Systems Builder Achieves 30% Annual Sales Growth With OEM Deal
This systems builder won a high-volume OEM deal with a WDS (Wide Area Data Services) manufacturer by doing more than just building computers.
AMAX Information Technologies is a custom computer system integration company focused on delivering computing solutions to OEMs. Its solutions include industrial computers, high-performance file server clusters, rack-optimized and pedestal servers, small form factor computers, storage subsystems, and graphics workstations. However, AMAX is doing more than just providing high performance computing systems — it's providing extras — extras that other systems builders should take note of.
At the core of AMAX' systems are components provided by Supermicro Computer, a manufacturer of high-performance computers and components. Supermicro components are a key to AMAX' custom system manufacturing. However, in the case of a WDS appliance manufacturer, it was a combination of AMAX' OEM design, quality assurance, and logistical support that resulted in four years of high-volume sales for AMAX.
The customer was a start-up that AMAX and Supermicro began working closely with in 2003. The customer started small but continued shipping greater quantities of rack-optimized, appliance-based file servers to customers with distributed offices worldwide. Now, as a publicly traded vendor, it works closely with AMAX and Supermicro to ship thousands of units per month.
"We knew we could build the systems to handle the technical requirements of the customer," explains Jean Shih, president of AMAX. "We differentiated our company from the competition by providing more than just hardware. We worked with the customer from the initial consultation to design the system prototypes, provided several prototypes for testing, made modifications to those prototypes, and sent systems to various agencies [e.g. Underwriters Laboratories] for certification. Once we secured the business, we provided mass production, inventory management, and worldwide logistics management."
Do More Than Build Fast Systems
As with any systems builder, AMAX must provide systems to meet the demands of the OEM. However, it is the turnkey nature of the products and services provided by AMAX that provide real value-add for this customer. By providing inventory management and worldwide logistics management services for the OEM, AMAX became more than just a component provider. The logistics support includes managing inventory levels and shipping customized systems to the OEM's locations all over the world. AMAX even provides support for the OEM — handling product returns directly from end users customer, without involvement of the OEM.
The systems for this OEM use Supermicro 933 Series chassis with 15 hot-swap drives in a 3U form factor. The end user cost for these systems range from $9,000 to $50,000 depending on the configuration. Since the relationship began in 2003, the volume of systems that AMAX builds for this customer has increased an average of 30% each year. Every two years, the customer engineers a complete product refresh, providing more sales opportunities for AMAX.
To win this sale, AMAX demonstrated it could more cost-effectively build the systems than the OEM could. AMAX already employs hardware engineers and has the supply chain relationships in place to perform CM (contract manufacturing). In the case of the WDS OEM, the sales process involved many visits to each others' locations, meetings with engineers of both companies and Supermicro, providing prototypes, and many consultation sessions. "We allow the OEM to concentrate on marketing and selling its intellectual property instead of being a systems builder," adds Shih.
During the CM process, AMAX customizes its offerings down to screening the OEM's name on the product. Tier-one computer manufacturers often do not have the ability to change manufacturing processes quickly to customize systems, providing a competitive advantage for AMAX. To provide this type of customization flexibility, AMAX employs 175 people and has a custom manufacturing facility and a warehouse. Margins are thin on hardware, so it is value propositions such as logistics support and inventory management that help AMAX increase margins in a very competitive market. At $100 million in sales and projected sales growth of 30% in 2007, AMAX is a company that is proving there are still plenty of good opportunities for systems builders and integrators.