Facebook taps Asian companies for low-cost storage gear

The social-network is reportedly sidestepping traditional IT suppliers by using low-cost manufacturers for some of its storage gear to save on money and help it scale.
Written by Jack Clark, Contributor

Facebook's divorce from traditional IT companies has taken another step with the news that the social network is going straight to Asian manufacturing companies for some of its storage gear.

The company has plans to out-source the manufacturer of some of its storage products to Taiwan-based original device manufacturers like Quanta Computer and Wistron, Digitimes reported on 2 January (subscription required).

Facebook told ZDNet in September that it uses Wistron subsidiary Wiwynn along with Quanta for the production of some of its stripped-down Open Compute servers, and hinted that storage would be next to be outsourced.

Put this together with the Digitimes report and it is possible that Quanta and Wistron could be bidding to manufacture Facebook's low-cost 'Open Vault' storage array.

By sidestepping traditional enterprise IT companies like HP, Dell and IBM, any sufficiently large company can get IT gear cheaper if they go straight to the production source. All of Google's servers and 30 percent of Amazon's are made by Asian companies, Digitimes reported.

This shift is already having serious repercussions for OEMs, with recent Gartner figures showing that over the past three years traditional server companies have had trouble preserving their market share by units shipped, while low-cost Asian manufacturers have dramatically grown theirs

But as with any commoditised business, much of the money to be made in servers and storage is in software, rather than hardware. For this reason major OEMs like IBM still take the lion's share of revenues by using their hardware as a Trojan horse for huge families of lucrative software.

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