Channel immaturity could hamper march of the ODMs

ODMs are beginning to cut OEMs out of the loop on servers, but a lack of channel experience could be their undoing, says Gartner

ODMs' efforts to displace the likes of HP and IBM as the server technology of choice among larger end users could be hampered by their lack of channel experience.

That's according to analyst Gartner, which has noticed that server ODMs are increasingly cutting their OEM partners out of the loop by targeting hyperscale datacentres and enterprise customers directly.

Gartner forecasts that sales of servers by ODMs directly to customers will account for 16 per cent of global x86 server shipments by 2018, amounting to $4.6bn (£2.8bn) revenue.

ODMs such as Quanta Computer and Wistron have traditionally designed and manufactured hardware, including servers, as specified and rebranded by OEM customers.

But ODMs' ability to produce servers at a cheaper cost than OEMs and customise them is increasing their appeal among "hyperscale" end users with large datacentre requirements. ODMs are also contemplating penetrating the enterprise market, Gartner said.

"ODM companies are rapidly changing their business model, as they are directly targeting hyperscale customers," said Naveen Mishra, research director at Gartner.

"These companies are expanding their business scope to also include enterprises in the near term."

Although the success of ODMs' direct forays is currently restricted to server technology, the trend could eventually spread into other technologies, especially storage, Gartner said.

Even for servers though, ODMs currently have limited appeal outside the smaller group of hyperscale companies, while their direct tactics are also putting a strain on their relations with OEMs, Gartner said.

A further stumbling block for OEMs is their limited investment in a support service ecosystem, coupled with their lack of knowledge of developing a channel, the analyst noted. This is a big disadvantage for them if they are aspiring to crack the large enterprise space, it said.

"Success in an enterprise account will also require an affinity with top-tier independent software vendors (ISVs), which most ODMs don't have today," Gartner added.