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

I can't figure out who he is trying to fool here, or if he is just fooling himself?

We had an early lifecycle of a basic design being settled upon, whereupon the existing manufacturers set about producing their own versions of that basic design. Each provided innovation on the basic design, and each matched the innovations of their competition.

We reach a stage where most of the innovation on that basic design is done, and most manufacturers products are equally capable. The next logical step (for the basic design) is for all different brands to be manufactured in the same process, with just the branding touches added by the final seller.

The transfer of skills to developing countries was always going to result in a shift in the models used to bring technology to market. As the ideas of those (now skilled) people were applied to the technology that has been manufactured to suit the ideas of incumbent manufacturers. They're clever enough to look at how things have been done and adapt the model to suit what they think would be an improvement in how a product is developed/delivered.

That's why different designs for different platforms (smartphones/tablets) are so popular, because they have room for innovation. They have space in the marketplace to make money by being different, by offering something more than the competition does.

The major players have designed themselves out of the marketplace, by designing the technology they produce to match the capabilities they and their competitors came up with. If it all looks the same, and does the same, who manufactured it, or who sells it becomes purely a matter of styling (which can easily be applied to a product manufactured by someone else) and price.

Everyone has a PC, they all do (or are capable of doing) pretty much the same things. The OEMs made it that way, and when market saturation (of available markets) was achieved their PC business struggled. The server market has gone the same way. It's a server, it does pretty much the same as any server (based on the same platform) from any manufacturer. If it came from the same high volume production line as a different server, the cost of manufacturing it was lower, which can be passed into the final product price.

Reliability and on-going maintenance are still a factor

Traditional vendors still have a large market share as they have proven hardware reliability and extended support, which is a requirement for large enterprises.

However, most of the kit is now used in clusters for visualization, this provides HA and hardware abstraction. As such, hardware consistency, reliability and maintainability is no longer a primary requirement, and it's possible to take a blended approach of 'traditional' hardware suppliers, and non-standard kit.

ODM irony

The fact is that many of the major brands, including Dell, use ODMs to build their kit. That some of the punters such as Facebook have cut out the middle man (HP, Dell, etc) and headed straight to the source is amusing.