Of course, buying in bulk results in loss of margins and the fact is highly applicable in the terms of making an order of hardware. But the signs for Cisco, Dell, HP, and Lenovo get worse.if it is about cloud business, every server vendor has lost a lot.
This conclusion has been made on the basis of research results released by Synergy Research Group in its ranking of top vendors in cloud infrastructure. As per the ranking, Cisco, HP Enterprises and Dell-EMC are placed at the top three seats for public cloud hardware. Well, that’s the good news.
And the bad news is that except HPE is dealing with revenue decline in the period of last year as big data centers increasingly skip name-brand servers for no-name boxes from ODMs (original design manufacturers) as IDC data reflects. A point to be considered especially is that HPE’s server has shown only the 3.5% growth in the specific period. So, we can say that there is no big brand server vendor can be said in a satisfying situation.
Winning a losing battle
The companies are working harder to face the challenge. Dell-EMC merger is a strong effort to compete with Cisco, Lenovo, HPE and others. And the plan seems to get worked, as the server sales is showing positive changes in the terms of private cloud infrastructure market.
The private cloud is being taken as a transition phase for enterprise computing. On the other hand, risk-averse CIO tiptoe towards true public cloud computing. Curt Monash, a well known analyst comment ”it is widely understood that due to economics of scale, only a few companies should operate their own data centers”.
There are many who believe that the certain workloads are simply inimical to public cloud infrastructure. Most of the leading names (like, Dell-EMC, Cisco and HPE) are taking a sizable chunk of the private cloud server market.
No brand name, big business
In its recent report, IDC has pointed out the squeezing situation of the brand name vendors, which is interestingly being ruled by the ODMs. These ship with no name and providing the efficient custom-built servers. Eckhardt Fischer, research analyst at IDC, noted that revenue decline “is strongly driven by the continued expansion of ODMs … a trend that IDC predicts will continue as mega data centers and large enterprises begin to source their hardware directly.”
The server vendors are seriously looking for the ways to fight back and the prime one that is being chosen by them is embracing the custom server craze. In his report, Agam Shah reports, “Lenovo is working toward offering custom-built converged servers targeted at specific tasks in a bid to satisfy customers that demand highly tuned software-plus-hardware stacks”.
It’s a trend that is roiling the server industry, as evidenced in both top-line revenue growth and profitability for server vendors, but there simply isn’t an option.
But in a broad view, these efforts may not be satisfying enough if the market keeps on spending around only a few cloud vendors: AWS, Microsoft Azure and Google. With growing powers like Facebook determined to build their own data centers and the public cloud vendors customizing their servers, the leftovers look sparse for traditional vendors.