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Bert22306
Yes indeed, good for Quanta, bad for Dell and HP, eh? None of this is surprising ...
escher
HP and Dell have created their own Frankenstein monster, which now has the ...
Taiwanese server makers outflanking traditional OEMs
Rick Merritt
2/14/2013 3:01 AM EST
SANTA CLARA, Calif. – A few years ago, executives from companies like Quanta wouldn't give interviews. They lived in the shadows of customers like Dell and Hewlett-Packard, quietly making their products in factories in Taiwan and China. Times have changed.
Flush with orders from big data centers, Quanta and its peers are on the rise. To feed its growth, Quanta is hungry for simpler silicon, more software expertise in power management and software-defined networks--and just a little limelight.
"Traditional OEMs no longer have the advantage, we do," said Mike Yang, general manager of the cloud computing group at Quanta Computer Inc., a subsidiary of the $37 billion manufacturing giant. "The business model is changing and it provides us a very good opportunity."
Quanta is one of a handful of big Taiwan companies traditionally known for building desktops, notebooks and, more recently, smartphones. It snagged a surprise windfall about five years ago when Facebook awarded it a contract to build a large number of integrated racks of servers, switches and storage systems.
"At that time [the deal] was roughly a single digit percentage of my total volume," said Yang. The Facebook deal "had a big impact on us and was quite surprising because we usually only provided products to OEMs," he said.
Facebook was following the lead of other big data centers such as Google and Microsoft who had come to Taiwan, too. They realized they could order custom-built servers that better suited their needs and get them at lower cost rather than pay a premium for the pre-defined systems from a Dell or Hewlett-Packard that also were made by Taiwan companies such as Quanta.
About two years after its first Facebook deal, Korea Telecom sent Quanta an unexpected request for a quote for racks in its data centers. "We asked them why they came to us, and they said they heard we were doing business with several of the biggest data centers in the world," Yang said.
The deal got Quanta started pursuing the market more proactively. Last year, it officially created its data center group.
Quanta still makes systems for OEMs like Dell and HP, but last year its direct sales to big data center customers became the majority of the group’s total business which expanded by 12 percent.
One of Quanta's rivals is Wistron, a former arm of Acer that now makes PCs for OEMs. It started getting orders for data center racks from the big data centers a few years ago, too. Last year it spun out a separate company called WiWynn Corp. to take the data center business and eliminate any possible conflicts with its OEM customers.
For its part Quanta still works both sides of the street. "When the OEMs come to us, we welcome them," Yang said.
Flush with orders from big data centers, Quanta and its peers are on the rise. To feed its growth, Quanta is hungry for simpler silicon, more software expertise in power management and software-defined networks--and just a little limelight.
"Traditional OEMs no longer have the advantage, we do," said Mike Yang, general manager of the cloud computing group at Quanta Computer Inc., a subsidiary of the $37 billion manufacturing giant. "The business model is changing and it provides us a very good opportunity."
Quanta is one of a handful of big Taiwan companies traditionally known for building desktops, notebooks and, more recently, smartphones. It snagged a surprise windfall about five years ago when Facebook awarded it a contract to build a large number of integrated racks of servers, switches and storage systems.
"At that time [the deal] was roughly a single digit percentage of my total volume," said Yang. The Facebook deal "had a big impact on us and was quite surprising because we usually only provided products to OEMs," he said.
Facebook was following the lead of other big data centers such as Google and Microsoft who had come to Taiwan, too. They realized they could order custom-built servers that better suited their needs and get them at lower cost rather than pay a premium for the pre-defined systems from a Dell or Hewlett-Packard that also were made by Taiwan companies such as Quanta.About two years after its first Facebook deal, Korea Telecom sent Quanta an unexpected request for a quote for racks in its data centers. "We asked them why they came to us, and they said they heard we were doing business with several of the biggest data centers in the world," Yang said.
The deal got Quanta started pursuing the market more proactively. Last year, it officially created its data center group.
Quanta still makes systems for OEMs like Dell and HP, but last year its direct sales to big data center customers became the majority of the group’s total business which expanded by 12 percent.
One of Quanta's rivals is Wistron, a former arm of Acer that now makes PCs for OEMs. It started getting orders for data center racks from the big data centers a few years ago, too. Last year it spun out a separate company called WiWynn Corp. to take the data center business and eliminate any possible conflicts with its OEM customers.
For its part Quanta still works both sides of the street. "When the OEMs come to us, we welcome them," Yang said.
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rick.merritt
2/14/2013 11:09 AM EST
How do you see the server business shifting in the cloud era?
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marcopol
2/15/2013 7:43 AM EST
To me this seems to be a general drawback of outsourcing the manufacturing and the know-how to an ODM. In long term, you rise a competitor.
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rick.merritt
2/15/2013 11:19 AM EST
Indeed contacts at HP bewail the fact the few systems engineering experts they have in servers are approaching retirement age.
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FuturePlus
2/15/2013 3:57 PM EST
All's I know is that memory DIMM failures for these big cloud servers is the #2 failure in the data center. Not only do they need simplier IC's but more reliable memory subsystems.
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rick.merritt
2/15/2013 4:41 PM EST
Whats the problem with the DIMM failures as far as you have heard?
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przemek
2/15/2013 5:18 PM EST
Funny because there was a recent article on Japanese DRAM industry, failing because they insisted on high-overhead manufacturing and testing for quality, and being undercut by competition which adopted shortcuts. I guess the chicken are coming home to roost.
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escher
2/17/2013 8:20 PM EST
HP and Dell have created their own Frankenstein monster, which now has the advantage of knowing more about making their products than the OEMs do (ref: Ricks comment about HP systems experts retiring with no one to take their place).
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Bert22306
2/18/2013 2:01 AM EST
Yes indeed, good for Quanta, bad for Dell and HP, eh? None of this is surprising though, right?
Now, how about Foxconn/Apple? I that the next article we'll be reading along these lines?
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