HyperScale Data Centers Featured Article

Smaller Firms Benefit from Hyperscale Customization Needs

March 16, 2016

For hyperscale data centers like those operated by the likes of Google, Facebook, Amazon and others, the secret sauce is as much customization and off-the-shelf commodity servers driven by software-defined networking and virtualization.

This is borne out by recent Gartner research that shows a marked uptick in spend on smaller original device manufacturers over larger server OEMs. In the last three months of 2015, according to Gartner research, the “other vendors” category of the server market saw a significant boost in revenue. In the fourth quarter, ODMs such as Wistron created more than $750 million in revenue and more than 170,000 in server units shipped.

The “other vendors” category saw an overall revenue increase of 18.9 percent year-to-year, which is less than the growth of industry leader, Cisco Systems' 20.2 growth, but much higher than other top system makers such as Dell, IBM and Lenovo.

ODM and direct vendors saw a revenue increase of 10.4 percent over the entire year. Only IBM saw a decline, and this because Lenovo purchased IBM’s x86 server business for $2.3 billion.

Hyperscale data centers aren’t just grabbing servers and the related kit. They are purchasing specialty hardware that plays to the specifics of their data center needs. The need for power efficiency and performance is so great at hyperscale firms they will use white box systems to keep expenses in check on everything from servers and storage appliances to networking gear.

While this goes counter to some of the prevailing trends in the past few years, it makes sense in the case of hyperscale data center—especially given that these data centers have the IT staff to integrate and manage these systems.

This is not good news for branded systems from the likes of HP, Dell and Lenovo, of course. But OEMs aren’t sitting still.

In 2014, HP partnered with Foxconn to build open, low-cost servers for cloud environments; this has become its new Cloudline portfolio. Dell also has its

Extreme Scale Infrastructure (ESI) organization that develops customized and optimized systems for the largest hyperscale companies. It targets both hyperscale data centers and organizations that aren't as large as the hyperscale players but still need customized and optimized infrastructure.

Hyperscale is pushing the server war in new directions. Right now the smaller players are winning.

Edited by Maurice Nagle

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