Data Center Technology Advances, Costs Decrease: Welcome to the Age of Deflation…

Quantitative easing, stimulus packages, rising oil prices, government spending and commodities costs rising globally have led many economists to predict wild swings in inflation on a global basis. Bloomberg reports that in some countries predicting double-digit inflationary scenarios over the coming years. These same economists are also predicting that greater austerity measures are required by the world's governments in order to preserve sovereign viability whilst simultaneously recommending huge loan packages to "bail out" troubled economies from "themselves."

Around the world, economists, government planners and politicians continue to insist on the investment in infrastructure and services (health and social) primarily funded through taxation and loans against sovereignty as the "path to prosperity". It is upon this backdrop that the technology industry has entered the largest cyclical growth in our industries history.

It was truly a humbling experience that President Obama visited Intel's Oregon manufacturing site to celebrate "American Innovation and American Manufacturing". I am proud to have been a part of a series of great teams at Intel who have led the industry in technology innovation, manufacturing and supply chain leadership. However, the single most important factor in this innovation is deflation. We have lowered the cost of manufacure, the cost of acquistion and the cost to manage the supply chain. Let me explain.....

Over the last 5 years, each generation of technology is better and less expensive than the last. In fact, the cost of a laptop computer has gone from $1600 in 2001, $1000 in 2005, approximately $600 today. 2.6x reduction in End User Cost in 10 years, not bad. The average price of an enterprise server has decreased over 50% in the last decade, while delivering over 10x the performance.  We have introduced new capabilities in smartphones, device storage, networking capacity, PC's, TV's, spectrum propagation and Server technology. Our data center technologies alone have reduced power consumption in the data center over 25% from previous generations just 3 years ago.  Virtualization technologies have improved on data center performance 8 times over the last 5 years. These improvements in efficiency, performance and virtualization have allowed us to realize billions of dollars, pounds, euros and yen in data center cost savings around the world. These costs are realized by IT departments whom budget have been "frozen" as a percentage of revenue for over 8 years.

In the last 5 years over 1 billion new users have joined the digital age and are regularly accessing the internet. The cost of the equipment to use, view and input their thoughts, ideas has gone down almost 20% in that same time frame. As an industry of service providers, technology manufacturers and software developers we have made it easier and more accessible for the world to consume our products. Yet ironically, we are climbing a mountain of uncertainty when it comes to realizing the benefits of our technological advancements in society at large. Social networking and communications have been at the heart of political change, yet globally economists are applying 19th Century economic theory to "manage the crisis". How can you apply 19th and Early 20th Century economic theory to world that relies on Facebook, Google, Baidu and Microsoft to sift through more data in one hour than these same theorists could digest in a lifetime?

Over the next 5 years, Intel is committed to delivering technologies in the data center that will reduce carbon emissions by as much as 45 coal plants worldwide. Our data center efficiency technologies can reduce power consumption per 1000 servers as much as 20% from previous levels just 18 months ago. Our Intelligent Power Node Manager technology is being developed into it's second generation to provide increased instrumentation for virtualization and cloud management software vendors to provide  interfaces for data center managers to optimize their workload and power consumption environments. We are delivering optimized virtualization silicon, with security (Intel TXT) across our entire server lineup in 2011, to insure trusted migration of workloads for virtualization and cloud computing implementations. We have introduced 10Gbe Ethernet technologies (x520) for unified networking to reduce the cable dependencies in Data Centers and hasten server, storage and networking consolidation. Further reducing the dependency on copper, nickel and gold requirements in the data center. We are delivering next generation storage devices which reduce power, consumption, mean time between failure and space requirements from previous generations by as much as 25%.

As importantly, we are committed to working with an industry of like-minded Data Center executives through the Open Data Center Alliance to develop the key usage models for future innovations across the data center  which drive simplification, security and efficiency in daily operations of some of the worlds most complex environments.

Perhaps it is just us "geeks of the industry" whom are committed to enter the "Age of Deflation", where efficiency, optimization and cost reduction are a requirement for survival, not a theory of "austerity". We have over a  billion people joining the digital discourse  and multiple billions of devices in the next 5 years, if we can extend  to them cost reduced technologies at the highest quality so that they can live in the most efficient manner possible, perhaps we can prove the "past" century economic theorists wrong. This isn't the 18th, 19th or 20th century, we are manufacturing better technology with faster innovation at the most unprecedented level in human history. Let's lead "Innovation in a Deflationary Economy" discourse over the next decade….it's challenge to us all living in the 21st century.

Let me know your thoughts....