Why is this? The primary factor driving the public cloud computing benefit is the fact that an eBay data center's cost structure is almost entirely fixed -- $.88 of the $1.07 computational unit remains whether there is any work done in the data center or not (see slide 8 of the presentation).
If eBay can avoid purchasing computing capacity that sits idle by using a public provider, it can save money even if the public provider costs significantly more than eBay's own resources.
Essentially, this is an example that illustrates something we preach all the time -- data center utilization rates are the key to cloud computing economics. Unless one can guarantee that a cloud data center will operate -- on a sustained basis -- at 70% or more of capacity, it will be hopelessly uncompetitive from a financial perspective.
If eBay can manage its capacity such that its own data centers operate at high utilization rates and it can harvest additional capacity from public providers at anything like typical rates, it will drop its overall computing cost by something like 40%.
Dell's Secret: Sleds
The second interesting item at the Design Summit related to hardware that Dell was showing off. The company demonstrated a high-density collection of servers and storage. Particularly interesting was the configuration of the server portion of this collection. Dell's offering does not use the common blade design that is often used to increase computing density. This is because blade designs commonly fail to offer redundant system services -- especially network connections, so that if the network connectivity of the blade chassis fails, the entire blade collection is unable to continue working.
Dell's design, by contrast, provides system resources for each computing device, which it refers to as "sleds," although to me they looked more like trays. Each "sled" is one or two sockets, contains a boatload of memory, and completely separate network connectivity from the other sleds. The only shared resource among all the sleds in a system is the power supply, and two are included for robustness reasons.
Each sled is connected to 12 2.5 inch drives, making very large storage capabilities part of this system. You can see an actual sled and get a sense of how they are constructed in this video I shot of Rob Hirschfield of Dell describing one.