The global growth in the number of data centres, and the corresponding growth in the manufacturing of servers, could provide opportunities for robot makers
The electrical and electronics sector is one of the fastest-growing markets for the industrial robotics and automation industry.
The sector bought almost as many industrial robots as did the automotive sector, traditionally the biggest buyer of industrial robots.
This is partly confirmed by new data and analysis by the International Federation of Robotics, but mostly, it can be gleaned from anecdotal evidence all around.
In its latest report, the IFR highlights the electrical and electronics sector in South Korea, where 41,400 industrial robots were sold in 2016.
That is an increase of 8 per cent compared with the previous year.
Elsewhere around the world, the electronics industry is seeing unprecedented growth.
Devices such as smartphones, tablet computers and home automation equipment are among the items consumers are buying in their millions in countries the world over.
Not only that, but the automotive sector, which has always been and still is the largest buyer of industrial robots, is integrating more and more electronics into the vehicles it produces.
Long before fully autonomous cars take to the roads, vehicles with more connectivity and advanced driver assistance systems are already clocking up thousands and thousands of miles – all using significantly more electronics than they ever did before.
And then there’s the computer industry.
While mobile computing – smartphones, tablets and so on – may have taken a huge chunk out of the desktop computer market over the past few years, all segments are still going strong.
In particular, the server market is seeing the type of growth and diversification which could provide many opportunities for robotics and automation companies.
Whereas before, servers and other computers required more human workers because of their often intricate assembly processes, now, a new generation of collaborative robots is able to assist in many tasks, or even take over many of them.
Overall, the global market for servers is estimated to be worth $16 billion a quarter.
That’s the figure research company IDC arrived at in calculating total server shipments in the second quarter of 2017.
What’s particularly interesting about the server market is that not only is it growing at a reasonably healthy rate, but it’s also becoming more diverse.
So, whereas in the past, there were just a few companies which dominated the market, supplying the overwhelming majority of server units, now there are many new companies entering the market.
The big companies, the brand names, are still in the lead, but a look at the list IDC produced makes for interesting reading.
Worldwide server vendor revenue, second quarter of 2017
- HPE / New H3C Group – $3.3 billion
- Dell – $2.7 billion
- IBM – $1 billion
- Cisco – $875 million
- Lenovo – $834 million
- ODM – $3.5 billion
- Others – $3.2 billion
Hewlett-Packard Enterprises has held the top spot for some time, and the other recognised brand names – Dell, IBM, Cisco, and Lenovo – have also held their top-five status as long as such lists have been produced.
But what’s interesting is the sixth and seventh categories – ODM, which stands for original design manufacturers, and others.
A closer look at the revenues generated by ODM and others shows that the total is almost as much as the top five combined – $6.7 billion compared with $8.7 billion.
Still a significant gap, but what’s even more significant is that the ODM category on its own generated more revenue than HPE.
This is the first time that this has happened, and means that the lesser brands – the so-called “white box” suppliers – are beginning to have the impact on the market many expert observers had been predicting.
One of the main reasons for the rise of ODMs is the growth of hyperscale data centres, which are designed and built differently.
Kuba Stolarski, research director, computing platforms at IDC, says: “Hyperscalers as a group made a large deployment push in the second quarter led by Amazon, which alone accounted for more than 10 per cent of server units shipped in the quarter.
“As hyperscalers tend to lead the market on most architectural updates, we expect the rest of the market to catch up over the next several quarters.
“As the market cycles through this refresh, we are seeing changes in vendor portfolios with new modular system designs and a greater focus on accelerator technologies, as well as the continued evolution of the role of cloud services in corporate IT.”
The technological ecosystem is increasingly suitable for white box suppliers because things are becoming more modular, so different equipment from different suppliers can be integrated into one system.
Also, there is a global trend towards software-defined everything – software-defined networks, software-defined data centres and so on.
What this means is that open-source protocols are enabling different devices from different companies to exchange data without any problems.
This was not always possible in the past, when if you bought a brand-name piece of equipment, it would be difficult to make it work with equipment from a different brand-name product, because they each may have had proprietary software and networking protocols, unique to the company.
Not only that, brand-name products are significantly more expensive than those supplied by the so-called white-box companies.
It’s probably unfair to call them white-box companies, since they are not entirely anonymous – they, too, have names and business operations.
In fact, some of them are well known. For example, Foxconn, the contract manufacturer which makes Apple’s iPhones and iPads and so on.
Foxconn also makes server computers for HP and Dell, among others, including itself.
Super Micro is another company which is doing good business in the server market. So, too, is Quanta.
Inspur is another company worth mentioning, since it’s been ranked number four in the world in one server category by Gartner.
In its commentary, Gartner’s research vice president Jeffrey Hewitt notes: “The second quarter of 2017 produced some growth compared with the first quarter on a global level, with varying regional results.
“The growth for the quarter is attributable to two main factors.
“The first is strong regional performance in Asia/Pacific because of data center infrastructure build-outs, mostly in China.
“The second is ongoing hyperscale data center growth that is exhibited in the self-build / ODM (original design manufacturer) segment.”
Many of these companies are expanding their manufacturing operations to meet the growing demand for servers from the ever-growing number of data centres and hyperscale data centres.
Foxconn, for example, is doubling its server manufacturing capacity in China, according to a report on Nikkei.com.
And it certainly won’t be the only one doing so over the next year or two, since the server market is predicted to continue growing at around 10 per cent a year.
With new types of servers being developed – specifically for artificial intelligence and machine learning, both of which will be required for industrial robots and autonomous car technologies – the market will grow further and further diversify.
And at least some of that growth will benefit the so-called “white box” suppliers.
Additionally, there are the hundreds, or thousands, of startups looking to design and manufacture their own electrical and electronic devices for launch, providing yet more opportunities for industrial robot makers, particularly those with collaborative robots to offer.
