailers, at the time, insisted on gross margins of 25 percent or more. Big Box retailers only demanded ten percent. Vizio used the strategy to undercut prices without undercutting margins too much.

It also kept headcount low. Vizio outsources nearly everything. When it overtook Samsung and Sony for the first time to become the number one LCD TV brand in America, it had only 85 employees.

"We don't have highly paid executives or fly around on corporate jets. The efficiency of the company is not hiding any kind of latency," Wang told me back then.

The momentum hasn't ended: Vizio is still regularly in the top spot with Samsung in the U.S. Now reviewers like Dave Katzmaier often give their TVs high marks. Compare that to Sony or Sharp: Sharp, one of the most innovative companies in LCD technology, is this week seeking an infusion of cash from Intel and Dell.

With that in mind, let's look at the new products. Vizio's tablet runs on AMD's Z60 processors. That means it is compatible with virtually every computer program on the market, unlike Microsoft's own Surface, which runs on an ARM chip. AMD is also a company on a mission to rebuild itself and so will likely go out of its way to help Vizio make sure it succeeds. The products are attractive, different and Vizio doesn't carry baggage like HP or Dell. 

In phones, Vizio will target the Chinese market, still a new frontier for smartphones.

Then again, it won't be easy. Vizio did try to sell phones in the U.S. a few years ago. In the summer of 2011, Lowe told me during a panel discussion that Vizio was going to come out with a line of LED light bulbs. Taiwan would produce them and Vizio would sell them. LED prices dropped and I haven't seen the light bulbs. The company's breakthrough channel strategy is no surprise anymore.

If these new products don't sell well, expect Vizio to back of its commitments quietly. But if TV sales begin to flatten, Vizio may decided that its future does indeed belong in portable entertainment and computing. An effort will be made to bring a new definition to form factors. And then someone will suggest...

Image courtesy of Vizio.

On December 16, 1947, Bell Labs researchers William Shockley, John Bardeen and Walter Brattain created an amplifier from a germanium crystal that boosted an input signal by 100 times. Various researchers had tried to develop a solid-state alternative to electromechanical switches and delicate vacuum tubes during the war. The Bell Labs Trio demonstrated it for lab officials a week later on December 23: Shockley deemed it ”a magnificent Christmas present.”

And only six months after the Roswell Incident. For the sake of argument, we’ll follow the official story.

Bell Labs announced it six months later. The trade press was ecstatic: Electronics put the three men, who would share the Nobel Prize for physics in 1956, on the cover. (Bardeen became a laureate a second time in 1972 for his work on superconductivity.) The New York Times only gave it a few paragraphs on page 46.

The transistor went on to become one of the signature scientific achievements of the 20^th century, ranking up with splitting the atom, manned flight, and the discovery of DNA. One could argue, in fact, that the transistor was the most important breakthrough of the 20^th century because subsequent advances in those other fields relied on the computing power made possible through integrated circuits and semiconductors. Information has become a science itself.

Computing, otherwise, would have been a cottage industry. ENIAC, the machine that brought computing to the public consciousness, only debuted 22 months before the transistor breakthrough. It relied on vacuum tubes. If Google built a datacenter based around the same technology behind ENIAC, a single datacenter would need as much power as Manhattan.

Sales and production skyrocketed. In 2003, Gordon Moore estimated that there were about 10¹⁸ transistors in the world, or about or about 100 times the number of ants in the word. Last year, the global semiconductor market came to $304 billion and an individual semiconductor device like an Intel Xeon can contain 2.5 billion transistors.

Unintended Consequences

The invention had a number of unanticipated consequences too. California, for instance, became the center of the world. The center of the computing industry, by rights, should be King of Prussia, Pennsylvania. The transistor came out of Bell Labs in New Jersey, after all. (So did the silicon solar cell). ENIAC came out of the University of Pennsylvania and early computer powers like Sperry Rand were located nearby. TV manufacturers like Philco clustered there too.

So how come parts of Philadelphia look more like a backdrop for a Frontline documentary on failed urban renewal than downtown Seoul on a Saturday night? Blame Fred Terman. The Stanford Provost wooed Shockley to come to Santa Clara County and others followed in his wake.

Business also became dominated by youth. Besides being a brilliant scientist, Shockley also happened to be a raging egomaniac. Several of the young engineers he hired at Shockley—Robert Noyce, Gordon Moore, Eugene Kleiner—left to form Fairchild. At the time, it was a radical departure: the traitorous eight were essentially they wouldn’t work for a micromanager. Investors trusted them. Authority by seniority was doomed forever.

You can also see the development of the symbiotic relationship between marketing and computing. An internal Bell Labs committee concluded that “Semiconductor Triode” was probably the best option as a name for the invention, although they thought it could be a bit too long. “Solid Triode” had the advantage of brevity but the committee felt that it connoted “sturdy, massive, rugged or strong.” Small and minute were conveyed by “Iotatron” but some felt it could get confused with a vacuum component. John Pierce came up with the name “transistor” by combining “transconductance” and “varistor.”

A Lasting Impact

But ultimately, the biggest impact has been an unusual combination of rapid innovation and predictability. In electronics, things get cheaper, faster, and smaller simultaneously. You can't say the same thing about designer cupcakes or industrial chemicals: bleach doesn’t get twice as caustic every two years. If the auto industry followed Moore's Law for even a decade or two, a Rolls Royce would cost less than a dollar and be far faster than the models on the road. But it would also be less than a centimeter long.

The dynamic is due to the fact that small chips perform better. A transistor is really just a freeway for electrons. Decreasing its size shortens the commute and hence boosts the speed. Smaller transistors also are cheaper to manufacturer because more can be manufactured in a single wafer of finite size simultaneously. If you can double the number of processors that can be harvested from a wafer, it’s like doubling your factory capacity without paying a dime.

The End Of Moore's Law

Will Moore’s Law come to an end? As it is used now, yes. Transistor shrinkage will hit physical limits: you can split atoms in ordinary manufacturing. Intel scientists have predicted transistor shrinkage might top out around 2020. Scientists from Hitachi at the Flash Memory Summit earlier this year noted that there might be only seven or eight turns of the crank left to reduce the size of transistors.

But that won’t be the end of creativity. Three dimensional transistors, which stack circuits vertically, are on the way from Toshiba, Intel, Samsung, Hitachi and others. This will let manufacturers get more powerful chips out of the same wafers. Thinner and wider wafers will further cut costs. Copper wires, which give off tremendous amounts of heat, will get replaced over time by fiber optic links.

Sixty five years from now, you’ll be reading the same article.

Image courtesy of Wikipedia.