This model removes one layer (brand vendor) from the equation, removing approximately 25-30% of costs of hardware. Internet companies (like Google or Facebook) and telecom operators (like AT&T, Vodafone) are seeking to optimize their procurement costs for IT hardware further with more configured solutions.
In the traditional IT business model, companies like HP, Dell used to sell servers, enterprise hardware and IT consulting services to enterprise customers. At the same time, the HP and Dell used to outsource manufacturing of the hardware to original design manufacturers (ODM) or electronics manufacturing services (EMS) providers in Taiwan, write a recent report from investment bank J.P. Morgan. (See Top 10 EMS / ODM)
In this process, Taiwanese ODMs (especially Quanta, Wistron and Inventec) have built up substantial knowhow in server design and data center performance.
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