This article is more than 1 year old

ODMs a 'threat' to Euro server biz? Well, yes, says HP exec

They're heeeere (in the US) and they're coming to Europe

HP Europe is braced for the looming "threat" from Far Eastern ODMS that are building custom servers to order for bulky service providers.

Beancounters at IDC have split out white box server makers as a separate segment because of their ballooning share of sales and growing influence on the global stage.

Some cloudy firms are bypassing the traditional bulky server firms to buy complete- and partial sub-systems with local configuration managed by large integrators.

Peter Ryan, EMEA grand fromage for HP's enterprise biz, is only too aware of this growing shadow cast by ODMs with service providers including Facebook, overhauling their supply chains.

"As service providers build out their environment they are clearly looking at all kinds ways to get the supply chain to give them the cost and value points they want," he told El Chan at HP's Global Partner knees-up.

"Initially it has affected the US more than the European market and what that really allows us to do in Europe is know it's coming, it's a threat and we need to make sure we are delivering value."

According to IDC's 2013 data, the ODM Direct segment, which includes firms such as Quanta Computer, Wistron and Compal Electronics, grew 57.3 per cent to $2.8bn as the market declined 4.4 per cent to $49.7bn.

HP's worldwide server revenues slipped 6.4 per cent to $13.2bn, IBM sales collapsed with only Dell and Cisco reporting growth.

In EMEA, HP declined 7.1 per cent in 2013 to $4.73bn, worse the market average but in Q4 sales fell two per cent as total market revenues dropped 5.2 per cent.

Ryan claimed the ODM trend was "disproportionately affecting some of our competition, some of them are going through tough times at the moment".

This looks to be a thinly veiled attack on IBM, which is offloading its x86 biz to Lenovo, and privately owned Dell which is currently chopping out costs across the business. Dell actually grew in 2013 across EMEA but declined in Q4.

The Enterprise Group honcho told us that rather than losing sleep over ODMs, HP is pushing hard on server architectures such as Moonshot, which the firm said uses 89 per cent less energy and 80 per cent less space.

"We'll get through this based on innovation but at the same time we have got to have the most effective supply chain to make sure people can't just go somewhere else that is cheaper and good enough," he said.

HP has a "vibrant" business with tier two and three service providers "almost all" via channel partners but is running "transformation workshops" in a bid to tighten up services skills.

Ryan said: "We are using [these] with partners to help them think through how they can evolve their business in the light of the service provider market." ®

More about

TIP US OFF

Send us news


Other stories you might like