The traditional server original design manufacturer (ODM) model is changing by directly targeting hyperscale data centres and enterprises.
According to Gartner sales of servers by ODMs directly to customers will account for 16 % of global x86 server shipments by 2018, amounting to $4.6 billion in revenue.
“Direct engagement with hyperscale data centers (DCs) is the biggest contributor to ODM growth. These customers are willing to consider innovative DC infrastructure designs that can offer better scalability and can drastically reduce the total cost of ownership of servers (including power and cooling expense) compared with mainstream servers offered by traditional server OEMs,” says Naveen Mishra, Research Director at Gartner.
Gartner estimates that the hyperscale segment will contribute 82% of the direct ODM server revenue in 2014. Rather than choosing mainstream OEM servers, these customers prefer ODM-supplied servers due to their lower cost, and innovative and efficient design, along with the ability to customize the systems. Gartner defines hyperscale as having large DC requirements, and is engaged in serving external customers.
“ODMs have strong credentials of technical knowledge and capabilities in designing customized server solutions for varying customer needs,” said Mishra. “Current ODM success is primarily restricted to server technology; however, OEMs need to recognize that this can eventually impact other technologies, especially storage. ODMs are already shipping storage (primarily internal), along with custom-built servers. Open stack storage solutions are slowly gaining traction with ODMs, which can disrupt the established external controller-based storage vendors.”
The challenge for ODMs is to transition their custom-built products for these enterprises. Increasing awareness among enterprises regarding Open Compute Project (OCP) can potentially enable enterprise decisions to partner with ODMs, as these engagements will be backed by the OCP community. ODMs should continue their short-term focus on large DCs. North America, Western Europe and the Asia/Pacific are the top three markets, with 82% of all DC sites.