CoolIT's datacenter liquid cooling tech is buoyed by Bitcoin spending wave

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1 CoolIT's datacenter liquid cooling tech is buoyed by Bitcoin spending wave Analyst: Andrew Donoghue 24 Mar, 2015 Cooling specialist CoolIT Systems is one of about a dozen suppliers of direct liquid cooling (DLC) technology for IT equipment in the datacenter. Like some of its DLC competitors, it originally developed its DLC technology for high-end workstations used for computer gaming and other process-intensive applications. In 2012, the company announced plans to port this knowhow to the datacenter and develop server products. As of Q1 2015, CoolIT reports that approximately 31% of its $27m in revenue comes from its datacenter wares. The company has sold its technology to end users such as HPC datacenters and Bitcoin mining vendors. However, it notes that the Bitcoin market has slowed down considerably, and is now focused on a more sustainable business. CoolIT is also helping establish standards around DLC through organizations such as Green Grid. The 451 Take CoolIT is one of a handful of leading DLC providers. Like its closest rival Asetek, it has chosen to take a relatively pragmatic stance on the benefits of liquid cooling and position its technology as an adjunct to, rather than a wholesale replacement for, traditional air-based cooling. Some of the motivation for this strategy is due to the fact that unlike immersion cooling firms which can remove nearly all of a facility's heat to liquid CoolIT's technology usually requires some air-based cooling to be in place (not all of the server components are cooled directly by its cold-plate technology). As shown by its involvement with Green Grid, CoolIT also realizes that working with, rather than dismissing, established datacenter technology providers is critical to establishing DLC as a viable alternative to air-based cooling. Context Copyright The 451 Group 1

2 Direct liquid cooling of server processors (or on-chip liquid cooling) is not a new technique, but despite innovations by IBM, HP and a host of small players, it remains a niche technology. A combination of factors has historically restricted liquid cooling to an important but limited set of use cases. For example, some mainframes and HPC datacenters deploy DLC systems due to their high-density requirements. Research from organizations such as Uptime Institute (an operating division of The 451 Group) has shown that average rack density in enterprise and colocation suppliers remains below 5kW per rack. There has been discussion for a number of years about growing rack density, but a significant increase does not appear to have occurred yet. Without a significant expansion beyond 20kW, some critics argue that the economic case for DLC is less compelling. However, DLC suppliers argue that the benefits of DLC go beyond density and include being able to easily add IT capacity to cooling-constrained facilities. Other benefits include lower noise (server fans can be removed in DLC systems), as well as the ability to overclock systems to drive increased performance. Established in 2001, Calgary, Canada-based CoolIT is a DLC technology supplier to high-end workstation component makers, as well as workstation and server system firms. The company has approximately 50 employees (up from 30 a year ago), and is privately funded. In 2009, CoolIT acquired the assets of Michigan-based Delphi Thermal Liquid Cooling for an undisclosed sum and took over existing contracts with customers. Its investors include inovia Capital and Chart Venture Partners. The company raised $6.2m in series A funding in 2009 and $6.2m in a series B round in 2011, as well as a further undisclosed tranche in Total financing to date is believed to be in excess of $20m. Technology DLC is a method of heat dissipation where the processor or other components are in close proximity or fully immersed in a liquid as opposed to rack-level liquid cooling, evaporative cooling, water-side economization or other uses of liquid as a coolant in datacenters. CoolIT's technology is based on the use of cold plates rather than full immersion. This means that its technology is easier to retrofit and install but does not remove as much of the IT heat load as immersion systems some air-based cooling in the facility is still required for CoolIT's system. The company has developed a range of datacenter offerings known as Rack Direct Contact Liquid Cooling (DCLC) units based on using water-cooled cold plates (with some anti-corrosion additives) to cool processor components. The server-level cold-plate technology, along with manifold (which distributes water to the servers), is standard across all of its products but CoolIT offers different Copyright The 451 Group 2

3 choices of heat-exchange modules depending on the requirements of the facility. The company has developed two main versions of Rack DCLC: one that ejects its heat into the facility water system (CHx), and another that ejects heat via a liquid-to-air heat exchanger (AHx). Different versions of these two approaches are available depending on the density and number of racks that need to be cooled. CoolIT says its Rack DCLC technology is capable of cooling rack densities of 35kW and higher. Innovation and roadmap CoolIT notes that its technology is suitable for not only HPC datacenters, but also cloud service providers (hyperscale). It also believes that the infrastructure necessary to support big-data systems will increase rack densities in enterprise facilities, which should drive interest in DLC. The company sells its desktop and Rack DCLC units to server-component manufacturers and system makers. These include Supermicro as well as Corsair and Ciara Technologies. CoolIT reports that it has also sold to or partnered with AMC, Apple, Dell, Delphi, Facebook, HP and Intel. In Q1 2015, it disclosed that 2014 revenue was more than $27m an increase of 40% compared with Datacenter sales accounted for 31% of total revenue. CoolIT sells directly to some large datacenter operators. It has also sold a number of systems to Bitcoin mining firms but notes that this business has declined recently. Liquid cooling is a popular technology with Bitcoin mining vendors because it enables high densities and lower cooling costs compared with traditional air cooling. (In January, immersion liquid cooling specialist Allied Control was acquired by Bitcoin mining company BitFury). Also, Bitcoin providers are less concerned about leakage and potential downtime than mission-critical datacenters. However, CoolIT also says that it is now focused on attracting more sustainable customers and is actively pursuing additional partnerships with large system makers. The company signed an OEM agreement with CES Group in CES is part of Nortek, a Nasdaq-listed supplier of industrial goods such as domestic heating, cooling and various ancillary products. The OEM agreement is specifically with CES affiliate organization Eaton-Williams, which sells a range of datacenter cooling technologies, including rear-door heat exchangers. CoolIT chief executive Geoff Lyon was recently appointed as head of Green Grid's Liquid Cooling Workgroup, which includes most of the company's competitors, including Asetek, Iceotope and Green Revolution Cooling. Copyright The 451 Group 3

4 Competition A number of DLC startups have emerged over the past 5-10 years, with several new entrants since We estimate that there are approximately suppliers of DLC technology (including large system makers), and that most have DLC revenue below $3m. These companies can be split between those providing technology based on immersion of components (in a mineral oil or synthetic liquid) and those that use water-cooled cold plates to replace traditional heat sinks. CoolIT vies directly with vendors that deploy liquid-cooled (usually water) cold plates (heat exchangers). Denmark-based Asetek is its closest rival, and has a background in liquid-cooled gaming machines; it licenses its technology to high-end workstation and gaming machine suppliers, including Dell (Alienware). Asetek filed a patent-infringement lawsuit against CoolIT in August Asetek recently noted that it had resolved the lawsuit but terms of the settlement have not been released. Other cold-plate suppliers include Clustered Systems Company and Chilldyne, both privately owned DLC system makers based in California. CoolIT also competes with other firms that sell liquid-immersion technologies, such as UK-based startup Iceotope, which developed a sealed-server system that immerses components in a dielectric fluid. US-based industrial specialist 3M has developed a prototype system based on its Novec synthetic liquid; Allied Control (as noted, recently acquired by BitFury) also uses Novec. Austin, Texas-based Green Revolution Cooling offers a system based on immersing standard servers (with fans removed) into baths of mineral oil. Columbus, Ohio-based Parker Hannifin has an immersion DLC system known as SprayCool. HPC specialists such as Cray and Bull have also employed DLC for more than a decade. Dell, HP, Fujitsu and IBM have all explored the potential of DLC technology for HPC, as well as for desktops and to a limited degree enterprise-class servers. Their approaches to the market have been a mix of direct development/sales HP released its Apollo 8000 system in 2014 and partnerships with DLC technology suppliers. SWOT Analysis Strengths Weaknesses CoolIT has established a solid track record in the DLC workstation market, and has developed a range of datacenter and server products. Opportunities Threats The company's technology does not remove as much of the heat load from the datacenter as immersion systems. Also, as it uses water as a coolant, leakage can damage systems. Copyright The 451 Group 4

5 CoolIT could benefit from the move toward datacenters increasingly having a mix of rack power densities. For example, DLC technology could enable islands of high-density liquid cooling in a mostly low-density free air-cooled facility. The company faces the same threats as other DLC suppliers. Concerns about maintenance and leakage persist. Datacenter densities have not increased significantly, which would have helped make the case for DLC for some customers. Copyright The 451 Group 5

6 Reproduced by permission of The 451 Group; This report was originally published within 451 Research's Market Insight Service. For additional information on 451 Research or to apply for trial access, go to: Copyright The 451 Group 6