For years, white box PCs have accounted for a significant chunk of desktop sales. It was the same wherever I went: small mom-and-pop shops built their own PCs using components shipped in from Taiwan, and if there was a logo on it, it was for the PC store (affectionately referred to as “screwdriver shops”) that built the thing.
On the server side, though, it remained a name-brand business. Data centers were filled with racks of servers that bore the logos of IBM (now Lenovo), Dell and HP.
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However, that’s changing. In its latest sales figures for the second quarter of 2017, IDC says ODM sales now account for the largest group of server sales, surpassing HPE. In the second calendar quarter of 2017, worldwide server sales increased 6.3 percent year over year to $15.7 billion thanks in part to new Intel Skylake processors.
Overall, the ODM Direct market was first, with sales of $3.545 billion accounting for 22.6 percent market share and a 48 percent rise over the same period last year. Granted, this is a collection of multiple vendors into one giant sales total, but it does say a lot about the collective growth of this group.
HPE remained the number one vendor in the worldwide server market with 21.3 percent market share and sales of $3.345 billion, but its growth shrank 8.4 percent year over year. Dell EMC was second with 17.7 percent of vendor revenue for the quarter and 7.0 percent year-over-year growth to $2.8 billion. IBM and Cisco were statistically tied for the fourth market position.
It is very telling that enterprises are going with, say, SuperMicro instead of HPE or Dell EMC. I doubt many of you have heard of names such as SuperMicro, Quanta, Wistron, Inventec and Jabil Circuit. Maybe you’ve heard of Foxconn due to its Apple association. But they are picking up sales.
Who is buying white box servers?
ODM Direct suppliers first took off in sales to companies with massive data centers, such as Google, Amazon, Facebook and Microsoft. And they buy a lot. Kuba Stolarski, research director of computing platforms at IDC, said Amazon alone accounted for more than 10 percent of worldwide shipments in the second quarter, which was 2.45 million machines.
So, in one quarter, Amazon bought nearly 250,000 servers, which is mind-blowing. Annualized, that’s a million servers. I’m sure HPE, Dell and Lenovo would love it if that were their machines, but they weren’t.
Why are white box servers taking off? In part, they are popular with massive hyperscale providers. Look at the Amazon numbers. Then add Google, Facebook, Microsoft, Twitter, Rackspace and a whole host of data center providers.
But they are also gaining popularity in traditional data centers because they are cheaper and competitive performance-wise. In fact, a lot of ODMs provide the hardware to the brand-name vendors. The ODMs are cheaper, offer more customization in configuring the hardware, and tend to be a little more aggressive in coming out with new hardware than traditional server vendors.
For now, it’s still a Dell and HPE world in the corporate data center, but that could change as more IT managers get wise to off-brand servers that are as good as the brand-name servers but cost less.