In the tech world, deep collaboration between companies can be a chancy thing. When impassioned engineers from different cultures knock heads, one partner or the other can come away feeling bruised.
But every once in awhile things go better than expected. And that, for engineers, can turn into a kind of peak experience.
That explains why executives from Advanced Micro Devices’ SeaMicro business unit and Verizon Communications’ Terremark cloud computing business were almost gushy last week when they talked about their two-year technical partnership and how it turned out.
Verizon, one of the giants of telecommunications, very much wanted to develop a cloud computing solution that would counter the rapid growth of upstarts like Amazon Web Services. And to accomplish that, it partnered with SeaMicro, a technical leader in building small “micro-servers” that can be packed together to provide a lot of compute power in a small package.
AMD — which has most of its operations and about 1,900 employees in Austin — has taken to calling this approach “dense computing.”
Its not the simplest thing to do and it requires a flexible and high-speed communications “fabric,” to effectively tie all hundreds of processors together.
SeaMicro, a startup that AMD acquired in 2012, saw the Verizon project as a chance to demonstrate its micro-server prowess. Verizon Terremark saw a very promising technology partner that it could use to create a more reliable and more secure cloud computing service that it could sell to enterprise custoemrs. About 150 engineers worked on the project and their inventions were incorporated into Verizon’s new cloud service unveiled this month.
Kevin Clarke, a top Verizon manager involved in the project said they were attracted to SeaMicro because “we found they were a bunch of wild-eyed crazies just like us.”
“Our partnership with SeaMicro was unparalleled,” he said. “I have never seen anything like it in the industry. It was an awesome experience.”
Andrew Feldman, general manager of AMD’s server business, returned the compliment. “We saw people at Terremark that were intent on building and amplifying the technology that we invented. How cool is that? Not only were they using our technology, they were extending vision and adding to it. They wanted to work deep inside the hardware and get incredible performance. It produced a cloud design that was never built before.”
Verizon says its cloud offering is built for enterprise clients and it provides them with the security, reliability, performance guarantees, flexibility and management controls that they expect from a data center operation.
“We reinvented the public cloud from the ground up to specifically address the needs of our enterprise clients,” said John Considine, chief technology officer of Verizon Terremark. “Our collaboration with AMD enabled us to develop revolutionary technology and it represents the backbone of our future plans.”
The two engineering teams pushed each other toward new technical advances. Verizon asked SeaMicro to tweak its designs in a way that it could better exploit with its software. Both companies came away with patentable inventions from the experience and they said there was no squabbling about who invented what.
“The trick in collaboration is being honest about what is yours and what is not yours,” Feldman said. “We had people of good faith working together. It wouldn’t occur to us to claim credit for their ideas. That makes seeing a line of demarcation really easy. Mutual respect is all of it.”
Feldman acknowledged that such powerful technical partnerships between companies are not commonplace. “This has given me hope that they exist,” he said. “They are hard to come by and rare in a career. This gives one faith that two partners can share a vision and meet in the middle and help change the world.”
Verizon already has become SeaMicro’s biggest customer and the relationship between the two is expected to expand as Verizon’s new service wins more customers.
Even though SeaMicro is owned by a chipmaker, the servers it designs are largely processor agnostic. Verizon decided it would use both Xeon processors, made by Intel Corp., AMD’s arch-rival, as well as AMD’s own Opteron chips. It plans to use more Opterons for a technical reason — they can address more memory than the Xeons and so make their cloud a little more flexible to more kinds of customer software applications.
Analyst Christopher Rolland with FBR Capital Markets said the Verizon partnership could turn into an extra $50 million a year in revenue for AMD over several years. SeaMicro, which AMD bought last year for a premium price of $334 million, could expand to $200 million a year in revenue next year and $800 million over time, the analyst projects.
AMD has taken its lumps in the personal computer and conventional server markets in recent years, but analysts including Patrick Moorhead and Charles King, said the Verizon deal shows the chip-maker can still innovate.
King, with Pund-IT Inc., said AMD’s acquisition of SeaMicro surprised some tech industry experts, but it could be paying off. “This is kind of a validation of their strategy,” he said. If the Verizon service succeeds, AMD might soon find itself in other collaborative projects with new customers.
“This is the biggest deal yet for AMD SeaMicro,” said Moorhead, with Moor Insights & Strategy. “It brings instant credibility to the SeaMicro architecture and to AMD for buying them.”