For nearly two years, tech insiders whispered that Microsoft was designing its own computer servers. Much like Google and Facebook and Amazon, the voices said, Microsoft was fashioning a cheaper and more efficient breed of server for use inside the massive data centers that drive its increasingly popular web services, including Bing, Windows Azure, and Office 365.

It only made sense. Typically, when you run a web service the size of Bing, needing tens of thousands of machines to keep the thing going, traditional server hardware becomes far too expensive. But when this phenomenon was discussed in public, Microsoft typically stayed mum. In designing its own servers, it was moving away from commercial machines sold by the likes of Dell and HP – hardware makers that have long worked hand-in-hand with Microsoft in so many areas of the computer game – and it seemed that Steve Ballmer and company were wary of offending their longtime allies.

>Microsoft will not only lift the veil from its secret server designs. It will 'open source' these designs, sharing them with the world at large.

Not anymore. This morning, in San Jose, California, Microsoft will not only lift the veil from its secret server designs. It will "open source" these designs, sharing them with the world at large so that other online outfits can use them inside their own data centers. "We're trying to drive hardware innovation in cloud computing," says Bill Laing, the Microsoft corporate vice president who will reveal the designs at this week's Open Compute Summit, a conference dedicated to the free exchange of hardware know-how.

It's yet another sign that the worldwide market for data center hardware is changing in enormous ways. In the past, if you needed servers or data storage gear or networking hardware, you simply bought what was available from American hardware vendors like Dell and HP and Cisco. Now, massive web outfits like Google and Facebook and Amazon and even Microsoft are designing their own hardware, partnering with manufacturers in Asia and other foreign locales to build this hardware on the cheap, and – in some cases – helping others take the same route.

Facebook galvanized this movement in 2011, when it open sourced its first server designs and founded the Open Compute Project, the not-for-profit foundation behind this week's summit. The aim was to foster a vast community of companies that would freely trade their hardware designs and bootstrap a more efficient means of getting these designs built. Now, nearly three years later, this idea has come into its own.

Microsoft's New Stripes ———————–

Microsoft's move towards the Open Compute Project is particularly telling. It's not just that the company is a traditional ally of Dell and HP, with these hardware makers selling its Windows operating system on all sorts of computers, from desktops and laptops to servers. It's that, for so many years, Microsoft was staunchly opposed to sharing its intellectual property with outsiders. It avoided open source software and even actively battled against those who built the stuff. Now, it's embracing open source in both the hardware and the software world.

>'Microsoft is not doing this purely for the good of the community. There's some good in it for them too.' Al Gillen

As it released its server designs, the company also open sourced the software it built to manage the operation of these servers.

But this isn't mere altruism. By sharing its designs and software, Microsoft can push the web forward, helping others build more efficient data centers. But it can also boost its own cause, expanding the market for this custom-built gear and driving down its hardware costs even further.

"Microsoft is not doing this purely for the good of the community," says Al Gillen, a server and system software analyst with research outfit IDC. "There's some good in it for them too."

Microsoft's Bill Laing adds that the move can also help the company sell more software. Remember, Microsoft isn't just a web company. It's a software vendor. In addition to running cloud services like Windows Azure, it sells all kinds of software that buyers can use to build their own cloud services. If the company shares the server designs that underpin Azure, the thinking goes, it will only encourage others to erect their own Azure-like services with Microsoft software.

"We've learned a lot from operating at scale," Laing says, "and we've heard from customers and

service providers we work with that they want to take advantage of our learnings and our knowledge."

More Than Just Spin ——————-

As Microsoft releases its server designs, it's careful to paint the Dells and the HPs in a positive light. Though Google and Facebook have openly said they go straight to low-cost Asian manufacturers in fashioning their own data center hardware, sidestepping the Dells and the HPs, Microsoft declines to say who builds its machines. And it says that, in addition to Asian manufacturer Quanta, both Dell and HP will sell systems based on its open source designs.

But this is more than just spin. The fact of the matter is that Dell and HP see where the world is moving, and they too have begun to embrace this new way of doing things.

>'We're being aggressive and going after an opportunity. We want to give our customers choice – as opposed to worrying about whether it hurts our existing business.' Tom Burns

A company like Quanta is the main beneficiary of the Open Compute movement. In the past, Quanta worked behind the scenes to build machines on behalf of American hardware vendors like Dell and HP. Now, it's selling hardware directly to buyers, cutting the middlemen out of the equation. But in an effort to maintain their place in the world, Dell and HP are working just as hard to court the many web companies who have their eye on a cheaper and more streamlined breed of hardware.

Thus, Dell and HP will sell machines based on Microsoft's designs, just as they've backed similar designs from Facebook. When Facebook created the Open Compute Project, Dell was on hand, and HP soon jumped in as well.

This morning, Dell revealed it has also embraced the Project's effort to overhaul the world's network gear. Web giants such as Facebook are moving to towards "bare metal" networking switches – commodity hardware that can be loaded with any software – and now, through a partnership with Silicon Valley startup Cumulus Networks, Dell is helping other outfits make the same leap.

In a way, Dell is eating its own business. For years, it has sold more expensive and more complex networking gear through a subsidiary called Force10 networks. But the company realizes that a growing number of companies need cheaper and more flexible gear – and that it must serve these companies too. "We're being aggressive and going after an opportunity," says Tom Burns, vice president of networking at Dell. "We want to give our customers choice – as opposed to worrying about whether it hurts our existing business."

That too is big news. The Googles and the Facebooks and the Amazons started this movement. But when Microsoft and Dell get involved, it's proof the rest of the world is following.