Bigger companies can negotiate to buy servers and power for less, and deploy gear more effectively.
They wanted to expand the site to several hundred more schools that fall, and they needed money to buy servers.
But companies like Google, Facebook, Amazon.com and Microsoft buy servers by the thousands as they try to keep up with demand from Internet users.
Businesses that used to buy servers from them, perhaps a dozen or two at a time, will increasingly rent computing services in the cloud instead.
Instead of buying new desktops, some schools have opted to buy servers, which cost about $5,000 each and provide the needed disk space for 40 or 50 outdated computers, as well as a connection to a common printer.
"The common theme is that all companies need to buy servers, software and storage devices and create networks," he said, which is why he buys companies that provide those products and services.
But they don't buy servers.
"Today I have to buy servers from one company, storage from another, networking from another, virtualization software from another.
Since 20% of its customers buy switches when they buy servers, Dell could perhaps muscle into this $13 billion market just as it moved from PCs into servers.
At Ooyala's usage levels, Chief Technical Officer Sean Knapp says, it might be cheaper to buy servers, but "this accelerates the speed of innovation".
