'White Box' Makers Take Up The Slack

n3hat writes: "This story in the business section of the Baltimore Sun points out that the 'pooter bidness isn't as bad as the publicly-traded companies report. Seems that as much as 45% of systems are assembled by screwdriver shops and other white-box makers, not the big guys." No huge surprises here.

Comments

Home built is still the best

[Anonymous Coward]

You control all your components and the way they're installed. I've seen too many of these boxen have loose ribbon cables impeding air flow, insufficient heat sinks, cheap PC Chips motherboards *shudder*, and any number of other problems. Even the good pre-built deals have a catch somewhere.

Build your own, learn something about hardware and software, and feel more confident to upgrade it. It's only slightly more difficult than putting together Ikea furniture.

Well then why are the CPU makers screwed?

[blair1q]

A part's a part. Intel should be overselling its predictable sales by 100% if half the computers are jobbed. AMD's doing no better (and may be losing market share, meaning it's losing unit sales even faster than Intel).

These guys have no real competition.

So if the market's still so healthy, why can't they sell parts?

Re:Well then why are the CPU makers screwed?

[dboyles]

So if the market's still so healthy, why can't they sell parts?

I'll tell you my theory, which is just that - a theory. I don't have numbers to back this up, it's just based on what I perceive.

Gone are the days that we drool over our friend's new rig with oodles of megahertz and megabytes. A 400 MHz machine with 128 MB of RAM and a 15 GB hard drive will run pretty much anything a consumer requires, save for games. Before everybody you know had a computer, the machine you bought two years ago isn't fast enough now (meaning 2 years after you bought it) to run those productivity apps that really would make a difference in the way you work.

Add to that the fact that the low-end PC market has become hugely competitive, with computers down into the sub-$400 range. Profit margins are lowered, and while methods of reducing costs have been introduced, they haven't kept pace with the dropping "going rate" for an entry-level computer.

It used to be that $3000 would buy you a nice machine that would be a top performer, even in terms of 3D graphics. The Dell sitting next to me was about $3300 back in April '98, and it was definitely one of the nicer desktops available at the time. But to get similar performance relative to current technology now, I'd only need to spend about $2000. And there are lots of ways (including lots of companies) to arrive at that price.

Re:And ... So?

[marxmarv]

But I don't think anyone really ever disagreed with his final point: "The lesson: Publicly traded companies are not the whole computer industry, and the publicly traded stock market is not the whole economy." Was this ever a source of controversy?

This article wasn't published in a trade publication, but in a daily newspaper. Most often the business press wants to hide facts like this from the average Joe, and it's good to see reminders of that in print every now and again so I don't get the urge to fsck myself with another salaried job.

The reason Dell and Gateway and large manufacturers are so important have to do with the support contracts they offer,

White box firms can roll almost instantaneously and often have parts and systems in stock.

the shipping options,

See above.

the warranties,

See above.

the phone support,

Ah, here's a possible failing of the small retailer. The phone support is often relatively weak -- but phone support is pretty much a non-issue when you have minimally sharp desktop people of your own on hand (which you do, if you're a large company).

the willingness and ability to ship next-day in the event of component failure

White box companies can roll almost instantaneously and often have parts and systems in stock.

In short, the security blanket that makes department managers at large companies feel comfortable purchasing those systems.

Corporations are best known for swallowing their own bullshit. It's the same reason COTS software is so prevalent in large organizations, the same reason schmucks pay six and seven figures for crap like Vignette or BroadVision or Dynamo: they want someone they think they can blame, even if they can't.

But [the typical purchasing manager] doesn't know them and here enters the important issue of brand value, identity, and leverage.

Better the devil you do know than the devil that lives entirely in one's mind? It's just another excellent example of the corporation swallowing its own bullshit. I once had a manager describe in hushed tones the Aura of the Brand, of how a brand represents an experience, much like how an infant saying "ma-ma" /* FIXME needs localization */ results in the goddess figure of its life appearing.

Except when it doesn't.

Ladies and gentlemen, we have put the economy and our very lives in the hands of imaginary colossal infants, and THEY NEED SPANKED.

Not to mention that the Dells and Gateways can, in fact, ship in the hundreds of units per day, manufacture in the thousands per week and purchase components in the billions of dollars per year. That's why they're important and has that really ever been a mystery?

And this is important why? This is worth paying extra and getting depersonalized service to who? White-box builders are no less capable of shipping hundreds of barebones systems per day, to order. Dell and Compaq both OEM their finished notebooks from an outfit called Compal. They're not a contract manufacturer, but a turnkey solution for notebook design and manufacturing.

This is what several companies do for the white box market.

This reporter got a good story and then took the wrong angle.

For PHBs and others invested in the worldwide corporate circle-jerk, perhaps. As it is, it's a testament to partial decentralization.

-jhp

Re:It's the service, stupid

[Roblimo]

Not only that, but the ability to run a broken box over to a local shop and have it fixed *while you wait* if it's an emergency is something only a local business can provide. It's also nice to deal with a human being instead of some crappy voice mail system that runs you through five layers of menus before you get to someone who can actually solve your problem.

There is a huge market for local systems integrators that serve other small local businesses. This is, BTW, the way Linux *should* be sold, but not many "Linux vendors" seem to have caught on to this.

If you had a small business, which would you rather do:

1) Call faceless operator at GiantComputerCo with a customer number.

2) Call your computer-hip Chamber of Commerce buddy Al at LocalCompouterCompany, who knows your name, your favorite brand of beer, and your opinion about the Orioles' chances in the playoffs this year?

I have more faith in Al, who I run into at the local bar all the time, than I will ever have in HPDellIBMGatewayCostcoBigCompany. I know where Al lives, he knows where I live. He is going to do his best to keep my computers working because I am important to him. Michael Dell and Carly Fiorina could care less about me. This makes a difference.

Maybe I'm just old-fashioned, but when I buy anything critical to my business, I like to deal with people I know, who know me too.

I'm a Slashdot editor and possibly one of the 10 or 20 most widely-read tech/IT journalists in the world, and emails I sent to several major laptop manufacturers over a week ago still have not been answered. But when I call my local buddies in the computer business, the Slashdot thing and all the tech journo hotshotness mean nothing. They respond to me quickly and politely, same as they respond to everyone else.

I am a major small business believer and booster because I have always gotten better and more reponsive server from local small businesses. Small businesses don't need to buy CRM [Customer Relationship Management] software. The good ones have CRM *wetware* and the bad ones go broke.

Not that I'm against big business or anything, or that I invented the OSDN self-serve ad system specifically to give small businesses a chance to compete head to head with big ones online or anything....

- Robin