Tiny only in size: Micro-modular datacenters are on the edge of widespread adoption

Micro-modular technical facilities are nothing new – telecommunications companies have been using street cabinets for decades to install last-mile network equipment outdoors. Their adoption in datacenters, however, has so far been sporadic at best. Few operators, such as some mining and computer-aided engineering firms, have moved beyond pilots and one-off installations. This may be changing soon, on the back of an anticipated wave of edge IT installations that are aimed at optimizing IT services and next-generation networks, and connecting the myriad machines and building sensors. Micro-modular datacenters appear to fit well in this future. In this report, we revisit what micro-modular datacenters are, what short-term demand looks like based on supplier pipelines and where the category's future could lie.

The 451 Take

Micro-modular datacenters are not widely known yet, but that is likely to change soon. A combination of technology shifts will necessitate the placement of more compute and storage capacity closer to industrial environments, as well as around the edges of carrier networks – not as a displacement of centralized capacity in purpose-built datacenters, but as an enhancement to it. Even though sales are sporadic today, and it will take more development and marketing efforts from vendors to promote the category, 451 Research believes micro-modular datacenters are well suited to play a key role in solving the challenges around distributed edge computing.

What is a micro-modular datacenter?
Generally speaking, customer awareness of the micro-modular form factor is still lacking, despite a recent increase in marketing activities from major vendors. The concept of micro technical facilities and packaged equipment is well understood and widely utilized in other industries, including telecommunications, but the datacenter industry in general lags behind in adoption of industrial techniques despite evidence of their utility.

451 Research defines micro-modular datacenters (MMDCs), in accordance with previous reports we have published, as a technical facility that is tightly wrapped around the equipment to support its intended functions and to protect it. This definition outlines the key pillars, yet this might read as too abstract. Practically, MMDCs are typically IT cabinets encapsulated in their own protective shell. For a more detailed description, we offer the following:

A micro-modular datacenter tightly couples both the IT and supporting infrastructure facilities into a self-contained and prefabricated unit (usually a cabinet, but there are multi-cabinet products). Typically, the cooling and climatic controls, power distribution, and network connectivity will be built in; other integrated functions, such as physical security, fire suppression, shock absorption, shielding against electromagnetic interference, power conditioning, and uninterruptible power supplies (UPS) or battery, may also be provided.

An MMDC is self-contained and is able to protect the equipment from intrusion and projectiles, as well as dust and water ingress. There are various certifications against such requirements; in the International Protection Marking code, we consider a rating of 44 (first digit for solids, second for liquid) as a minimum. This specifies protection against small objects, limits dust ingress and withstands splashes of water. There are MMDC products that are designed to withstand harsher environments (dust-proof, survives water jets and fire) and can be installed outdoors.

MMDCs come in various shapes and sizes to serve many different purposes. A popular use is branch-office computing, where units start as small as one-quarter of a rack, equipped with power distribution, fan-powered heat removal and sound dampening, and cost only a few thousand dollars to protect IT and networking equipment. On the other end of the scale are designs that conjoin multiple cabinets to create a larger block of micro-modular facility, with capacities from tens to hundreds of kilowatts.

Whatever the size and use case, MMDCs offer multiple advantages over traditional design, build and operational practices. These advantages are similar to those of converged IT platforms. Timelines are greatly accelerated because testing and integration of components is done by the vendor and its channel partners. Performance is virtually guaranteed, too, since the units are highly engineered using computational fluid dynamics models and built in factory environments. Also, because MMDCs are self-contained, site preparation is simpler and on-site works are minimized, which reduces labor requirements and lowers the disruption to the site, be it an office or a manufacturing floor. MMDCs also need less space than an equivalent 'macro' (room) environment.

Driven to the edge
We believe that MMDCs are likely to prove relevant for many use cases due to the form factor's performance, compartmentalized nature and lean cost structure. For example, adding high-density racks would prove difficult in many aging datacenters that were designed to support 3-4kW racks on average. Many high-density systems, including blades, have powerful fans that can create problems on their own – for example, pushing hot air back across the hot aisle through older, low-power systems. MMDCs can solve such problems as long as sufficient power can be delivered to them.

However, we see a much larger opportunity for next-generation distributed edge installations outside purpose-built datacenter sites. The number of emerging use cases is vast, yet we attempt put them in three categories: in operational technology, data acquisition and control systems being migrated onto IT platforms; on-premises acceleration of applications; and next-generation carrier network optimization and services delivery, particularly LTE Advanced and 5G cellular networks. MMDCs are well suited to add necessary storage and compute capacity at speed and with ease.

Operational technology is the umbrella term for a collection of typically purpose-built hardware and software for the monitoring and control of physical devices, everything from building management to manufacturing tools to gas pipelines and water treatment facilities. There appears to be a general consensus that, over time, most of such specialty systems will give way to largely commodity off-the-shelf (COTS) IT equipment, and that operational technology functions (e.g., industrial process controls) will be performed in software running on COTS systems.

It is not necessarily the cost of OT that compels companies to make the shift, but the attraction of better optimized industrial operations – the potential for higher output and quality, and the introduction of predictive maintenance for lower running costs of factories, trucks, ships and aircraft. This change, in turn, will generate net new demand for more IT in industrial settings to start with. This will likely be followed by a more dramatic growth in local data storage and processing requirements as increasingly more companies realize the full potential of analytics and machine learning, and install more and better (higher resolution, faster sampling etc.) sensors and 'smarter' machines in their industrial environments, once they have completed the migration over to IT-based data acquisition and controls.

But it is not just industrial systems that will generate substantial on-premises capacity requirements. Many enterprises will find that productivity of their office workers can be enhanced with local systems via more responsive higher availability applications, even if the organization's IT is centrally managed and core business systems are running out of purpose-built datacenters. Examples span a very wide range: local file caching; hosted desktop infrastructures and applications; high-performance computing clusters for scientific, engineering and media production; crafting high-availability systems (and multi-pathing networks) for maintaining access to business-critical systems; etc. A great many of these local sites exist today, and MMDCs offer an easy and quick upgrade path from closets and rooms.

The third area is the least explored, but holds great potential for MMDCs. Telecommunications providers already own vast infrastructures on which they operate hundreds if not thousands of distribution sites, small and large, that house network equipment to handle everything from connecting subscribers to routing traffic between carriers. Like many in the industry, 451 Research believes the optimization of networks and the digital services running on them (be it video streaming, online shops or connected machines) will necessitate more compute and storage capacity to be deployed across carrier networks. Upcoming fifth-generation radio networks (which build on a more dynamic utilization of pooled resources across cells and spectra), in particular, will require richer compute if telecoms are to realize their full potential and operate them economically. Early pilots are under way to test such capabilities and to figure out how operators can monetize their enhanced networks.

The micro-modular world is getting busy
These opportunities have attracted a multitude of suppliers that have introduced various offerings, and sales and marketing activities have shown a marked uptick since the second half of 2016. Vendors that offer off-the-shelf micro-modular products now include industry heavyweights such as Hewlett Packard Enterprise, which has an OEM-supply agreement in place with Schneider Electric, and Schneider itself is marketing and selling various products under its APC rack business. Dell recently added an outdoor, three-cabinet-sized unit to support its large enterprise users' branch computing needs.

German cooling specialist STULZ recently launched its own MMDC lineup, with an added focus on supercomputing applications – it can support racks over 100kW each with cold-plate direct liquid cooling. Others include US MMDC startup Instant Data Centers (owning the IP of defunct MMDC pioneer Elliptical Mobile Solutions), UK-based Cannon Technologies, Rittal and Vertiv.

With the expansion of both supply and demand, 451 Research expects sales of MMDCs will accelerate in the coming years. In our updated forecast, we project sales to approach $30m by 2018. Even though this appears to be nascent, it will represent about two thousand new installations and will support project values many times greater than that. This projection doesn't include the effect of 5G and the ongoing migration of OT over to IT.

Figure 1. Global micro-modular datacenter sales ($m)

Source: 451 Research

At the same time, it must be noted that MMDCs, as a product category, do not have a monopoly on distributed edge installations, and as such they don't represent the full edge potential. There are highly integrated rack and containment systems that offer many of the benefits, and all they need is a protective shell of a building or a modular enclosure. One example is Vapor IO's Chamber cylindrical containment system, for which prefabricated datacenter vendor Baselayer Technology provides the enclosure with security controls, cooling and power delivery.

In a follow-up report, we will be looking at the various vendors and their products in greater detail.

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