Systems Builders Fashion New Tech Niche

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In response, Nor-Tech developed a portable cluster on wheels. The 15u cluster is housed in a ruggedized, shock-mounted chassis and can operate up to 96 processor cores on just two 110VAC 20-amp circuits, or 52 cores on a single circuit--which also satisfied the researchers' limited power constraints.

Seeking out such niche markets and providing highly customized solutions is the path many systems builders are taking to drum up new sales, as many have struggled to compete in the custom white-box market against top-tier OEM vendors.

Nor-Tec's 15u portable cluster.

"It's how we're differentiating ourselves from the Dells and Hewlett-Packards of the world," says Todd Swank, vice president of marketing at Nor-Tech.

"You have to look for different niches," agrees Joe Stopski, vice president of business relations and development at Fusion Microsystems, a systems builder based in Centennial, Colo. "What we're really looking at is providing custom computing solutions for specific applications."

Fusion has developed custom systems for medical devices in hospitals, high-performance storage solutions and even digital signage in airports.

"Systems builders are moving up the stack in terms of what they're producing and providing," says Steve Dallman, general manager of Intel's worldwide reseller channel organization, Santa Clara, Calif. "They decided there's not a lot of value in just selling a generic desktop PC, which doesn't require a lot of customization. That particular customer just needs basic computing, and there's not a lot of margin or application support required."

Serving Up Opportunity
Servers are one area where many systems builders have migrated, with blade servers, in particular, becoming a more compelling market, as blade server sales are expected to reach $10 billion by 2009, according to market-research firm IDC.

"They've all moved into the server business in a very big way," Dallman says. "It's a growing phenomenon, and we're just at the beginning of what's a very dynamic ramp-up in servers to meet the unending computational demand. Whether it's Google or Microsoft adding server farms or SMBs increasing their productivity or Web presence, there's an insatiable demand for servers."

"We're just at the beginning of what's a very dynamic ramp-up in servers," says Intel's Steve Dallman.

And along with server sales come increased opportunities for higher-margin services and support, from break-fix to ongoing management.

"With servers, you get to sell a lot of different software, and it's more complicated in terms of technology. It's a big area for us to provide service and value to customers," says Jean Shih, president of AMAX Information Technologies, a large systems builder based in Fremont, Calif.

"Servers are more complicated, and the barrier of getting into the field is higher, but, in return, there's still a lot of competition compared to PCs. In the PC market, the first-tier companies like HP, Dell, IBM and Acer are doing well, so it doesn't leave much for white-box people to compete; the products are so standardized, there's not much value to add," Shih says.

The systems builder decided early to make the move upward from selling mainly white-box systems, and for the past five years has been moving more deeply into servers, storage and high-performance computing.

So far, the move has paid off handsomely for AMAX, which saw 30 percent to 40 percent growth from its server sales this year, and the company sees no sign of a slowdown in the coming year. In fact, it's expecting to get an even bigger boost as AMD rolls out its quad-core Barcelona chips for servers. Already, the systems builder is seeing demand in that space.

Along with the demand for servers comes an increased opportunity for systems builders to provide custom storage solutions.

"We expect to see more and more demand for storage and blade servers this year," adds James Huang, marketing manager at AMAX.

In addition, AMAX just joined Microsoft's certified program for Microsoft Windows Storage Server solution manufacturers, which includes larger vendors such as Dell, HP and CDW, and about a half-dozen other companies.

"This will really help us gain more market momentum in storage servers," Huang says.

NEXT: Tapping into storage.