- The global chip shortage has big companies like Dell & HPE seeing delays of 3-9 months.
- Customers are searching for alternatives to Dell and HPE due to them prioritizing high ticket and returning customers.
- Due to the war in Ukraine and Covid-19, supply chain shortages are likely to lead to further uncertainty and delays.
As the world searches for light at the end of the COVID-19 tunnel, leading information technology companies are working to overcome the shortage of critical supply chain components for servers, storage and networking products. The global silicon shortage has been affecting supply chains for some time, but now the pain is being felt for critical data center components, slowing or postponing many IT projects from lack of available hardware.
The state of the IT infrastructure market:
Demand for products utilizing chips far outweighs the supply, hardware shortages could continue in the coming years. Despite the fact that chip production has increased slightly in recent months, most analysts predict that chips, and other crucial components for data center infrastructure will still be experiencing widespread shortage in the coming years. This problem has also been exasperated by the continuing trends of employees pushing to work from home. Now companies are working to not only supply their base offices, but also their ever-growing remote workforce.
And you don’t have to take our word for it, here’s what Jeff Clarke, the Chief Operating Officer (COO) of Dell had to say about during the company’s recent earnings call,
“We are still experiencing shortages of integrated circuits across a wide range of devices, including network controllers and micro controllers that go into our products and solutions. The result we are seeing an impact across client systems, servers and storage“
Increasing demand from consumers combined with an industry-wide squeeze on supply chains has resulted in much longer procurement times – especially for custom, or high-end server builds. To make matters worse, CEO of Dell Technologies, Michael Dell recently said the following, which confirmed the suspicion of many in the industry that OEM’s are now playing favorites by tying fulfillment times to order size:
“Right now, certainly there is generally more demand than supply, and technology investments are highly prioritized by companies as it relates to their spending”
Who’s being hit the hardest:
Supply chain problems in the IT infrastructure space are widespread. Even the most optimistic forecasts have the current shortage of chips and other server and networking-related hardware here to stay for at least the next couple of years. And while many think that the problem will be most acutely felt by the largest data center operators, it’s actually the small and medium-sized purchasers that will be hit the hardest.
Any company or individual that is trying to make somewhat smaller purchases from one of the big OEM’s will undoubtedly be subject to slow fulfillment times, or outright canceled orders. Those companies simply don’t have purchasing power to move their order to the front of the line. As it stands today, most orders for custom-configured servers, or higher-end networking equipment from Dell or HPE could see delays of anywhere from 3-9 months.
What can be done?
Understandably, for the first time in a long time, many of these smaller purchasers who are subject to long delays are starting to look beyond the OEM, but what options do they have? For starters, many infrastructure managers are working harder than ever to ensure that their equipment lasts and is being used as efficiently as possible. That being said, even the most efficient usage won’t prevent the inevitable need that eventually new hardware will be required. Another option is to look to the secondary market for IT infrastructure hardware.
IT managers are implementing more and more contingency plans to source and maintain core data center and network infrastructure resources. More and more companies are now relying on used and refurbished parts and equipment. Trust in resale businesses for new and refurbished products is growing and many find themselves turning away from the big box names of Dell and HPE, who are currently prioritizing the needs of long-term customers over that of new (and often smaller) clients. Both Dell and HPE are having to deal with a much higher rate of unhappy customers because of the delays, and also due to watching the bigger names “cut in line,” so to speak. The smaller companies that cannot compete with these huge orders are now looking for alternative solutions, like turning to trusted third-party service providers.
For the foreseeable future, the devastating war in Ukraine and the resurgence of the Covid-19 pandemic are likely to lead to further uncertainty and supply disruptions. Because of this, many companies are moving beyond attempting to purchase through the Dell and HPE sites and searching for reliable companies offering refurbished products with reasonable turnaround times. If you were to ask any CEO to name the most significant impact of Covid-19 on their IT ownership, the answer would be continued delays in hardware shipments due to a global shortage of semiconductor chips.
SourceTech Systems has been supplying high quality, new and refurbished servers and storage equipment long before this crisis began. They understand the need for a fast turnaround time without sacrificing usability and quality. Moreover, they understand that at the end of the day, customers want pricing that fits in their budget. For over 30 years, SourceTech Systems has done this, and more, to ensure that customers remain a priority, regardless of the volume of the order. Each product they carry has been rigorously tested to ensure that customers receive exactly what they expect. All purchases carry a free 24 month warranty as SourceTech’s quality guarantee. Whether you’re here to learn, ask a question or place an order, they’ll go out of their way to exceed expectations with every interaction.