AT&T Tech Support 360October 30, 2007 4:00 AM PDT
Trouble on horizon for 'white box' PC makers
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Those purchases go on as Hewlett-Packard and Dell churn out millions of name-brand PCs every quarter, Acer enjoys double- and triple-digit growth rates, and Apple continues to be the darling of the hardware business.
At first glance, it would appear the white-box market hasn't changed so dramatically in the past several years. The share of white-box computers (which includes PCs without brand names and those from smaller manufacturers) has decreased from a 44 percent share of the worldwide market in 2003 to 37 percent as of 2006, according to market researcher IDC.
But the growing popularity of notebook PCs spells big trouble for the future of white-box manufacturing. The "white-book" market has dwindled from an already-small 8.5 percent share to a 5.6 percent share between 2003 and 2006. That comes while notebooks have, over the same period of time, become the dominant PC form factor for top vendors Hewlett-Packard, Dell, Lenovo, and Acer, accounting for two-thirds of consumer PC sales.
The smaller PC assemblers can't participate as easily in the notebook market. That's because their bread and butter--an oversupply of parts they can buy at a discount--are intended more and more for specific notebook models.
That fact is antithetical to what it means to do business as a white-box manufacturer. The key to the white-box market is opportunity. These smaller manufacturers make their money by taking advantage when major manufacturers make mistakes on orders, or by scooping up soon-to-be outdated parts when newer versions are about to become available.
"The thing about white-box vendors is they're opportunistic," observed analyst Roger Kay, president of Endpoint Technologies Associates. "They change their market model depending on market conditions."
That list of white-box manufacturers mostly reads like a who's-that list, rather than a who's-who. Companies like Systemax, ProStar, MicroPro, and CLT Computers put together custom PCs and offer them under a no-name brand or no brand at all. Sales are typically done on a direct basis, avoiding retail outlets, and often are bundled with services, software installation packages, printers, network cables, and warranties. Typical customers of white-box manufacturers are government agencies, educational institutes, small and medium businesses, and even individual consumers.
White-box makers thrive when the bigger guys mess up. Say HP over-orders hard drives: When HP tries to resell those hard drives to smaller players at a discount, white-box manufacturers will snap them up, throw them into some desktop boxes, and wait for sales. In that case, the assembler is making money on the PC with the name-brand hard drive that it got at a discount and put in a no-name box.
It's easy enough to do that with desktops or servers. But notebook form factors and their corresponding components present a challenge for manufacturers who want to mix and match. A motherboard created specifically for an HP Pavilion notebook, for example, can't be shoved into any old notebook, Kay points out.
"There's a great deal of integration and complexity, (which is why) there are hardly any white-box notebook vendors," he said. "The requirement (to be a white-box manufacturer) is a great degree of flexibility in the assembly process." That doesn't work when the parts for notebooks are specially made, and are designed to fit specific spaces inside a specific notebook, he added.
The mix-and-match model can work swimmingly for white-box desktop makers--and for the component makers and operating system makers.
Microsoft, for one, can benefit from having an alternative outlet to license its operating system. For example, HP computers account for just under 20 percent of the worldwide PC market, which affords the company a lot of negotiating power with Redmond. But Microsoft can try to regain the upper hand by having an option to license its products to smaller outfits that individually wield far less influence, said Kay.
Despite that, small and regional PC sellers still find it close to impossible to compete with the big guys. Ray Klammer, who has owned San Francisco computer seller Boxed CPU for a decade, has seen his business change with the PC market. He switched from building PCs to order to buying and reselling name-brand PCs seven years ago, after just three years in business.
"You can't sell computers for less than Dell," Klammer said. "Customers that need really specialized computers will (order white-box PCs), but otherwise, no one can build a computer cheaper by building with parts off the shelf."
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I do think that whitebooks could have a significant advantage if they offered features such as expanded memory or tougher case at a reasonable price.
I put together a box that was at least 1/2 the price of a Dell box and had 2x the performance. Dell's materials are proprietary which means that their driver updates usually lag behind a lot.
Heck, I once read a forum article at the Dell website (that eventually got closed by Dell) having to do with their Creative Labs Live PCI card they had. People tried to do updates from the Creative site, and their driver update wouldn't even recognize that card as existing on the system.
That forum post was like 300 pages long with well over 1500 people responding to it fuming as to why that cards performance was so terrible. All that those people got in reply was a "Thank you for your concern, this topic has been closed".
That was a bogus way to handle it. And it still shows in their parts today! Try running an audio CD on an Optiplex GX620 and something else... you'd be amazed to NOT get any stuttering in the audio.
Dell uses overly costly crap parts, for PC's. If you give their pc's a workout, they fail. The only consolidation is their Server line, which has progressively gotten better.
The only part you benefit from is a cheaper OS. The rest is the Dell name. An expensive, under performing performance machine. So, you go ahead and dish out 5K for a XPS box while I build it to the same specs as a generic box for 3K. No thanks. *** does a performance gamer system need ECC ram for... Makes not a dang bit of difference, but hey... 2GB of RAM will only cost you $700 vs the 2GB of non-ECC at $300... stupid stupid stupid.
Good news is that it is not going to be happen tomorrow nor in the near future.
Bad news are that the practice of locking customers to the brands is becoming more fashionable than ever.
I agree that the notebooks putting a real thread at interoperability of computer components. And the more users are favoring the notebooks the more likely it would be harder in the future to get a system that is tailored to one's taste.
In particular, many whitebox shifters let you buy a machine with no operating system - try doing that with the major OEMs for a desktop or laptop! Why should Linux users have to pay for an OS they're only going to have to wipe off as soon as they get the machine?
Having said that, I looked for a whitebox laptop with no OS pre-installed earlier this year and couldn't find one, instead settling for an Acer with XP pre-installed (which, yes, got wiped off and Linux put on it).
I'd also like to be able to get larger capacity batteries, which were not available for mine. I dont' even know where I'd get a replacement for the now dead battery that came with it.
Improve some of these issues and I'm there. I like having very fine-grained choice in what exactly is included in my computers, including not only which graphics vendor, but what particular chip from that vendor, CPU combination, screen size and resolution, etc.
I'd love to see a standard laptop motherboard formfactor, and be able to choose which exact motherboard to put into which exact laptop "case", select exactly what screen resolution, size, and finish to get, etc. It'd also be nice to see a standard laptop grahics card formfactor and other things like that, so I can create a laptop to the exact detail that I can create a desktop today. That'd be very cool.
But today I'm shopping for battery life and driver support, and I haven't heard very good things about these from the cheapo whitebox guys. I'm little concerned about the name brand that's winning my current shopping interest, as it has a lesser reputation for general reliability than others do, but they have the laptop closest to the exact specs I desire. They are not exactly what I want either, but I have not found a closer fit from any other brand, let alone one with a better reputation.
Only the 'white-box' OEMs will sell systems without support, which has a tendancy to define their customer base of very tech-savvy users. Perhaps the Big OEM's could learn from this, in fact leverage it, with products and prices geared toward the Technical user who needs little tech support.
All this talk about "I can build a PC that's twice as fast for half the price" is complete rubbish. If you're a gearhead and you want to build your own PC with specific components, that's fine (I've done it myself several times), but no one can compete with Dell's scale and buying power once you eliminate the OEM cost of a Windows OS.
-Mister Winky
preinstalled is all about. Sure, a few want Linux but most still
want a Windows flavor. I do think Apple has made some
headway because of all the hype about the iPod and the iPhone.
Plus, the fact that it can still run Windows if you decide you
don't like OS 10. Linux has started way late in the game to get a
big PC manufacture to offer and support a Linux computer. Even
though Linux has made strides in making the OS more beginner
friendly. It has a long way to go before mainstream user's jump
on the bandwagon. Apple is playing Microsoft's misstep with
Vista well so far. Gaining ground against the big giant. But can
Linux do the same?
- Not in this lifetime
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by drekow
November 5, 2007 2:03 PM PST
- I have to work on Intel Macs all day along with Window based PC's and I can honestly say I wont be moving to the Mac's. I would also like to add that I agree the notebooks are becoming more popular and have advantages but I will still stick with my white-box's for as long as I can.
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