Solution Providers: Memory, SSD Shortages And Price Hikes Mean 'Double Trouble For All Of Us'

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Solution providers say they're losing deals, worrying over bloated backlogs and seeing revenue, profitability and cash flows impacted by the shortage of memory and SSDs currently gripping the hardware market.

Dell Technologies said recently that it would raise PC and server prices as a result of the component shortages and commensurate cost increases. Solution providers tell CRN vendors across the board have raised, or have told partners they intend to raise prices between 5 and 10 percent.

The shortages, along with rising prices, are wreaking havoc on solution providers, whose customers deploy technology on predetermined, often strict, schedules.

[Related: Dell Technologies Raising Systems Prices In Face Of Deepening Memory, SSD Shortages]

"It's bad news," said Stephen Monteros, senior vice president at Sigmanet, an Ontario, Calif.-based solution provider that works with several major vendors. "Customers have timed their deployments on very tight windows, and [shortages] combined with price increases means double trouble for all of us."

"We're seeking any and all alternatives because we've lost deals," said Dan Serpico, CEO of San Francisco-based FusionStorm, No. 46 on the CRN Solution Provider 500 ranking. "The customers can't wait. We're seeing instances where customers have opted to go to Supermicro or somebody else because of delays in the Dell EMC supply chain, and we've also seen Dell EMC do some extraordinary things for us, too, but they needed to do something extraordinary because of the impact of the problem."

"The delay impacts our revenue, our ability to ship," Serpico said. "Our backlog is higher than normal right now because stuff is on a longer timeframe than we would expect. It impacts our cash flow, our profitability. You can't really move your costs, so we're going to see price increases."

Dell EMC CFO Tom Sweet told Wall Street analysts recently that the company expects memory and SSD shortages to persist for the remainder of the year. Since late last year, memory prices have doubled and SSD prices have increased 20 percent, Sweet said.

Dell EMC's estimate for the duration of the shortages is in line with HPE's. HPE CFO Tim Stonesifer told investors early this month that the company has seen similarly dramatic memory price increases and made "global price increases" with mixed results, especially in the U.S., where it competition from rivals like Dell EMC is most intense.

The SSD market, Stonesifer said, is particularly tight: "We're getting our fair share of supplies, but given the complexity of our broad product portfolio, we're finding it challenging to what we call demand shift."

Serpico said estimates that predict year-end relief may be somewhat optimistic. "We've heard it'll be no sooner than the end of the year, and we've heard the middle of next year," he said. "It's not promising."

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