An original-design manufacturer develops, designs and manufactures a product or components for a second company, which in turn resells the product under the second company’s brand name. In the computer industry, many foreign companies that had built personal computers and their components designed by American firms are now designing their own computer network servers sold under common brand names.
From OEMs to ODMs
Electronic and computer companies have regularly turned to foreign original-equipment manufacturers for components, particularly Taiwanese companies, according to Joyeur, the company blog for the service and cloud-software provider Joyent. But as the companies became more experienced, they began designing their own components and marketing themselves as ODM sources.
Turning to Servers
The personal-computer industry has commonly outsourced PCs to ODMs. ODMs, however, had narrow profits margins and limited growth despite dominating the market by providing nearly 84 percent of notebook computers, according to a 2007 study by the iSuppli Corp. Jeffrey Wu of iSuppli wrote on the EMSNow website that the standardized and modularized architecture of notebook PC has kept profits low, prompting these ODMs to diversify by moving into server design and manufacturing.
Role of Servers
While retail computing centers on the personal computer, the server is the hardware system that networks computers together in business intranets and is essential for the Internet. Servers are major components of data centers.
Use of ODMs
When Facebook posted detailed information about its data centers in 2011, the social networking company cited several ODMs as providing servers and data storage equipment, including Synnex, Quanta, Delta and Inventec. Joyeur described Inventec of Taiwan as the “biggest ODM and one of the top four notebook makers worldwide.” The blog states these companies earn $20 to 60 billion per year.
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