10 Nov

Asian Manufacturing Trends Good for SMBs

Asian RegionIf you’re wondering when global manufacturing is going to shift its center of gravity to someplace in the world besides Asia, don’t hold your breath. While manufacturing can and does take place in other parts of the world and there are constant shifts in the product focus of any given geography, Asia is still the world’s factory. And China remains the dominant force.

Costs Rise, Growth Slows
Since the 2007-2008 recession, growth in the region has slowed somewhat, but it is far from stagnant. Industry Week believes growth has slowed from 5 percent CAGR prior to the recession to 1.5 to 2 percent CAGR looking forward from now through 2017. A variety of factors are keeping the lid on growth, which include:

  • Rising labor wages
  • Government efforts to update infrastruc­ture
  • Expiration of certain tax ben­efits
  • Efforts to impose stricter environmental regulations

What these all add up to are higher costs for OEMs and distributors. The dramatic increase in wages, coupled with rapid economic growth in coastal China, has pushed some manufacturers to look beyond the developed coastal regions around Shanghai. The increased cost of logistics for inland manufacturers is becoming more manageable as the infrastructure improves.

Asia as a Consumer
Ever since Asian countries became the world’s primary source of low cost manufacturing, we’ve seen images of poverty-stricken laborers in dangerous conditions working for peanuts. While this is often still the case in some industries of Southeast Asia, other industries (particularly the electronics manufacturing industry in China) have become the source of economic boom and a dramatic rise in the standard of living.

As a result, according to Industry Week, “Major markets such as China, Indonesia, Malaysia, Thailand and India are becoming significant consumers of industrial, commercial and consumer goods. Designing supply chains to consider both existing Western consumption and significant Asian consumption adds new dimensions of complexity to the decision-making process.” The flip side of which is opportunity.

Good News for SMBs
The industrialization and urbanization of the areas that surround the Asian manufacturing hubs has created an opportunity for Western companies to both manufacture and sell goods in Asia. Many OEMs have found that the barriers to smaller production – those generally under $5M – have been removed.

From a logistical perspective, the vast improvements in systems, processes, technology, and communications have made it much easier to do business in Asia. In addition, specialized brokers are helping smaller OEMs manage outsourced manufacturing and suppliers on the other side of the world.

Also, SMBs can now look at Asia as both a supplier and consumer, so it’s easier to justify a local presence that can both oversee manufacturing and sell into the local market at the same time. Eventually when local demand catches up with supply, the “world’s factory” may see some competition from countries that have been slower to modernize.
If you’re interested in learning more about manufacturing technology or market conditions, the Pacific Rim experts at Advance Micro Solutions are glad to speak with you. We can be reached here. (CTA)

07 Nov

The Ink Dries on Lenovo Acquisition of IBM x86 Servers

Lenovo Canada IBM System x3500 M4 7383EJU

Lenovo Canada IBM System x3500 M4 7383EJU

If you’ve been following Lenovo’s $2.1 billion acquisition of IBM’s x86 server business out of one eye the past several months, you may be surprised to learn that it wasn’t a done deal until very recently – Oct. 1, to be exact. Now that the regulators have all signed off and the ink is dry, the herculean effort of moving more than 7,500 IBMers – the entire X86 salesforce, the R&D facilities, and the manufacturing infrastructure – over to Lenovo has begun. And while this acquisition alters the IT industry playing field, existing IBM x86 SMB customers shouldn’t notice much difference.

An Acquisition Déjà Vu
If you’re the proud owner of an IBM System x product, there are a plethora of articles and blog posts that say you have nothing to worry about. Many insist that the transition is expected to be as seamless and transparent to the customer as the IBM ThinkPad acquisition in 2005. According to The Register: “Lenovo purchasing System x isn’t all that different than when they bought up IBM’s PC operations. The two markets have a lot in common.”
The acquisition puts Lenovo on the battlefield with global server powerhouses and channel giants Hewlett-Packard, Dell, and Cisco. According to PC World, Lenovo still has much ecosystem development work to do with software companies like Microsoft, Oracle and VMware. One could also argue that those relationships will all be part of the package, as they were with the ThinkPad acquisition.

What’s In, What’s Out
Insofar as the acquired offerings are concerned, nothing has changed since the deal was originally proposed back in January. Boxes that will now bear the Lenovo logo include:

  • System x racks and towers
  • x86 BladeCenter
  • x86 Flex System blade servers and integrated systems
  • Associated software, switching, and maintenance operations

Lenovo will get licenses to IBM’s GPFS (General Parallel File System), SmartCloud Entry package, System x management software, and the Platform Computing suite. Lenovo can OEM and resell these products (plus IBM’s Storwize and tape tech) or use them as components in their own solution bundles.

An SMB Dream Come True
This is all great news for SMBs, who can expect to see the price for the Lenovo x86 product line be commensurate with competing products from Dell, HP, Cisco, and other hardware vendors. According to The Register: “When it comes to x86 servers, IBM receives high marks for their x86 technology, performance, and reliability – but lower scores when it came to pricing and ease of doing business.” Those low scores should improve now that Lenovo is in charge.

Lenovo is also known for its commitment to the business partner channel, which has helped them become the world’s number one PC maker. After this week, Lenovo is now the third largest commodity x86 server maker behind HP and Dell. According to CRN: “IBM’s x86 business has always been the IBM red-headed step child compared to its mainframe business and software. At Lenovo it will be a flagship brand… the x86 team has a sense of renewed vigor. The x86 team is really pumped. They are getting a lot of attention and the budget they need to really make a difference in the market.”
To see how your company can take advantage of new Lenovo System X product line, reach out to an expert at Advance Micro Solutions today.