MSPs Will Need White-Box Services if They Are to Sleep at Night

Among the things that keep managed services providers up at night is this concept of hardware as a service.

But the sleepless nights have little to do with understanding the model, which is, after all, just a slight variant on the leasing model. The real concern is how to keep hardware service from eating away at the margin.

As anybody who provides a service knows, hardware support is fraught with issues that more often than not drive up the cost of supporting the customer, and all that support bites hard into the bottom line of the MSP.

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All that said, it seems inevitable that MSPs will be forced down the hardware-as-a-service path because the end customer is ultimately going to demand it. And if they are forced to compare multiple MSPs, the one that provides the most complete set of services is likely to win the day just because customers want to limit the number of suppliers they have to deal with.

Hardware as a service: Are you ready? Click here to read more.

This may result in some stratification of MSPs, with, say, hardware specialists acting as sub-contractors to other MSPs in order to create an ecosystem of specialists that are managed by a single provider playing the role of the general contractor.

But the more compelling question for those looking to enter the hardware-as-a-service model is just what approach to take. Obviously, IBM, Hewlett-Packard, Dell, Sun and others would like MSPs to bring the business to them, but to one degree or another, these vendors are going to be offering managed services of their own directly to end customers. So by introducing them into an account, the MSP has to then worry about whether one of these vendors is going to try to usurp control of the end customer down the road.

Given that concern, a lot of the early pioneers in the hardware-as-a-service model are bypassing the system vendors to embrace white-box systems that they either build themselves or purchase from a system builder.

Click here to read why Mike Vizard says hardware as a service is inevitable.

It's still in the early days here, but if the hardware is delivered as a service to the customer, about the only thing the customer really cares about is to make sure that the systems being used are industry-standard gear, usually based on either Intel or AMD processors. In fact, increasingly when you ask most customers what they have running in their data centers, they will tell you what class of Intel or AMD processors they have running rather than the name of the company that actually sold them the system.

That means that the opportunity for MSPs to deliver hardware as a service using a white-box model is pretty real, especially when you consider the increasing sophistication of white-box system builders in the server space.

The only real question is when are white-box system builders and their distribution partners going to step up the opportunity at hand, because for the first time in more than a decade there is an inflection point at hand that has the potential to change the dynamics of the white-box system market in ways that most people might have never thought possible.