As many as 20 cloud titans that order servers by the container load are fixed in HP's server team's sights – as a joint venture between contract manufacturer Foxconn and the PC giant begins.
The duo's alliance was forged last week: the aim is to give HP a better shot at competing against Taiwanese assembly lines that churn out server farms to order for the likes of Google.
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It's estimated these original device manufacturers (ODMs) in the Far East are responsible for roughly 15 per cent of global server shipments, and about six per cent of revenues, according to IDC, which now breaks out these white-box builders as a standalone segment.
Quanta Computer, Compal Electronics, Wistron and other ODMs have a stranglehold on the cloud service provider market, accounting for some 80 per cent of shipments stateside.
He said HP tried flogging its Scalable systems – designed for enterprises – to cloud service providers, but those customers didn't require various features in the computers, such as on-board management and power redundancy. The web goliaths prefer to spec their own lightweight machines and get the custom kit built by ODMs.
"The service providers at the top end see no value in that [unnecessary] technology," Stephen told The Channel.
Architecturally, the cloud giants can (in theory) "absorb" a failure from one to 50 racks without service disruption due to the scale of their deployments and build hardware resilience at the rack level, the HP veep said.
"This deal with Foxconn gives us the ability to capture some demand with the right products at the right cost in a faster way than we could, and at a scale most of our enterprise customers can't comprehend," Stephen added.
"Unless you can address the SP [cloud service provider] opportunity in volumes and without losing money, it is a fairly significant threat to the traditional vendors over the next three to five years."
Tier-one cloud companies use hundreds of thousands of servers, "consuming computers effectively by the container because that's the most efficient way to move computers in and out of the environment".
If machines cranked out by the HP-Foxconn joint-venture tickle the big-name SPs, and wrestle them from the jaws of the ODMs, the next step will be to tout kit to tier-two and three clouds.
"This is very important for Europe because most of our service providers there are tier-two and three," said Stephen.
This is where the distribution channel enters the fray: half of HP's tier two and three server business in Europe is transacted by partners who reach corners HP's direct sales teams cannot.
The mega data-centre customers don't want to "additional bells and whistles" that large enterprises are looking for, agreed Giorgio Nebuloni, IDC server research manager.
"This agreement with Foxconn gives [HP] a grip on the market to compete on price and customisation," he told us. "SPs want raw power delivered at a price point in huge volumes."
In Europe, local service providers held about 10 per cent of shipments in Q4 2014, the IDC man said, but whether annual growth rates of 40 to 50 per cent can be maintained is questionable. ®