The trend toward “do it yourself” servers among the major Internet and social media companies reinforces the end-customer’s position at the top of the electronics supply chain.
Google, Facebook and other major dot.com companies are migrating away from off-the-shelf equipment in favor of custom-designed and built machines that better meet their specific needs. While the trend — custom-built servers now make up 20% of the US server market, according to a recent report by research firm Gartner — isn’t completely new, it is now affecting the bottom lines of H-P, Dell and other OEMs that live in that space.
Moreover, Google and Facebook are employing large numbers of hardware designers, once again taking the top talent away from the manufacturing floor (the companies then outsource the actual product build). It could also change the services model: Will repair be performed by the major EMS companies, or by local or even internal specialists?
I suspect the major server makers will try to adapt their product lines, but the question remains whether the Googles of the world will let them far enough through the door to get a good feel for the technology needs, or whether the major dot.coms become mini-Apples in which paranoia trumps partnering.
Various Wall Street sources are reporting today that the world’s second largest electronics company will spin off its PC unit in order to concentrate on servers and services. If true, it marks the end to an extraordinary era — one that saw H-P race neck-and-neck for years with IBM and Digital Equipment in the mainframe space, then after falling behind Dell in PCs, snatch up Compaq in a move that was generally panned but turned out to be a masterstroke.
Still, over the past several years PCs became an ever lower-margin business filled with low-cost competitors. Moreover, the emergence of shared-server computing — aka, “the cloud” — posed a threat to those who poured resources into branded laptops and desktops.
It says here this move is H-P’s way of saying that it, too, believes cloud computing is the future, and the money to be made will come from selling the heavy-duty hardware, not billions of “dummy” terminals that are hooked in to it.
Apple, one of the larger customers for the site, released a statement that was at once nonjudgmental and noncommittal. In it, the iPad maker had this to say: “We are deeply saddened by the tragedy at Foxconn’s plant in Chengdu, and our hearts go out to the victims and their families. We are working closely with Foxconn to understand what caused this terrible event.”
For a company that takes incredible umbrage at the slightest hint of disclosure, I suppose it would be asking too much for it to reveal any hint of emotion now. But Apple has long shown itself to be disinterested in the ugly goings-on at its largest supplier. Report after report has ripped Foxconn for worker abuses ranging from environmental conditions to overtime and penalties for mistakes generally associated with penal colonies.
Other major Foxconn customers, such as H-P, Dell and Motorola, generally have avoided the scrutiny that Apple gets, but that doesn’t — or shouldn’t — make them any less culpable. It’s a convenient excuse to hide behind the veil of outsourcing as a means to ignore what goes on inside your supplier’s factories.
To me, it’s corporate-sanctioned cannibalism. We are supposed to be better than that.
These days, environmental regulations are changing the rules of the game in terms of how things are made, sourced and distributed in manufacturing and supply chains. The rules define the product and the process. More so than ever before.
Green Chemistry might be the sleeper key to compliance
Regulations make the brand? Regulations such as REACH, RoHS, “China RoHS,” “China REACH” and WEEE have huge impact on finished goods as they move through a supply network. The impact of regulation is felt in all stages:
waste procedures and
This is true in aerospace, automotive, packaging — but especially true in electronics, ever more so as the electronics industry becomes increasingly plastic-oriented.
We’re talking about products increasingly defined and designed by environmental interests.
Electronic paper. Of course, late last week the electronics industry became paper-based, or paper-esque shall we say (origami telephones, anyone?) when BBC London announced the debut of the paper cell phone. Yes, you read that right. It’s a cell phone made of electronic paper. You could make an airplane out of it and try to get your friend’s attention — rather than call.
Increasingly we see more regulations and faster creation to disposal cycles. So how can the electronics industry cope?
E is for Electronics, Environmental, and EHS. Regulations are usually either strictly Environmental regulations or Environmental, Health & Safety (EHS). Categories of regulations in electronics manufacturing and supply include:
The last one, air quality, is a hot topic right now but is no more important than toxic chemicals, end-of-life or fire safety in electronics manufacturing. Air quality typically comes down to Hazardous Air Pollutants (HAPs). HAPs as a class cause serious environmental fall out. HAPs include:
volatile organic compounds (VOCs)
hazardous air pollutants.
Green chemistry might be key. Action to reduce emissions can be done either by converting the waste itself or by using cleaner ingredients to begin with. The latter is at the heart of green chemistry. Green chemistry in fact addresses most environmental regulatory concerns: the greener the chemistry, the fewer the environmental regulatory concerns.
To find out about Green Chemistry without the struggle of navigating the California.gov web site, try GC3 or Green Chemistry Council out of University of Massachusetts-Lowell. Under the “Publications” section there are some helpful documents, including case studies by big companies like HP and Seagate who are seeking environmental regulatory compliance worldwide through greener chemistry. Read up, go green, and as always: track, track, track your data.
Because it’s critical to be compliant, it becomes key to be green. Remember: there is no substitute for year-over-year tracking data for demonstrating to shareholders just how green you’ve been.
Green Chemistry image (top) courtesy of Actio Corporation Communications, used by permission.