Issues in HPC as a business: a view as a small solutions provider

One of the things all HPC vendors have to deal with is competition. This is fine, doesn’t worry me. Fair competition can be quite good, and even exciting. Its the unfair competition that bugs me.

Suppose we have a potential customer X. Said customer works with us, we generate benchmark data, show them what we can do with well tuned systems. Customer likes it. Asks us for a quote. We provide one, and the price is good.

Customers IT group steps in and says, “no, we only buy from Y, Z, T”.

Ok, Customer still wants to work with us, asks us to get quotes for Y, Z, T.

Uh… ok.

Y, Z, and T are overcharging the customer. Badly overcharging them.

If they have an equivalent substitution, it is usually at a huge premium relative to our system. Remember, they are made out of the same components. So it can’t be component cost. Must be the labels. Yeah, thats it, those labels with the fancy logos for Y, Z, and T must cost about as much as unit does, which is why they are being quoted so high.

Work up a quote, show to Customer. Its less than they normally spend. The IT group still raises objections, the fancy and expensive label is not on the box.

[Shakes head in incredulity]

We have had a customer with a corporate agreement with “Y” have to write a sole source memo in order to purchase a system from us. Our system was less expensive than the “Y” system. It had better features/functionality. It was faster. Far better price performance.

One might think that basic competition would have dictated a win here.

Of course, it didn’t.

We had to convince this customer to spend less money to get a superior product.

Every single corporate agreement that binds a purchaser to a vendor reduces competition for the purchasers business. Unless there is something of massive value (are those labels really that good?) that the purchaser gets as a result of this agreement, none of these agreements do anything more than reduce competition, reduce choice, and raise prices for purchasers.

Again, how is this a good thing?

Sure the vendors will tell you (and show you) that you are getting a discount over the vendors inflated prices. Sure this is a a good thing, if they are the only vendor out there. But they aren’t. All they have done is stopped you from investigating the competition. Which puts less pressure on their pricing.

If you are running a company, a university, or whatever … and you have one of these things, do yourself a favor. Get a quote for a server. Just call up your friends on the agreement and get it. Now call up a reputable vendor not on your agreement, and get an identical quote. Look at them. One number will be higher (usually much higher) than the other. Odds are, the higher one will be the vendor you have the purchase agreement with.

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