Original Designs

 

The ratio of original design manufacturing (ODM) is rising fast in the storage and server markets. Major data center operators are coping with the technical and cost limitations of products already on the market by means of ODM to create new business opportunities.

According to market research firm IDC Korea, ODM accounted for 11.5 percent of the global storage market in the second quarter of this year, to reach US$1.012 billion in size. The percentage jumped as much as 25.8 percent from a year ago, and amounted to close to 12 times the overall market growth rate.

In the past, ODM storage products had been supplied mainly to game and portal service providers requiring certain specifications. However, leading Internet service providers such as Google, Facebook, and Amazon Web Services began to adopt ODM from 2011 to accelerate the growth of the market.

In the second quarter of this year, ODM represented 43.8 percent, or 13.3 exabytes, of the global storage market in capacity. The rate of increase is astonishing, in that the share is still limited to 7 percent in the server market, where the use of ODM products started earlier.

Experts point out that ODM in the storage market will continue to grow as an alternative platform, because the demand for equipment customized for corporate services is on the rise, and more and more companies are looking to take out the features they do not need from universal equipment in order to save costs. Facebook and Google are currently expanding their open compute projects, and existing server and storage providers like HP and Dell are responding to market demand in cooperation with original design manufacturers such as Foxconn and Quanta System. In Korea, mobile carriers like SK Telecom and KT, and portals such as Naver are setting up self-designed server and storage systems, too.

Nevertheless, it is said that ODM will take at least some time to become the mainstream, in spite of rapid growth, because of its technical limitations and reliability. “Most companies are not capable of designing on their own yet, and ODM products in the storage market still focus on high capacity, high density, and low power,” an industry insider explained, adding, “These products are relatively less expensive and have their own limitations in increasing their market share in terms of sales.”

Copyright © BusinessKorea. Prohibited from unauthorized reproduction and redistribution