Served Up

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 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.