Original design manufacturers (ODMs) including Quanta and Wiston Wiwynn are benefiting from moves by big internet service providers to keep costs low.
According to a report in Digitimes, the ISPs are choosing the so-called white box manufacturers like Quanta and Wistron because they don’t see any need to have branded servers in their data centres.
That is likely to hit Hewlett-Packard and Dell.
There’s no systematic let up in server demand, the report said. Sales are steady at 10 million units this year.
The report said Google, Facebook and Amazon are voting with their wallets by adopting servers from the ODMs.
Quanta was well known as being a major ODM of notebooks, but it has diversified into white box servers that now represent just over a third of its revenues.
The news for vendors of notebooks hasn’t been good for many quarters now but it appears August offers a glimmer of hope for the manufacturers.
Digitimes Research (DR) said that the top five brands showed growth of 17 percent in August, over July’s figures.
In more rosy times, August was the month that manufacturers prepared machines for the “back to school” period but that patterns been disrupted for some years now.
DR said that out of the top five vendors, HP, Lenovo and Acer had a healthy August showing growth of 30 percent, 30 percent and 40 percent respectively.
But the shipments were not too good for Asustek and Dell, which showed weak growth, with DR believing the latter suffered from lack of demand in the commercial sector.
Meanwhile, the original design manufacturers – that is to say the companies that actually make the kit that is later branded, also did well, with Quanta, Compal and Wistron all seeing growth for the period.
DR believes it’s impossible right now to gauge the effect of Windows 10 on notebook sales.
And while many of the companies showed growth in shipments, those aren’t sales.
A senior executive at Dell claimed that his company has now taken second place globally in shipments of servers and in revenues.
Speaking to Digitimes, Ashley Gorakhpurwalla, general manager of servers at Dell, said his company has narrowed the gap between it and arch rival Hewlett Packard.
Gorakhpurwalla claimed that Dell is now the number one server vendor in North America and in China.
Nor does Dell appear to view the original development manufacturers (ODMs) such as Quanta to be a threat to its own business.
Dell believes its server growth in the high performance computer (HPC) sector is boosting its revenues worldwide.
Open source vendors don’t bother Dell either, said Gorakhpurwalla.
Taiwan accounts for 81.6 percent of the notebooks that ship worldwide and it appears that the downward trend of sales will continue throughout this year.
The prediction comes in the wake of results from CPU manufacturers Intel and AMD this week, and certainly means that other component suppliers are feeling the squeeze.
Digitimes Research (DR) predicts that over 32 million notebooks will ship during the third calendar quarter – that’s down by 12.2 percent on the same calendar quarter last year.
The third quarter was traditionally a buoyant period for notebook sales, but that pattern seems to have been disrupted.
DR said that of the 32 million shipping, HP will be the biggest customer responsible for a quarter of shipments, Dell 17 percent, Apple 14.3 percent, Asustek 11.2 percent, Acer 10.9 percent, Lenovo 10.6 percent and Toshiba 4.4 percent.
The biggest original design manufacturer (ODM) will be Quanta, then Compal, Wistron, Pegatron and Inventec. Of these, Quanta and Compal have 32.8 percent and 31.9 percent of the ODM market, said Digitimes Research.
If you’re a client, you need a server and if you’ve a server you need storage and an Ethernet switch too. Combined, this is called IT infrastructure and a report said that cloud infrastructure grew by 26 percent in the first quarter of this year.
With net revenues of $6.3 billion in the first quarter, for both public and private cloud IT services, this is the second highest growth in the five quarters market research company since IDC started tracking the sector.
Cloud infrastructure accounted for 30 percent of overall IT infrastructure spending in the quarter, IDC said, outstripping the growth of the whole sector and showing that data workloads were shifting to cloud based systems.
The winning vendors in the first quarter were HP, Dell, Cisco, EMC, Netapp and Lenovo. But if you count original device manufacturers such as Quanta, they outstripped the traditional winners in the sector and held 28.8 percent of market share in the quarter.
ODMs supply their servers directly, bypassing the routes to market and offering a significant price premium over the HPs and Dells of this server world.
We’ve seen recently that companies that specialise in making notebooks for others – so called original design manufacturers (ODMs) – have been cautious about the outlook for the future.
Last week, Taiwanese ODM Quanta said it didn’t expect anything great from notebook sales. It has diversified its business to sell servers direct and to manufacture watces for Apple.
And today, another major Taiwanese ODM, Wiston, said it didn’t expect a lot of growth in the notebook market in the second half of this year.
According to a report in Digitimes, Wistron saw a precipitous drop in notebook shipments in the first half of this year, and the second half looks little better.
Like Quanta, Wistron is hoping to diversify its business by manufacturing other electronic devices and elements.
The writing has been on the wall for X86 notebooks for quite a few quarters now, and it looks like the era of the Windows Intel duopoly is more or less over and done.
Quanta Computer is a Taiwanese original development manufacturer (ODM) and its business grew on the back of it making notebook PCs for manufacturers.
But recently it has diversified, and as well as making servers that it ships direct to selected customers, it’s also making the Apple Watch.
It’s the sole manufacturer so far, and told the Digitimes wire that it expected a large growth in shipments of the watches in the second half of this year.
It also discounted rumours that other manufacturers were being lined up to second source Apple Watch production, but that could well happen if the device becomes as popular as the company hopes.
Digitimes thinks that as many as 40 million watches could ship this year, but other sources are far less buoyant about its future.
Quanta turned in $2.49 billion in revenues during the month of May, much of that not based on notebook PCs but on its diversified ranges.
Giant Taiwanese original design manufacturer (ODM) Quanta doesn’t see sales of notebooks in 2015 being anything other than flat.
Quanta is one of three or four manufacturers who build notebooks for the so-called “white box” market and for multinationals which rebrand them under their own name.
Recently, Quanta has diversified into selling X86 servers direct to large companies building data centres.
But, according to a report in the Taipei Times, while business is brisk in some sectors, it will ship the same number of notebooks this year but they’ll be low priced notebooks rather than margin rich high end machines.
Quanta’s other business lines including making watches and 12-inch Macbooks for Cupertino-based outfit Apple.
It is investigating making wearable tech but is also diversifying into other sectors including the internet of things and cloud computing technologies, as well as the automotive sector.
Quanta is considering establishing a manufacturing base in India, in another sign that all is not well for electronics outfits operating looking behind the Bamboo Curtain to provide them with cheap labour.
Quanta vice-chairman C.C. Leung said the company was gathering materials for evaluation and looking into it.
Quanta’s rival Hon Hai Precision Industry, announced that it was investing billions of dollars into establishing 10 to 12 facilities in India by 2020.
Prime Minister Narendra Modi has sought to reboot manufacturing to boost growth and employment but it is yet to rival China, particularly in technology where most factories will likely be assembly units.
Leung said the company has no specific investment plans at present. He said that there are a number of considerations that must be taken into account when evaluating India’s suitability for manufacturing.
It depends on convenient transportation and access to ports and getting the whole tech supply chain working.
The company said that its PC shipment volume and revenue contribution from PCs should remain about the same this year as last year, despite a 6.2 percent drop in shipments industry-wide predicted by market watchers IDC.
Figures for the first quarter of this year show that factory revenue from enterprise storage systems worldwide rose by 6.8 percent, quarter on quarter, year on year, to stand at $8.8 billion.
IDC said that total capacity shipments rose 41.1 percent year on year to stand at 28.3 exabytes. An exabyte is one quintillion bytes, or one billion gigabytes (GB).
IDC said that spending on “traditional” external arrays fell during the quarter but demand for server based storage and hyperscale infrastructure rose strongly.
EMC help the pole position in the storage rat pack, collecting 17.4 percent of all spending in the quarter. HP was second with a 14.6 percent share, while Dell had 10.2 percent share.
But original design manufacturers (ODMs), such as Taiwanese firms like Quanta selling directly to data centre customers was 12.6 percent during the quarter.
As far as external disk storage systems are concerned, EMC was the clear leader (27.3%), followed by Netapp (13.6%), and HP and Hitachi holding 9.1 percent and nine percent share of worldwide revenues.