Four reasons to analyze the low cost of white box equipment

Why is white box & White card network equipment cheaper than brand equipment? There are 4 main reasons, it is about the market economy and commodity procurement and manufacturing mechanism.

1 , low input cost

Before the development of new products, equipment manufacturers need to invest a large amount of money to develop products. Over the past 20 years, this has meant creating a team to design chips, develop software, and design physical enclosures. In the process of product development, we also need to invest money in quality assurance, functional management and early production evaluation. Market teams also need to spend a lot of money on feature selection, product marketing and customer talks. The bulk of the product was not started until the big order was taken, before the inventory was filled.

The development process is very expensive, if the use of existing commercial chips and open source software can save a lot of money, once the cost reduction can reduce the price of products to improve the competitive advantage of goods, of course, you can choose not to lower prices to obtain more profits.

2, short development cycle

Product development cycle has a great impact on the return on investment, mainly in two aspects. The amount of money spent on product development is generally regarded as investment and interest charges, so once the development cycle gets longer, the interest costs will be higher. On the other hand, the lengthening of the development cycle means that the required labour funds and ancillary costs will increase.

Shortening the development cycle will not only save money but also effectively reduce market risk. The market is changing rapidly, and the longer the development cycle gets, the greater the chance that the product will be eliminated. The general design chip and the software need 3-5 years, the software development process the project control and the quality assurance also need many funds. The use of commercial chips and open-source operating systems can effectively reduce time-to-market and avoid the risk of changes in markets. Reducing the risk is reducing the failure budget, indirectly reducing the capital investment, and the reduction of the project cost means that the price of the product is reduced.

3, Mass production

Mass production can reduce the cost of a single product. White box hardware already occupies 20% of the switch market, mass production, transport products, then the input of a single white box equipment will obviously be reduced.

The equipment vendor can also maintain the price of the product, thereby making more profit. Cisco and EMC are typical examples of reducing costs by expanding production scale, maintaining sales prices with a solid market position and strong sales tools.

4, market and product innovation are low thresholds

Market prices and profit margins generally depend on the strength of the competitor, and the availability of standardised products reduces the cost of entering the online market.

EtherealMindOpinion

The size impact leads to a long product development cycle for large enterprises, but when the product is put into production, it can increase efficiency through mass production and reduce the cost of individual products. Small businesses focus more on time-to-market, but it is difficult to expand production.

Large enterprises can also benefit from commercial chips and open source software, the most representative of which is the Cisco Nexus 9000 series, which is rumored to have successfully reduced product development and time-to-market to less than 1 years through commercial chips and open source software.

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Four reasons to analyze the low cost of white box equipment