Dear Paul:
So does mine. Most of the companies I work for were either manufacturers of systems (hardware end) or VARs (making turn key servers). I worked for companies either #1 or #2 in their business segment. Most VARs sell you hardware at retail prices because it includes specifing them, putting them together, testing them, installing them into a customers site, testing them again and ongoing support for the first few years. The hardware portion includes all but some of the last. The software portion is where they make most of the "gravy" (profits).
The hardware manufacturers price all of their overhead into the price of the hardware. Most of the low level support software (drivers, firmware, utilities, diagnostics, etc.) are given away (free). The bill of materials and their associated costs are about 25% of the final retail price. Large orders reduce the administration and marketing costs and thus are given a break. For telephony boards, the major fraction of those component costs are in the switching chip sets. The embedded CPU chip is less than 2% of the component costs. Most of the telephony servers use SBCs and the CPU is either a Celeron or a P2. They sell to us for $3-4K each and the CPU probably costs them less than $50. Add $1-2K for the chassis, PS, and backplane, and you get less than 1%. This is typical of this end of the market. And IDC calls this what? A server? they typically ship out with 4 to 5 telephony boards at $1-4K each (depending on the generation and capability). The "CPU" chip thus is less than 1% of the total server cost. Many high end servers are built the same way, fully modular.
Since only Intel knows exactly how many of their processors are Xeons (they do not tell us shareholders the split but, AMD does to a point), it is very hard to put a number on how many servers contain Xeons and how many contain Celerons, P3s or smaller. I suspect that much of their unit share is not Xeons but, the smaller less expensive ones. Thus, it could be that IDC's server market overlaps the PC desktop market to a large extent. Do you know otherwise?
Pete |
