Component failure vexes BYO VARs
Pricing Pressure, Manufacturing Changes Draw Blame
by Stephanie Green & Joe Wilcox
crn.com
Boston -- As the adage goes, you get what you pay for. Quality problems on low-cost components are causing some white-box VARs to reconsider the build-your-own market.
The source of most quality problems are "main boards, drives and power supplies, in that order," said Jared Knowlton, sales manager at Capitol Computers, a VAR based in Augusta, Maine.
Some companies, for instance, have seen failure rates as high as 30 percent on some motherboards, sources said. Typically, failure rates for motherboards are in the 3 percent to 5 percent range, sources said.
Capitol Computers has considered getting out of the white-box market due to the quality problems. "We've actually gone back and forth on white box four or five times, between building them and buying them, because of the quality," said Knowlton.
In fact, a strong majority, 68 percent, of the 250 resellers responding to a CRN spot survey said white boxes have gained credibility in the enterprise market. Adding to this, distributors such as Ingram Micro Inc. and Tech Data Corp. are moving fast to try to persuade VARs that build their own systems to stop building and instead buy white-box systems from them.
In fact, Ingram Micro is close to making a decision on whether it should begin branding its own white-box systems for its VAR customers.
But Michael Mallory, state and local government sales manager at Megabyte Business Systems Inc., Ashland, Va., said he prefers branded systems because he sees them as a higher-quality product.
"I think the quality control [of components] has gone down because I see [failures] too much. But then again, the quality has never been that good. I can take a radio at home and drop it with no problem, but I can't buy a hard-disk drive with any certainty it will work," Mallory said. "The manufacturers double-check everything."
The decline in the quality of components has been caused by intense pricing pressure and changes in manufacturing, said company executives and VARs.
"There is a lot of price pressure out there," said Todd Whitaker, communications manager in Intel Corp.'s OEM Products and Solutions Division, based in Santa Clara, Calif.
Some manufacturers choose to cut costs by shaving the design specification, said Whitaker. "There's a lot of cases where if you shave the specification, even if it worked, it doesn't work with the next-generation processor."
And in order to come out with higher-quality components, manufacturers have to increase their overhead, which forces them to increase price, he said.
Problems with components also could arise due to a manufacturing problem or a bad batch, said Martin Reynolds, vice president at Dataquest, a San Jose, Calif.-based market-research firm.
Some VARs may have problems because they have been getting components from someone other than their regular suppliers, or their suppliers may be getting their products from a new source, he said.
Still another motherboard source said the quality problem was tied to the fact that Taiwanese companies now manufacture in mainland China.
"Taiwanese manufacturers are so cost-driven, and the quality then suffers," the source said.
Worse yet, due to price competition, many manufacturing companies are short-lived, said Jason Chuang, director of marketing for AOpen America Inc., San Jose. "There is no guarantee the clone company you buy from today won't be out of business tomorrow," he said.
Chuang suggests VARs focus on building high-quality, total solutions with quality components. "If you do that, price isn't important anymore," he said.
"Whether [component quality] is getting worse or not, I know it's not getting better," Chuang said.
KELLEY DAMORE contributed to this story.
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5 Things VARs Should Know
-Limited support is indicator of how much the manufacturer shaves off cost.
-Are driver updates easy? If not, buy elsewhere.
-Decide the value of your time. Can you afford to rebuild that system?
-Double burn-in time will cut the likelihood of component failure.
-How long has supplier been around? |
