Who are the world's biggest server sellers? No one really knows.
Venerable research firms like IDC and Gartner will tell you that the server game is dominated by familiar names like IBM, Dell, HP, Cisco, and Fujitsu, but the truth is a bit more complicated. You see, the giants of the internet -- the companies that need more servers than anyone -- are buying massive amounts of custom-built gear straight from manufacturers in Asia, and they prefer to keep the specifics under wraps. This includes Google and Amazon and others.
Mike Yang is a vice president and general manager at Quanta Computer, one of the Asian manufacturers supplying gear to such web giants, and even he even he doesn't know where the company ranks on the list of the world's biggest server sellers. But he will tell you that numbers from IDC and Gartner don't includes Quanta's direct sales to the giants of the web -- and that these sales are very much on the rise.
In 2012, Yang tells us, Quanta built 1.2 million server motherboards, up 19 percent from the previous year, and most of that growth came from direct sales to the likes of Facebook. In the past, Quanta was strictly an ODM, or original design manufacturer, that build machines on behalf of companies like Dell and HP (the OEMs, or original equipment manufacturers). But the Taiwanese company has transformed itself in recent years, cutting out the middle men and going straight to the big-name buyers.
In 2011, thirty-four percent of its revenue came from direct sales to web outfits, and last year, that figure grew to 65 percent.
"Let's say you run a big restaurant, and inside this restaurant you serve Japanese food and you serve steak," Yang says. "If you figure out there are a lot more people interested in steak, you enlarge the size of your steak house - and the Japanese portion gets smaller."
Quanta is at the heart of a trend that's remaking the worldwide server game. The big web giants have gone straight to Asia in an effort to slice the cost of operating their massive data centers, and other companies are following, including the likes of Rackspace and Goldman Sachs.
This change is bigger than many realize. As Intel's Diane Bryant told us this past fall, Google is "something like number five" on the list of companies purchasing server processors from the chip giant. Google buys its chips directly from companies like Intel and then contracts with manufacturers in Asia to build its machines. Intel is the largest chip maker on the planet. So, in all likelihood, the number of machines going into Google data centers outstrips those being sold by all but four of the world's server vendors.
Mike Yang declines to identify all of Quanta's big-name web customers. He'll merely confirm that the company works with Facebook and Rackspace, two outfits that have shared their server designs as part of the Open Compute Project, a Facebook led effort to open up this shadow server market. But he will say that the company will soon open an office in Seattle, not far from both Amazon and Microsoft. Currently, the Taiwanese company has multiple offices in Silicon Valley.
From these offices, Quanta is driving the sale of servers, but also data storage gear and network switches. You see, the entire hardware world is changing. The giants of the web have built a whole new supply chain -- and now others can use it.
