Newsworthy- The Great White (Box) retreat.
Joey and thread:
Here is an article that bode well for all the brand-name hardware makers,DELL-CPQ-HP-IBM and all.It is important to note that since the 'No Name' White-Box makers control the majority of the market share,both here and abroad.I belive their share of the market is a whopping +70% in developing nations and close to 60% here at home and possibly in Europe.Since 'white-box' makers seem to be retreating the brand name PC makers should add considerably to their market share.
Any comments? Anyone?
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DELL COMPUTER CORP
PRICE CUTS HAMPER WHITE-BOX VARS
Oct. 09, 1998 (Computer Reseller News - CMP via COMTEX) --
San Anselmo, Calif. -- Battered by the price cutting from major hardware companies and aggressive marketing by retailers and direct vendors, some resellers in the white-box market are having a tougher time than ever.
The market factors have forced some resellers to quit making their own systems, go out of business altogether or shift focus to service-related profits.
Adding to resellers' anxieties is Ingram Micro Inc.'s entry into the white-box market (CRN, Sept. 28). Ingram Micro, Santa Ana, Calif., created four SKUs of nonbranded computers that it will sell to resellers through its Frameworks Total Integration Services division.
Price pressure is everywhere, said David Halgren, president of InteliStep Inc., a Kirkland, Wash.-based reseller that makes white boxes. "On the other hand, I've got to compete with retailer prices. On the one hand, I've got Dell and Gateway offering really [low-cost] machines with free bundles, such as Microsoft Office. Before I even start to build a box, I'm at a price disadvantage because Office costs me $180 or so," he said.
Although Halgren makes money from selling service, usually by rolling such fees into the combined hardware, software and service estimate he gives customers, too many prospects unfairly compare his total price with that of a Dell system.
"[Customers] see the Dell name and the price but don't think about service too much. They think Dell will give them good service. But I know Dell doesn't offer good support in the Seattle area. I tell them that, but it doesn't change their minds," Halgren said.
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<<Mohan>>:Yeah right,what is this guy smoking <g> that is why DELL got examplary marks(and the only one I might add) in all 3 categories in a 'the survey' which I posted here earlier.
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Pricing pressure also is forcing Halgren to take on contracts and customers he normally would not. But while he enhances his service business and continues building his own systems, another reseller recently quit making white boxes.
"I couldn't compete on price with Dell, Gateway, Compaq and the retailers," said John West, president of PC III Inc., a systems integrator in Houston. "Now, I advise my customers to buy brand-name products from me or elsewhere and to come to me for services."
Lower prices in local retail stores and at weekend computer shows eventually killed off Terry Lorrah's once-thriving white-box business in Allentown, Pa. Three months ago, he closed the doors of Delikon Computer Systems Inc. and became an independent consultant.
"In my particular area, there is a computer show nearly every weekend, where guys are selling PCs at cost and pocketing the tax," said Lorrah. "I couldn't compete with that or with the price wars between retailers selling discontinued PCs for $300 and new machines with free software."
Lorrah also said it was becoming increasingly difficult to stay current on advancements in motherboards, chipsets and other hardware.
Still, not all "white-boxers" are angst-ridden about their futures; many enjoy and foresee big profits in small business.
For years, the small-business market has been one of the most profitable areas for white-box profits. Over the past two years, white boxes have been the best-selling desktops, according to CRN surveys (see chart on page 75). Forty-five percent of small-business respondents in a CRN Inside Spending survey said they expect to buy nonbrand PCs from a reseller or distributor within the next year.
"You have to know what you're doing to make money from white boxes," said Tony Andas, director of purchasing at Technology Partners Inc., a VAR in Ann Arbor, Mich. A reseller must know the market, needs reliable suppliers and must build good-quality, upgradable machines that suit customers' needs, he said.
Technology Partners has built a strong white-box business of about 600 units per year by doing all of the above and by knowing who its customers are and how to market to them, Andas said.
The company makes a broad range of machines, starting at $1,000 and rising to $5,000. It usually sells one or two machines at a time, mostly to small businesses.
"Our key selling points are: the 'future value' of our machines, which are all upgradable; the quality of our parts, which are generic and easy to find; and the fact that we provide local service," Andas said.
While Andas said Technology Partners makes margins of between 15 points and 20 points on white boxes, excluding service margins, "there is constant price pressure from various sources," he said. |
