2014, July 11

Here is my marketing analysis of the currently fifth biggest server manufacturer in the world, Chinese company Inspur (浪潮). The company had achieved record fourfold increase in server shipments from 20’000 units in 1Q2013 to 80’000 units in 1Q2014. It currently holds 3.4% of the world server market, in front of Japanese Fujitsu. (see Gartner’s report)

Inspur is gaining traction following the recent disputes between Chinese and US governments on the communication backdoors and unauthorized accesses. In the aftermath, Chinese ministry of finance persuaded several banks to participate in the trial use of domestic servers. Following the successful tests at China Construction Bank, other companies have started massively unmounting and scrapping equipment of American IT manufacturers and replacing it with Inspur infrastructure.

So, who is this company based in Jinan, and is their current marketing strategy I2I (IBM to Inspur) sustainable ?

Inspur has several business lines: Hardware, Software and Services.

Hardware business brought $700M in 2013, which is twofold increase from 2012. About 17% of the sales are coming from outside China. Hardware portfolio is very comprehensive and Inspur is the only company in China able to satisfy completely the needs of data centers. The products worth attention are the following:

Rack and blade low-end servers: Xeon CPU based machines that can be easily added to the existing server farms and virtualized with traditional VMware or Linux hypervisors. These are commodity machines and there is no reason that Inspur can’t make them to the industry standards. Apart from CPUs, all other components are home-made.
High-end servers (in their terminology – mainframe): Tiansuo K1. The main use case of Tiansuo K1 are mission critical workloads which require strong performance and high-availability. The heart of the system is Itanium 9500 CPU with maximum capacity of 32 CPUs and 4TB RAM. The system is fully redundant and the company claims the availability of 99.9994%, which is comparable to the best-in-class. The server can be divided into up to 8 logical partitions, and on top of them is Inspur K-UX Operating System, which is Unix 03 certified (one of five systems in the world). This OS comes in Unix and open-source Linux flavors. Here are the technical specs.
Supercomputer: Tianhe-2. With 33 petaflops, Tianhe 2 has been the world’s fastest supercomputer for two consecutive years, both in 2013 and 2014, twice as fast as second rated Cray’s Titan. This monster is consuming in total 24 megawatts of electricity and has in total 3’120’000 CPU cores working in parallel, run by Qilin Chinese version of Linux. It’s been used for the military purposes, and it was built jointly by the National Institute for Defense and Inspur scientists.
Storage systems: AS8000 and AS10000. These are high-end storage systems with expandable number of controllers from 2 to 32 for redundancy purposes. They feature many functionalities of its competitors: thin provisioning, data snapshots, and synchronous and asynchronous remote data replication. The rate of adoption of SSD drives in China is faster than in other markets, and Inspur storage systems can work with all storage tiers : SSD, FC and SATA disks. It comes with management software, but I think what is lacking is automatic tiering solution like EMC’s FAST.
I will add here other storage solutions: SAN switches FS5800 with 20 ports of 8/4 Gbps and VTL data backup system.

Talking about services business, let’s focus on data center and cloud.

Inspur maintains 39 cloud centers in the country. Their cloud computing offering includes IaaS, PaaS, but since Inspur software division develops ERP software and e-learning solutions, Software as a Service (SaaS) is particularly interesting since it allows advantages of complete vertical integration.
Traditional data center services – Inspur operates a network of 285 hosting centers in China. They included Beijing Olympics, Shanghai Expo and Guangzhou Asian games data centers. Among current customers are all major universities, state petrol companies and airlines.

Inspur has international presence in data centers of 44 countries in Africa, Russia, Middle Asia, and Latin America. They have recently opened five international business centers with aim of reaching markets such as India and Europe. Overall, their revenue is still much smaller of their competitors: only about 7% of IBM, but Inspur is currently in full expansion.

Conclusion

Briefly, Inspur is a company with strong potential, with broad and comprehensive portfolio, which, supported by the strong market and government push, is increasingly able to compete in the international arena. There is maybe long way for them to get acceptance in the West, but global and European cloud service providers should at consider testing their equipment.