Dell: We May Never Build Another Data Center

It wasn't as simple as just deciding to go virtual rather than expand compute facilities -- especially for an IT hardware company. But in digging into the costs that Dell's two Austin, Texas, data centers were responsible for, and the costs to build a new data center, executives realized that there had to be another way.

"So we asked, is there something we can do to get more capacity out of that same infrastructure," Parker explained, "and can we get efficiency savings by going to virtualization?"

As Dell kicked around the options, virtualization technology was improving in effectiveness, as technology is wont to do. That steady progress, coupled with an initiative led by Johnson to identify and remove underutilized and outdated assets, made Dell's no-new-data-centers future possible.

"You've just halved the power demand I have," Parker said, "and maybe we don't need to build another one -- now it looks like we can wait another 10, 15, 20 years to build another one."

The process is more complex than simply virtualizing everything possible, of course. And Johnson laid out how IT hardware firms can continue to benefit from companies using ever-fewer servers.

"It wasn't simply putting more on each box, it was putting in the latest and greatest box," Johnson said. "Those two things are what's driving the change."

By replacing the oldest 25 percent of its servers every year and upgrading to the "latest and greatest" models, Dell can essentially recoup its capital expenditures every year through reduced energy costs -- increased energy efficiency offsets the costs of buying new hardware on a rolling four-year refresh cycle.

Fortune is archiving and streaming at least portions of its Brainstorm Green conference online; you can watch the entire hour-long discussion from Dell's Robin Johnson and Dane Parker, as well as much more, at Fortune-ls.WebEx.com.