Find Server & Storage Equipment Electronics Services Near You

Understanding server and storage equipment contract electronics services

Electronics solutions providers offering design and manufacturing services for cloud and networking servers and storage equipment specialize in meeting specific needs. Whether the trend is hyperconverged storage or flash architecture and various other technical capabilities VentureOutsource.com can help you find suitable contract electronics providers.

There are numerous electronics solutions providers specializing in design and manufacturing of cloud networking server and storage electronics equipment. There is a wide variation on server categories plus performance optimization that cannot be overlooked.

Trends in server, storage equipment

There are several trends in the servers and storage equipment industry, including:

• Cloud computing: The growth of cloud services and the increasing adoption of cloud-based infrastructure is driving demand for servers and storage equipment in data centers.
• Edge computing: As more devices and sensors are connected to the internet, there is a growing need to process and store data at the edge of networks, rather than in centralized data centers. This is leading to an increase in the deployment of servers and storage equipment in edge locations, such as on factory floors and in retail stores.
• Artificial intelligence and machine learning: The growth of AI and ML is driving demand for powerful servers and storage equipment that can handle large amounts of data and support real-time analytics.
• Virtualization and containerization: The use of virtualization and containerization technologies, such as Docker and Kubernetes, is increasing, which is driving demand for servers and storage equipment that can support these technologies.
• Software-defined infrastructure: There is a growing trend towards software-defined infrastructure, which allows for the flexible and automated management of servers and storage resources.

Hyperscale internet data center companies including Amazon, Facebook, Microsoft and Google began purchasing cloud server networking equipment direct from Taiwan ODMs as early as 2011. (Telecommunications carriers soon later began shifting their equipment purchases direct to ODM providers, also)

For sheer size of data center footprints, see Microsoft’s footprint from a Morgan Stanley 2019 data center industry research report, below:

Today, some equipment manufacturers serving the server and storage market want to provide end-to-end services featuring virtualization (design) capabilities through to access point hardware, edge routing, aggregation points, and core network components all installed with their operating systems – extending into equipment beyond access points – such as IP routers.

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As more equipment manufacturers in the server and storage market shift to more direct models, sourcing directly from ODM providers of ‘white boxes’, server and storage company margins could be improved considerably.

This trend of ODMs taking share directly from traditional server OEM brands like HP and Dell, in terms of both unit share and value share, is driven by demand from hyperscale cloud vendors’ need to lower the total cost of ownership or, optimizing total landed cost.

Whereas, with increasing competition seeking and retaining customers by server and storage firms, margins are coming under pressure, further emphasizing the need for manufacturing and supply chain decision makers to plan and execute contract electronics outsourcing strategies that accurately determine product ‘should cost’ while optimizing total landed cost profit and product margin growth protection.

And as ODMs continue to take market share from traditional server OEM brand companies like HP and Dell, in terms of both unit share and value share, driven by demand from hyperscale cloud vendors’ need to lower the total cost of ownership (TCO) the ODMs are able to provide cheaper and more customized servers in bulk directly to these hyperscale cloud vendors.

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This trend will continue going forward, driven by increasing data traffic requiring more data center hardware and more workloads shifting toward public clouds.

Meanwhile, semiconductor companies are also finding ways, expanding their margins and ecosystem across the compute, storage, and networking segments to take advantage of these trends taking shape in server and storage equipment – and taking their product directly to OEM customers, bypassing components distributors that add little value. Additionally, some OEM equipment firms have design plans on the table, or have already executed, their own ASIC chips for use in their equipment.

In addition to finding and selection of server and storage contract electronics solutions providers, commodity and sourcing managers seeking lower costs focused on server systems bill-of-materials (BOM), are primarily concerned with sourcing CPUs and chipsets, power supplies, casings and enclosures, storage and DRAM materials procurement. See pie chart, below.

Purchasing data center server bill of materials (BOM)

CPUs, chipsets, and DRAM contribute the most to BOM costs with CPUs and chipsets leading the way. Additionally, aside from upcoming new data center builds, hyperscale vendors like Microsoft, Amazon, Google…periodically upgrade their existing data center hardware based on replacement demand.

Its typical for hyperscale data center vendors to replace data center hardware equipment every two to three years. Combine this with new data center hardware demand, its evident the capability for future industry growth, particularly as the large, hyperscale vendors continue to expand their global data center footprints.

Challenges for sales and marketing of servers and storage equipment

Marketing and sales of servers and storage equipment can present a number of challenges, including:

• High competition: The servers and storage equipment industry is highly competitive, with many established players and new entrants vying for market share. It can be difficult for a new company to establish itself in the market and for existing companies to differentiate themselves from the competition.
• Technical complexity: Servers and storage equipment can be complex and technical products, making it challenging to communicate the value and benefits to potential customers in a way that is easy to understand.
• Price sensitivity: Servers and storage equipment can be expensive, and customers may be price sensitive. It can be difficult to justify the cost of the equipment to potential customers, especially in a crowded market.
• Lack of standardization: There is a lack of standardization in the servers and storage equipment industry, which can make it difficult for customers to compare products and make informed purchasing decisions.
• *Long sales cycle: The sales cycle for servers and storage equipment can be long, as potential customers may need to conduct extensive research and testing before making a purchase.
• Sales staff and channel partners need to be knowledgeable about the product and the customer’s needs.
• Keeping up with the technology: The industry changes rapidly, so keeping up with the latest technology trends and developments can be a challenge for sales and marketing teams.
• Addressing the customer’s security and compliance concerns.
• Meeting the customer’s energy efficiency and sustainability requirements.

*The sales cycle for servers and storage equipment can vary depending on the size and complexity of the equipment, the type of customer, and the industry. However, in general, the sales cycle for servers and storage equipment can be quite long. It can take several months or even a year or more for a customer to research, evaluate, and make a decision on a purchase.

The sales cycle for servers and storage equipment typically includes several stages, such as:

• Prospecting: Identifying potential customers and building relationships with them.
• Qualifying: Determining if the potential customer has a need for the equipment and if they have the budget and authority to make a purchase.
• Presenting: Demonstrating the equipment and its capabilities to the potential customer.
• Handling objections: Addressing any concerns or questions the potential customer may have about the equipment.
• Closing: Securing the sale and finalizing the purchase agreement.
• Delivery and installation of equipment
• Follow-up and after-sales service

It’s worth to note that the cycle may be shorter for small businesses or for the customers with specific and urgent needs.

Your One Stop Electronics Services Directory

Every electronic OEM equipment manufacturer has needs for sourcing, product design, manufacturing and supply chain management specific to its industry. The contract electronics industry is more than just outsourcing manufacturing, it’s about finding the right suppliers and partners and building relationships that add real value and the VentureOutsource.com website can help.

Search Global Directory of Contract Electronics Services | Contract Electronics Services Overview | Design Services | New Product Introduction (NPI) Services | Manufacturing Services | Supply Chain Services | Logistics Services | After Market Services

Manufacturing trends

Below are links to different industry contract electronics manufacturing pages filled with detailed information on trends and best practices.

Aerospace & Avionics | Defense & Military | Industrial | Consumer Devices | Computing | Medical | Clean, Green Technology | Automotive | Networking Equipment | Telecom | Servers & Storage | Peripherals

View Venture Outsource management consulting menu or learn more about our contract electronics industry online training and education and the unique way our consulting services and research projects are set up to better serve our clients here.

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Electronic OEM professionals reading this and wanting help locating contract electronic service providers matching your program and end market, Venture Outsource offers a free service. Speak with a Provider Advisor. Advisors have access to detailed information on listings in our global database and can help you compare provider service capabilities to better match your program needs. Advisors also have intelligence on specific providers, plus info on emerging industry trends and best practices to share with you.

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