Super Micro Computer Stock

Super Micro Computer, Inc. operates as a Silicon Valley-based provider of accelerated compute platforms that are application-optimized high-performance and high-efficiency server and storage systems for various markets, including enterprise data centers, cloud computing, artificial intelligence, 5G and edge computing.

The company’s solutions, which it refers to as Total IT Solutions, include complete servers, storage systems, modular blade servers, blades, workstations, complete rack scale plug and play solutions delivering pre-defined and pre-tested full rack scale solutions, networking devices, server sub-systems, system management and security software. The company also provides global support and services to help its customers install, upgrade and maintain their computing infrastructure. The company offers its customers a high degree of flexibility and customization by providing a broad array of server models and configurations from which they can choose the best solutions to fit their computing needs. The company’s server and storage systems, sub-systems and accessories are architecturally designed to provide high levels of reliability, quality, configurability, and scalability.

The company’s in-house design competencies, design control over many of the components used within its server and storage systems, and its Server Building Block Solutions (an innovative, modular and open architecture) enable it to rapidly develop, build and test its compute platforms along with its server and storage systems, sub-systems and accessories with unique configurations. As a result, when new technologies are brought to market, the company is generally able to quickly assemble a broad portfolio of solutions by leveraging common building blocks across product lines. The company works closely with the leading microprocessor, graphics processing units (GPU), memory, disk/flash, and interconnect vendors and other hardware and software suppliers to coordinate its new products' design with their product release schedules. This enhances the company’s ability to introduce new products incorporating the latest technology rapidly. The company seeks to be the first to market with products incorporating new technologies and to offer the broadest selection of products using those technologies to its customers.

The company’s resource saving architecture supports its efforts to lead in green IT innovation. This architecture disaggregates CPU and memory, which enables each resource to be refreshed independently, thereby allowing data centers to significantly reduce both refresh cycle costs and e-waste. In addition, the company offers product lines that are designed to share common computing resources, thereby saving both valuable space and power as compared to general-purpose rackmount servers. The company’s approach of leveraging an overall architecture that balances data center power requirements, cooling, shared resources and refresh cycles helps the environment and provides total cost of ownership (TCO) savings for its customers.

The company conducts its operations principally from its Silicon Valley headquarters, Taiwan and Netherlands facilities. The company’s sales and marketing activities operate through a combination of its direct sales force and indirect sales channel partners. The company works with distributors, value-added resellers, system integrators, and original equipment manufacturers (OEMs) to market and sell its optimized solutions to their end customers in its indirect sales channels.

Strategy

The key elements of the company’s strategy include investing in its engineering organization; introducing more innovative products, faster; driving software and services sales to its global enterprise customers; and continuing to increase its worldwide manufacturing capacity and logistics abilities in the United States, Taiwan and the Netherlands to more efficiently serve its customers.

Products and Services

The company offers a broad range of accelerated compute platforms that are application-optimized server solutions, rackmount and blade servers, storage, and subsystems and accessories, which can be used to build complete server and storage systems. These Total IT Solutions and products are designed to serve a variety of markets, such as enterprise data centers, cloud computing, artificial intelligence (AI) and 5G/edge computing. The percentage of the company’s net sales represented by sales of server and storage systems increased to 85.9% in fiscal year 2022, and the percentage of its net sales represented by sales of subsystems and accessories was 14.1% in fiscal year 2022. During fiscal year 2022, the company experienced increased revenue from server and storage systems, particularly from its large enterprise and datacenter customers. The year-over-year decrease in net sales of subsystems and accessories was primarily due to the emphasis of selling full systems and servers, which require utilization of the subcomponents. The company complements its accelerated compute platforms inclusive of server and storage system offerings with software management/security solutions, global services and supports, the revenue for which is included in its server and storage systems revenue.

Server and Storage Systems

The company sells accelerated compute platforms consisted of a combination of server and storage systems in rackmount, blade, multi-node and embedded form factors, which support single, dual, and multiprocessor architectures. The company’s key product lines include:

SuperBlade and MicroBlade system families designed to share common computing resources, thereby saving space and power over standard rackmount servers;

SuperStorage systems that provide high-density storage while leveraging an efficient use of power to achieve performance-per-watt savings;

Twin family of multi-node server systems designed for density, performance, and power efficiency;

Ultra Server systems for demanding enterprise workloads;

GPU or Accelerated systems for rapidly growing AI markets;

Data Center Optimized server systems that deliver increased scalability and performance-per-watt with an improved thermal architecture;

Embedded (5G/IoT/Edge) systems optimized for evolving networks and intelligent management of connected devices; and

MicroCloud server systems that deliver node density in environments with space and power constraints.

In addition to its accelerated compute platforms business, the company offers a large array of modular server subsystems and accessories, such as server boards, chassis, power supplies and other accessories. These subsystems are the foundation of platform solutions and span product offerings from the entry-level single and dual-processor server segment to the high-end multiprocessor market. The majority of the subsystems and accessories it sells individually are designed to work together to improve performance and are ultimately integrated into complete server and storage systems.

Server Software Management Solutions

The company’s open industry-standard remote system management solutions, such as its Server Management suite, including Supermicro Server Manager (SSM), Supermicro Power Management software (SPM), Supermicro Update Manager (SUM), SuperCloud Composer and SuperDoctor 5, have been designed to help manage large-scale heterogeneous data center environments.

Supermicro Global Services

The company provides global service and support offerings for its direct and OEM customers and its indirect sales channel partners directly or through approved distributors and third-party partners. The company’s services include server and storage system integration, configuration and software upgrades and updates. The company also identifies service requirements, create and executes project plans, conduct verification testing and training and provide technical documentation.

Global Services: The company’s strategic direct and OEM customers may purchase a variety of on-site support service plans. The company’s service plans vary depending on specific services, response times, coverage hours and duration, repair priority levels, spare parts requirements, logistics, data privacy and security needs. The company’s Global Services team provides help desk services and on-site product support for its server and storage systems.

Support Services: The company’s customer support services offer competitive market warranties, generally from one-to-three years, and warranty extension options for products sold by its direct sales team and approved indirect sales channel partners. The company’s customer support team provides ongoing maintenance and technical support for its products through its website and 24-hour continuous direct phone-based support.

Customers

During each of fiscal year 2022, the company sold to over 1,000 direct customers in over 100 countries. In addition, over the three years ended June 30, 2022, the company has sold to thousands of end users through its indirect sales channel. These customers represent a diverse set of market verticals, including enterprise data centers, cloud computing, artificial intelligence, 5G and edge computing markets.

Sales and Marketing

The company’s sales and marketing activities are conducted through a combination of its direct sales force and its indirect sales channel partners. The company’s direct sales force primarily focuses on selling Total IT Solutions, including management software and global services to large scale cloud, enterprise and OEM customers. In addition, the company is planning to offer optimized products with its command-center-based services, starting with a comprehensive product auto-configurator. The command center is the foundation of the company’s expanding B2C and B2B programs.

The company works with distributors, value-added resellers, system integrators, and OEMs to market and sells its optimized solutions to their end customers. The company provides sales and marketing assistance and training to its indirect sales channel partners and OEMs, who in turn provide service and support to end customers. The company leverages its relationships in its indirect sales channel and with its OEMs to penetrate select industry segments where its products can provide better alternatives to existing solutions.

The company maintains close contact with its indirect sales channel partners and end customers. The company often collaborates during the sales process with its indirect sales channel partners and the end customer’s technical staff to help determine the optimal system configuration for the customer’s needs. The company’s interaction with its indirect sales channel partners and end customers allows it to monitor customer requirements and develop new products to meet their needs.

International Sales

The company’s global sales efforts are supported both by its international offices in the Netherlands, Taiwan, South Korea, the United Kingdom, China and Japan, as well as by its the United States based sales team. Product fulfillment and first level support for the company’s international customers are provided by Supermicro Global Services and through its indirect sales channel and OEMs. Sales to customers located outside of the United States represented 41.6% of net sales in fiscal year 2022.

Marketing

The company’s marketing programs are designed to create a global awareness and branding for its company and products, as well as an understanding of the significant value it brings to customers. These programs also inform existing and potential customers, the trade press, market analysts, indirect sales channel partners and OEMs about the strong capabilities and benefits of using its products and solutions. The company’s marketing efforts support the sale and distribution of its products through both direct sales and indirect channels. The company relies on a variety of marketing vehicles, including advertising, public relations, web, social media, participation in industry trade shows and conferences to help gain market acceptance. The company provides funds for cooperative marketing to its indirect sales channel partners to extend the reach of its marketing efforts. The company also actively utilizes its suppliers’ cooperative marketing programs and jointly benefit from their marketing development funds to which it is entitled.

Manufacturing and Quality Control

The company uses Ablecom Technology, Inc. (Ablecom) and its affiliate Compuware Technology, Inc. (Compuware), both of which are related parties, for contract design and manufacturing coordination support. The company works with Ablecom to optimize modular designs for its chassis and several other components. Ablecom also coordinates the manufacturing of chassis for the company. In addition to providing a large volume of contract manufacturing services to the company, Ablecom warehouses multiple components and subassemblies manufactured by various suppliers before shipment to its facilities in the United States, Europe and Asia. The company also has a series of agreements with Compuware, including multiple product development, production and service agreements, product manufacturing agreements and lease agreements for office space.

History

Super Micro Computer, Inc. was founded in 1993. The company was incorporated in California in 1993 and reincorporated in Delaware in 2007.