I think the key here is that they "threatened" to bring in white boxes. They didn't (in any meaningful way). I'm sure that HWP and CPQ gave something back to assure that...but EVEN IF they did...there's no guarantee it would work.
People like brands. Despite being a sucky business to be in, people still primarily use AT&T's long distance service. And there are a million "white boxes" to choose from in that realm.
If CompUSA or Best Buy or any of them brought in the white box solution, there's no guarantee they'd sell, let alone help the retailer make money. In fact, there's alot of evidence they'd lose money on the bargain. It's great bargaining leverage to have, but let's see them really do it.
Today, it's still cheaper to buy a white box off the web (I looked into it), or direct from manufacturer (like Dell, only cheaper). But there are deterrents from doing so. You don't know what you're buying, you get horrible service, and you get (basically) what you pay for.
I understand the differentiation that you made, and it is true that the retailers hold the bargaining chips in that kind of negotiation. However, I'd be willing to forego those supply lines if that's what it came down to...because people will find the brand. There'd be a huge jump in margins despite the overall loss of income. The real group to suffer would be the retailers. How profitable are generic brands in other retail outlets (very)? What percentage of sales do they represent (small)?
Commoditization has limits. Brands carry power.
Still...it's a great bargaining chip for the retailers to threaten. |
