it's hard to infer if the record is being set due to better hardware or better algorithms. I'd like to see benchmark improvements in algorithms not hardware, but I'm a software guy.
"We asked ourselves, ‘What does it mean to build a balanced system where we are not wasting any system resources in carrying out high end computation?’” said Vahdat. “If you are idling your processors or not using all your RAM, you’re burning energy and losing efficiency.”
From personal experience, the hardest part of dealing with super-high-end hardware is utilizing the capacity that it gives you. You don't just throw a larger computer at a program written in Blub for a smaller system, and gain instant world-record performance. If nothing else, you usually have to re-architect your code to match the assumptions of the new hardware.
Also, the I/O numbers you're assuming are probably very high: you never get 100% utilization of a network interface -- 70% is more realistic. And for a problem like this, you're bounded not by the product of the bandwidth of the pairwise interconnects (i.e. (10Gbps * 52) / 8 == 65GB/s), but the bandwidth of any single interconnect, because you can get to a point where you're transferring most of the data across a few connections. Also, latency matters a lot, because a small connection latency can easily throttle your overall bandwidth when you're moving lots of small chunks of data.
Realistically, these guys probably had something more like 7Gbps / 8 = ~.88 GB/s bandwidth between nodes, not counting latency. That means that it would take ~1163s to transfer 1TB between any two nodes -- which means that that naive solution (distributed merge sort where the intermediates are transferred between nodes) is already ruled out. So, like I said, we're back to software improvements, if only to utilize the hardware available.
If that is correct, most improvements would probably come from hardware and software use-case tuning.