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Who Wants to be the Next Dell?
cybercomm writes "Tom's Hardware has a very interesting column regarding the future of beige-box manufacturers, such as Dell, gateway, Compaq, et all. I found this article really thought provoking, since the author has raised some really interesting issues, especially concerning the fact that the writer of the column compares reviewers to the lowest ring of the ladder, and asks one simple question: Instead of whining, why not do it? Why should you learn all the specs on the latest processor and slam the competition just because you may happen to own a P4? Why not start the same way that the Dell, Apple, Gateway, and other founders took by forming your own store, getting in touch with Asian suppliers who "are more than willing" to give you discounts, just so that they can get their foot in the lucrative N. American and European markets. Very interesting reading, that raises another what-if scenario (what if you succed and your business is based on Chinas' dragon CPU, XGI card, open-source OS...)."
Can you still GET a beige box from dell these days?
Or is THW paying /. to link to all their articles? It seems anything submitted is approved...
i have seen some of these white box laptop systems. all you have to do is put in a hard drive, ram and os. some come with CPUs already. if you did something like this and sold it cheap enough, you could get your foot in the student laptop market. same with pcs them selfs. interesting idea. now for a business plan......
Lotas T Smartman www.lotas-smartman.net
You see the problem with hardware is all about margin. Unless you are moving a huge amount of goods you will loose your ass. Software on the other hand is all margin, big profit ratio's. Why do you think so many restarants go out of business? Small margins, same goes for grocery stores.
Got Code?
Enthusiast sites helped to widen up the market for Asian suppliers, of which there are many, many more waiting in the wings to get into the lucrative North American and European markets. These supplies are hungry. They can feed hungry White Box vendors, but I grant that White Box vendors have to contend with the general ignorance of the people.
The people like Gateway, and the sound of those Intel chimes. They fear computers and the big Tier One OEMs feed on that fear.
Good idea .. why doesn't Omid do it, then?
We'll check on how well he did two years from now.
Sun plans server with AMD's Opteron instead of Ultra Sparcs
Consensus is good, but informed dictatorship is better
You sold me there on that story. Obviously I'm passing this on to all of those Berkeley, MIT, Carnegie, Harvard, Yale grad CTO's and marketers who work at places like Alienware, Sager, Toshiba, and other smaller comp makers who spend the big bucks. This guy is definitely on to something, and I'm glad Slashdot didn't waste my time posting garbage. Oh yea, that guy's good.
MoFscker
Personally, I think the days of selling general-purpose computers to home users are coming to a close. Within a few years, real computers will be limited to businesses and hobbyists (those who use computers for their hobbies, and those for whom computers *are* a hobby).
"Joe Sixpack" will surf the net on an "Internet Center", listen to MP3s (or whatever DRM-crippled crap has replaced it) on "Media Center", etc. Regular people will stop thinking of these things as computers, and they'll just be happy that they work. To be honest, I don't know what to think of this. If Apple has survived in its niche, I'll still be able to get the stuff I need (heck, *somebody* will make sure that Linux can still run on these devices), but it's a little sad to think that this era might come to an end.
The thing that this jounalist is writing about (very well, I might add) occurs in every industry/walk of life. There are the whiners, and there are the doers. What he doesn't realize is that doers just do it, and ignore these whiners. He ends the article well... "get a grip". Personally, I don't give people like this even that much attention.
...and while it is tempting to get into the whitebox market, it requires a significant amount of capital. Why? Bulk purchasing (ie for processors) is only really worth it pricewise if you do it in the thousands. Dell et al. do that easily now, but for "the next Dell", unless he/she/them are able to take advantage of those discounts by purchasing parts in huge multiples, it will always be cheaper for the end user to buy from current whitebox manufacturers, even if "the next Dell" provides better quality. The vast majority of people are willing to save a buck, and unless "the next Dell" can compete on price as well as everything else, it is unlikely that there would be "another Dell".
libertarianswag.com
Apparently Slashdot does, or is this a funny attempt at turning his servers into a crater one at a time and remove his sold out ass from the world?
There is nothing wrong with being gay. It's getting caught where the trouble lies.
You know how it is? When you don't get enough fibre in your diet. Things get all, well, you know, repressed, which is the nice way of putting it. Then, you have a prune juice, or have a fat friend jump on your stomach, and before you know it, you feel like the fog has lifted, and everything is going to be okay.
Damn it, milk just shot out my nose and now it's gonna feel weird all day.
"Come on, let's go drink till we can't feel feelings anymore."
..has the author of that column started? His beef is people who complain about hardware rather than building, but he just complains about people who complain. Where's that in the food chain?
The two biggest obstacles I can see are name recognition and the Microsoft tax. If someone were selling a computer with similar specs to a Dell machine, most people are going to go with the Dell just because it's a company they've heard of before (and therefore one they can "trust"). The other problem is Microsoft: if you are going to install Windows on the computer (and possibily Office), you will have to sell your machines at a loss to compete. This is to compensate for the fact that Microsoft gives big name vendors like Dell and HP discounts on their software. I think the best way to overcome these two obstacles is to invent a product truly unique, so that people actually WANT to pay more for your system. Look at Apple. Innovation is what helped Apple rise from their own ashes, first with the iMac and now with the iPod and OS X. Jump a feature that you think will be big in the next few years, and then have the guts to use it as the cornerstone for your business.
The World is Yours.
You're not going to be very successful if you can't spell or at least use a spell-checker.
Another 2 minutes down the drain.
...that the market for commodity systems is already saturated.
Trying to compete with companies like Dell only makes sense if you're the star of Brewster's Millions.
There is certainly money to be made in the computer industry. But the days when hardware firms could be started out of someone's garage are long, long gone.
Of course I'm sure there will be a whole army of dreamers and wet-behind-the-ears schmucks lined up to argue with me about this for the simple reason that the truth I speak is a threat to their pipe dream. Well I say they need to put that crack pipe down and start looking for sectors and markets that don't already have dozens of 800 pound gorillas stomping about. Just because you have a love for something doesn't mean you can turn it into a successful business, especially when that business would be servicing a competitive market with razor-thin margins.
The most anyone could hope for would to eek out a marginal existance selling highly customized systems built from hand-picked components for gamers and similar enthusiasts. (Most of whom can do it themselves, or at least think they can)
Lee
Muslim community leaders warn of backlash from tomorrow morning's terrorist attack.
...I don't have the money for the lawyers who will defend my success in N. America.
Ok, this answer is highly optimized, but it's redundant also.
They DO have stores (They've got Dell Direct sales kiosks in the mall- where you get to see something of what you're ordering through the system) and the online sales system for Dell (Whether it be by phone or by web) is also a store.
It's just that they didn't have brick and mortar storefronts until very recently- and these don't keep inventory, they're solely there to show off the wares so people can see what they're buying.
I am not merely a "consumer" or a "taxpayer". I am a Citizen of the State of Texas
Make sure to get enough venture capital, when you start you new hardware store, that you can hire somebody else to take care of customer-support.
But seriously, it's all about volumn. You have to buy a lot of parts to be able to compete - the margin on hardware is small. Your fortune isn't made just because you can sell a thousand boxes and make 10 or 20 bucks each. Now you have to be read, when half of them calls you and tell you that they can't figure how to connect that 56k modem to their adsl line or that the cup holder is broken.
Good luck...
TC - My Photos..
This is nothing new. I have funded my drinking habbit for years by making people computers. There is no need to have a store to do it. Most people don't realise how easy it is and they usually want something special. This is how the Dell bloke goty started anyway. For the office I make all the machnes now, we wouldn't even consider buying machines ready made (unfortunately except for Sun machiness)
The dragon CPU is not supported very well (or at all) currently and does not bring a huge advantage yet. Its hard enough to convince someone to use a non windows/x86 machine when you are a huge company nevermind when you are a singly guy knocking them out of your garage.
Mouse powered Chips, Open source Processors and Lego
It's the answer to everything in America that could harm other peoples money.
Dell works to hollow out their suppliers, leaving behind dead and worthless companies. We don't need them, just like we don't need Wal-mart.
The Dell model, such as it is, is already dead. It may have worked for Mikey, but it won't work if cookie-cutter'd. There won't be another Dell, thank god.
Why not start the same way that the Dell, Apple, Gateway, and other founders took by forming your own store, getting in touch with Asian suppliers who "are more than willing" to give you discounts
Um, I wouldn't put Apple in the same group as Gateway or Dell.
Gateway and Dell did start by piecing together PCs... not much innovation there, just source some parts, stick 'em together, bundle it with an OS, and then you've got yourself a PC business! With good marketing and by learning from mistakes, you could have a billion dollar business!
In contrast, Apple was a manufacturer first. Basically, Apple designed a computer, made boards, designed a custom power supply, had a custom case designed, wrote software, wrote some technical manuals, etc etc.
That's pretty much how Apple does it today, with the exception that Apple has been taking more advantage of some commodity components like drives (they always have) and highly integrated ICs.
Admittedly, Apple has become quiet adept at marketing - and that's a good thing, because Apple has a niche business that requires both innovation (both in marketing and technology) to stay relevant.
It's only recently that Apple started to get into the retail business.
He asks why the reviewers critical of Dell don't just start their own computer biz? Ya, why don't movie reviewers shoot their own movies? Why don't the people in my office all become computer technicians? Sorry, I think I'll skip this article. The author is obviously too wise for me. I wouldn't understand.
THe problem with the summary above is that it totally misses the point. Now how many of you read forums at hardware sites? I'm sure most of you have dabbled in it. What do all of us see? Well, through the woefully-poor signal-to-noise ration there may be a few posts that are truely gems. However, most posts focus on bickering over silly issues that are more than likely the fault of the user not the hardware. The rest of the remaining comments tend to focus on the proverbial pissing contest. For example (we see this on /. too): "AMD sucks" and then a very intellectual poster will say "No Intel sucks" and post that hideous picture of that man with a gapping butthole to somehow prove their point. What the Tom's Hardware article is saying is that people need to get off their butts and stop complaining. If people think they know how to do it so much better, then its time to put your money where you mouth is and start building computers. Once in the work field, the true nature of the industry comes out and people learn that its not always as easy as it looks.
I guess the best way to describe is all those people who complain of such-and-such feature missing or being substandard in a GPL'd project. To that most respond that the complainer should start coding it or shut up. This article says the same to hardware enthusiast complainer: "build it or shut up".
and I've got plenty of advice for those who might want to try it.
1. Don't take on any partners. My company had 3 owners. If it had had one owner and 2 employee's I'd still be in business. Multiple owners means that profit is divided. While you're getting started, you have to live off of whatever miniscule profit you generate. If you have to divide those profits three ways, you're going to have to learn to love Top Ramen.
2. Dealing with local distributors is a great way to get parts quickly, but their prices are awful. Get contacts overseas, and import your own parts, or work with national distributors such as Tech Data or Merisel. Just be aware that their prices will be awful too until your volume comes up.
3. If you're selling computers via mail, etc, be careful with credit cards. Chargebacks come right out of your bank account. Visa/Mastercard/etc. do a great job of protecting the customer because they can steal from the merchants. If you're hit with a chargeback, it doesn't matter that you've been victimized, too. We once had three high-end PCs (marked for signature delivery) "stolen" from a customer's doorstep. Then, when the customer decided he didn't want us to ship replacements and hit us with the chargeback, we were out nearly $10,000. I still believe the customer saw an opening and stole those PCs, but I'll never know for sure.
4. Control support costs. Many small "white-box" PC makers provide top-notch support, but customers will eat you alive if you let them. I realized that when I went over to a good customer's house to help them with a PC problem and ended up looking at a laptop we didn't even sell them. A corollary to this is that if you're going to be providing "personal touch" service, make sure that your pricing reflects it. You can't visit people's houses if you're selling a $500 PC @ 5% margins.
5. Watch inventory. Keep as low a supply on hand as possible, because when component prices drop, customers expect assembled PC prices to drop accordingly, and immediately. Your competitors watch their inventory, too.
6. If you're planning to offer services and support in addition to hardware, consider becoming a VAR instead of a system builder. You can benefit from the marketing opportunities that the Compaqs/IBMs/etc offer, and you don't have to deal with warranty support of your own boxes. If you have a service department, the companies you deal with will pay you to do warranty work.
All in all, I can't say I recommend starting a PC company. Because you're selling what is essentially a commodity, your margins are constantly being squeezed. And that sucks! But, if you have access to Asian manufacturing and can control your costs, you just might prove me wrong. Good luck to all the future captains of industry out there!
Blogging Weight Loss, Distance Education, and more at verlin.com
So, where are the horizntal bar graphs comparing Dell, Gateway, HP, Compaq & Packard Hell? Why aren't there 30+ advertisements for whoever gave Tommy the most dough? Why isn't there a seperate section in the article with benchmarks on a bunch of those brand-name PCs? I want to know how Quake 3 will run at 1600x1200! How good are these babies in overclocking? This isn't Tom's Hardware! Someone messed with my DNS settings!
Untill I see at least 20 useless horizontal bar graphs with various benchmarks that mean nothing, at best, I refuse to believe we're talking about Tom's Hardware.
Hate me!
That's almost like saying "You don't like Chevrolet? Make your own car and compete!"
You have to look at it realistically. As a national manufacturer / re-seller the road will be very tough. Hardware isn't profitable to begin with (margin-wise) and there's not much room in the market. Only company I can think of that "came in" was eMachines, but I don't know anything about them, I just know I didn't see them 10 years ago. But for example, what happenned to Packard Bell?
I think where a lot of value and opportunity lie would be any niche market... Take for example, AlienWare, who makes specific game-oriented PCs. IIRC they will even install games for you and tweak them for your hardware configuration (at no extra cost). Dell doesn't do that, so they're not in direct competition.
So where are there niches? Could someone compete with AlienWare? What about a super high-performance company that sells already-cooled OCd systems? Or an anti-Wintel company that is setting itself up correctly so that, no, you won't be clogged by DRM in a few years? I could imagine a company setting up computers for very cheap that, say, boot up in 10 seconds or less. Sort of internet or email machines for other parts of the home. Or extremely sleek looking systems -- hire a good designer and make stuff that looks better than Apple's, but is a PC inside.
There's lots of room for interesting business models. But why would you need another Dell?
Small potatoes make the steak look bigger.
THG is the only site more useless than slashdot.
...getting in touch with Asian suppliers who "are more than willing" to give you discounts, just so that they can get their foot in the lucrative N. American and European markets.
So much wrong with this kind of statement. China doesn't need those markets. It does need the western style of pragmatic project management, etc, but the market is now inside China/Asia, and much larger than Europe and North America. This statement only serves to show why the west is being left further and further behind.
The market for PCs is already oversaturated
Margins are already basically zero on desktop boxes
Your company would not be able to scale like any of the large players
etc etc etc
Basically no one is going to invest startup capital in a business that has such dismal prospects from day one.
Just do a search for "Ultimate System" or some other catchy phrase and you'll get dozens of listings of beige box builders. The problem is these systems are often more expensive than a Dell when you factor in the shipping. Plus there is no customer support and the warranties are all isolated to the individual components. So it's never a surprise to see no bids for any of these systems, unless they are loaded with pirated apps.
Although we may all rant and rave about the wasted resources in big companies, scale does matter in the PC industry.
1. Amortizing R&D: It costs money to develop and document a new PC (learning the vagaries of drivers, interactions with myriad software packages, and cranky connections to all the possible peripherals that customers might have). The more PCs you sell, the more you get to spread this fixed cost over the customer base. (Even if you, Mr.NewPC Inc., wants to ignore this, the vendors that must supply you with engineering data and support won't).
2. Uncertainty of Sales: If you expect to sell 10,000 PCs tommorow, then the basic statistics of random arrivals of orders means that there is a 95% chance of recieving betwen 9,800 and 10,200 orders. So, you order parts for 200 extra systems (2%) provides cover in case of high demand. If demand is low, you can sell the extra 400 systems in the first few minutes of the following day. On the other hand, if you expect to only sell 25 PCs tomorrow, then these same statistical issues mean that there is a 95% chance of recieving between 15 and 35 orders. To cover the same range, you need to order 40% more parts than the average expected sales and a low demand day leaves you with 20 extra systems (almosty a full day's sales) sitting in inventory.
3. Marketing Costs: If you want to be the next Dell, you need to tell people about you. A nationally broadcast ad costs the same regardless of whether you sell millions of PCs per year or only a few PCs per year. Maybe you can find more targetted ad outlets. Maybe you can rely on word of month (although given that most dissatisfied customers are more vocal than satisfied one, word of mouth is a dicy strategy). EVen if the ad is targetted, the creation of the ad is stil a fixed cost that gets divided by the number of PCs you sell.
I'm not saying that small Mon&Pop PC companies don't have a niche (some customers will always be willing to pay more in order to buy face to face from someone they know locally). I'm only saying that big PC makers have advantages in scale.
Two wrongs don't make a right, but three lefts do.
Audrey. The eVilla. The list goes on.
Internet appliances came and went. All in the blink of an eye. What you're talking about has happened. And failed.
Because it's far, far cheaper and less work to bitch then it is to start a company :P
autopr0n is like, down and stuff.
That a TiVo is a general purpose computer running Linux. It's not hard to make a general purpose machine 'just work' for what you buy it for. The problem comes when people add in new software and drivers. If you buy a new dell, it'll 'just work' as long as you like as long as you never upgrade the hardware or software (assuming you don't connect it to the internet, or that no security patches break the system... )
autopr0n is like, down and stuff.
Actually the reason not to get into the PC business is because it's stupid. Unless you have tons of money to advertise, why would anyone buy from a 'no name' company when they could get a Dell, probably for cheaper? Anyone who knows enough about computers to judge their quality would just build their own anyway.
Maybe if you made super-high end systems like Alienware, or some other companies, and could justify a heavy premium, you might make money.
Of course, then you would need even more money to start with.
Not only is it stupid, it's also unoriginal. I mean why would you would you want to get into the business of selling basically the exact same thing as hundreds of other companies? Why not make something Unique and interesting?
autopr0n is like, down and stuff.
http://www1.us.dell.com/content/topics/segtopic.as px/kiosk?c=us&cs=19&l=en&s=dhs&~section=pa
every day http://en.wikipedia.org/wiki/Special:Random
Your goatse link needs to be hidden better.
"Verbing weirds language." -- Calvin
...if you pay for it. I believe you can literally get a white-colored case under this program (I've seen photos elsewhere of the cases.)
Dell's white box program
Dell uses just-in-time inventory and has the component makers store the parts until Dell needs them. Basically the parts aren't Dell's until they are in the system.
"Karma can only be portioned out by the cosmos." -Homer Simpson
The real question which bears some discussion is where and how people will be buying hardware in the future. For a long time Dell or Gateway could count on business because of their reputations. Those reputations seem to slipping.
If a couple of large companies aren't holding a large share of the market, who will? It's not likely to be the local computer store, which is less than welcoming to mom and pop. Judging by the lack of ongoing success thus far, companies like Wal-Mart or Sears won't be selling branded machines in any volume (and wouldn't want the support headaches anyhow).
I believe that there is a spot in the market right now for something new.
The problem with buying from retail outlets is that you get a one size fits all machine which usually isn't quite what you need or want. Maybe we'll see something along a Dell model, but aimed at non-business purchasers. On-line or phone sales, but allowing customers to customize the system for say music use, or gaming, or to downgrade for someone who just does e-mail and word processing.
Install the apps or games or features that the customer wants, and ignore the ones that they don't. Maybe offer a shiny branded Linux box that will do everything that the WinXp boxes do, but a bit cheaper.
There is a market of people who just want to buy a box that works, and who don't necessarily want all the extra gobbledy gook that retail systems include. If you can add quality customer service you can probably even charge a premium.
Remember, Dell's market wasn't built on price, it was built on a reputation for quality, for building the system that you needed (optional iupgrades tec), and for having top notch support.
Three Squirrels
you have a point!
It is easy to be pompus and critical from a seat of ignorance! You are typical of what it wrong with your generation of Americans. Smart Mouth, ignorant mind.
Put up or shut up!
My local Community college has a "PC Management" class that just built 36 kickass whitebox CAD systems. Most parts were from Tiger Direct, not the cheapest place, but the return policy help when a student scorches a Motheboard. The Students learn hands-on, and the college gets a price break on better'n'dell equipment. Win-Win Situation.
Well maybe not never, but it seems that computers are on the verge of going completely to a commodity device, if they already haven't.
As computers get cheaper, which in turn makes them more disposable, which in turn makes the purchase of one not that big of a deal, people will seek out the lowest price, not caring as much about quality, if they can get another one cheaply. We're not there yet, but almost. It's looking like the new opportunity is laptops, they are coming down in price and accounting for more and more computer sales, but Dell is already leading there too.
I think the more interesting part, is what's going to happend to Apple as computer prices keep going down. The price jump to a Mac seems to get longer and Apple's computer sales keep dropping.
"Karma can only be portioned out by the cosmos." -Homer Simpson
... I have built my computers from parts for years, however it looks like my next box *might* be a Dell. I need 1 question answered: If I choose to purchase an operating system with a new computer, is it going to be actual Microsoft CD or some "welcome To Dell. Here's Your Shovelware CD". I ask because a new box will run Debian and I'd probably opt to install Windoze on an old (non-Dell box).
> Why not start the same way ... Apple... took by
> forming your own store, getting in touch with
> Asian suppliers...
Um, perhaps you should actually _read_ about how Apple started?
Warning: this article may contain humor, sarcasm, parody, and perhaps even irony. Read at your own risk.
I sell whiteboxes like more than 20 companies in my metropolitan area! I sell my expertise with each and every system. Training, troubleshooting, hand holding, etc. Hardware customers get a discount rate on my consulting services.
My total advertising budges is spent on a yellow-pages advert. I do attend the local trade shows, and all of the local computer parts shows. Satisfied customers are my advertising agency.
You can beat my prices at Dell, gateway, Walmart, even Radioshack, and at the other no-name shops. Price is just a number, support is the key.
I have more customers than I can handle alone, I have had to expand and take on employees. I am a VAR, That stands for Value Added Reseller. Better yet, I am local, I speak the local dialect, and I can service my clients faster and more efficiently than any large outsourced corporation.
I started out on a shoe-string 6 years ago, with $5000 of personal savings. I'm clearing 6 figures yearly with no outside investing, the bigest loan I had was a note for the company van, $26K.
So, I am making money on Average systems, selling at a premium, and making money. How does this reality fit your theory?
Ahh, it takes more than wishes and wants to get ahead, get off your chair and do something! Or as Tom said, stop whining.
The problem that I come up against is support: What if it goes wrong? they whine.
I get commission from leads to my mate's beige-box PC business... and my friend provides a warranty, but he doesn't have the time or means to pick up and drop back PCs, or swap out 95% of the system if necessary.
Some of the people i've come accross (ie the potential customers) almost seem to know that they can get an identical system cheaper... but will not make the leap to someone who they've never heard of. It seems like they want to pay 1/minute for tech support, as opposed to local rate!
For those of you (in the UK) interested in earning me some commission, check out Pro's Friend :)
You cant make anything foolproof, they'll only invent better fools.
I personally think that the next big thing that people will want although they don't know why are Mini-ITX computers.
Look at the apps.
It is a computer, but it looks like a gamecube in size and is a good price. It is the new WebTV with REAL FEATURES.
Laptops are great, and WebTV was a great idea that never caught on, but why not Webtv? Well my mother had one and this is all I can say:
1. It was only one service, and that was getting expensive. Dial up only.
2. When a person gets net savvy, they want features after a bit. WebTV offered no features.
3. NO MOUSE. You just cannot navigate the web without a mouse. END OF DISCUSSION.
4. It really is a computer. But it looks like an appliance.
Somewhere in the future, the Webtv, Xbox, and Mini-ITX computer will merge.
That is when it will get interesting.
You want to have a small number of beige boxes that are solid and need virtually no support.
But offering only 2 models, your business probably won't last very long.
...you witless geek!
The article writer finally has realized that most of his readers are 13-16 year old kiddies.
Yes, indeed the component and barebones system manufacturers want to do business and SELL their wares! Gosh!
... could be achieved by combining this with recent failures of GPS in Europe. See this article here (in German).
Abstract: Satellite SVN23 (PRN23) has gone off-line due to an "anomalous condition", which led to people having their GPS devices telling them they flew 14 km high with 120kph.
Forget them. If you aren't able to put a computer toghether yourself, instead of buying a cheap suitable Dell or Compaq computer for your internet and basic needs, just go buy an extremely overpriced IBM T40P.
Economies of Scale require any competitors to Dell to have massive amounts of venture capital, which prohibits what you suggest. Also Dell has had years to develop appropriate automation, quality control procedures, and customer support systems which would require a great deal of work to be able to compete with a 500$/computer. Of Course, I don't touch on all of the issues involved in a business or even this idea but these are a few of the things that would stop me from even spending time(=money) researching the possibility.
If you want to start a business, identify a real problem or need, and develop a product or service to address it. If you want to build computers, don't try to copy Intel and Microsoft. Design a computer that does something new and unique, or does it significantly better than existing systems.
Mea navis aericumbens anguillis abundat
...and this fuels the sales of general purpose computers. How many people buy the top of the line Dell to do Email and Web Surfing? Lots I'm sure...and some of them must be smart enough to know they can do those things for less...easier...with a dedicated device.
Thing is, they don't want to look like 'wussies' infront of their buddies (You mean you got the 6? should have got the V8 man!) and some actually do believe that they will use their new PC to make world class films and music. Heh.
Some trend that sells tarted up trucks as 'SUVs' to people for whom a station wagon would be overkill.
Blar.
Sorry, but I had to point out that "et all." is incorrect. The real abbreviation is "et al." It is short for "et alii," meaning "and others."
I actually laughed when I saw what seemed to be just a randomly used Latin conjunction.
Consider this: Design a Linux-based home PC targeted at Wal-Mart customers and their kids. The "no nonsense, no excuses" PC for America.
I have an observation on your point #1. Your company can have as many owners you want, as far as your business plan takes that in count. When you are starting your company you cannot expect to make profit inmediatly, Amazon in it's complex business model took 4 year to have profit, this time was planned.
If you want to receive money from day 1 then you need to include your salary (and the other owners' salaries)in the expenses, if you don't have earning after the considered amount of time when the equilibrium point is calculated. Once you have passed this point, if you have revenues then you can split with all your partners.
You can get parts cheaper than an assembled pc. That makes perfect sence. Dell, Gateway and others have to Pay for it to be assembled, shipped, marketed ect. In addition to that they must make enough to pay for the lights, executives, tech support, and all of the other bills they pay. So yes individuals that do not have to pay for all of those things can build pc's cheaper, but not at the volume that any major pc manufacurer does.
Well.. maybe. Or Maybe not. But Definitely not sort of.
Haha, then perhaps the future of efficiency demands that Dell become Apple's reseller and distributor; Apple then gets higher volume, and Dell gets higher margin, and both companies win : )
GPL Deconstructed
If you are looking to sell expensive boxes, don't forget businesses. Build sharp, top-of-the-line boxes into shiny piano-black cases, then offer to setup their office network if they buy 3 or more of the things. Want 802.11g wireless and a 5 year warranty on that? Insurance against fire, flood, acts of god? I can keep that printer of yours topped off for just $50 a month. Know moore's law? For $100 per month I'll keep your system up-to-date (every 1.5 years).
There are a lot of niches to be filled while working with businesses. They're focused upon doing something other than computing, and could really care less about what WEP encryption is. Outsourcing that to someone else makes a lot of sense, and being the guys who sold them the hardware is a good way to get into their offices... and vice versa.
The ______ Agenda
Unless you want to go after a niche market (witness Alienware's success with PC gamers), taking on established vendors in what is now in many ways a commodity market is a very dangerous proposition.
Low margins, relentless competition, and an undifferentiated product aren't exactly the factors that would lead an experienced entrepreneur to want to enter a market.
Read the EFF's Fair Use FAQ
Here's the plan.
1. Collect Underpants
2. ?
3. Profit
It can't be beaten I tell you.
Let me know if you want to join in. I want to serve several niche markets. Unfortunately we will have to start with a biz plan that discusses ownership and how the venture is managed. If 8 people contact me, I figure 4 of us will have compatible ideas on how to proceed. Daniel dot Carden at cox dot net
And for the prices they charge you don't really care all that much about the specs. I'm sure there are some 1337 Gamerz who have to have that last 0.8% of performance.
I'm also sure that PHBs and suits will ALWAYS buy only HPaq. Or IBM Thinkpads or whatever they think they need.
My guess is that the huge battle for the home PC user in the near future will be between X-BOX vs PS 2/X. Actually we are looking at the warm-up round now. The home PC will soon be gone. Why start a new business that is already doomed.
X-BOX/PS2 with email client, browser, VoIP ports (like CISCO ATA186 and a friendly VoIP provider ~ Vonage, 8x8 or even AT&T), Video/Audio on Demand (with copyright issues settled), perfect gaming experience including online commuinty, DVD playback/record... And I don't care about OS, RAM, CPU. The big question will be about the shape of the services mix but the free market will have the last word...
And my wildest guess is that the X-BOX/PS2 will be provided by the service providers for FREE. Currently you get CISCO ATA 186 worth 140 USD for free when you sign up with Vonage ot 8x8. New PS2 at Amazon.com is priced at 149 USD. Well that's true only if you have Broadband. So keep your eyes on KOREA...
That's like asking who wants to be the next Michael Jackson. Or something.
This isn't 1980s. This is the 2000s. You don't have a vendor or two (IBM and Compaq in Dell's case) selling a 'home computer' upwards to $5000 without a $800 monitor.
Assembling your own white-box for $2000 with a $500 monitor in your apartment could be done pretty easily.
But now you have to build a white box system, offer 3 years of idiot level support & 3 years of parts warranty in order to begin to compete - and then you'd have to do it 20 - 30% less expensive than Dell who already has driven the bottom of the market low.
Unless there is something new out there that I don't see on Newegg.com or something, it'd be a lot harder than it was when Dell did it in the 80s.
As a rock-in-roll Physicist once said, No matter where you go, there you are.
The posts so far are about Dell's business model, but the article is asking techies to ignore Dell and build their own PCs, then build a business and negotiate for better prices. Why isn't anybody discussing building PCs?
I build PCs for myself, my friends, and my family. Most of them have custom "Solprovider" machines. I pick the parts; I build it; I install the software; I support them. PCs I build remain usable for over 5 years, and I average about 1 support call per machine per year. (If you are interested in what I build, see my October recommendations from the last time I built a PC.)
I am not attempting to turn this into a business. I have a very successful career, and the effort is too high and the margin is too low for this business to be worth my time. I refuse any money, although I expect a home-cooked dinner for my trouble, but then I only build PCs for people I care about. The other side is that these people know that I will never interrupt my paying work to help them, so sometimes their problems can take over a month to solve.
But why aren't you trying to sell PCs? You are already technical. You probably understand what the hardware does. You can learn how to use a screwdriver. You already know how to install software. The bad side is that you might have to install MSWindows if the buyer insists, but you could install grub for dual-booting, so every time the buyers watch it boot there is a chance they may choose Linux.
(Use the Maxtor 160GB drive. Use only 10GB for Linux and they will not complain. Tell them it is there so you can troubleshoot easier, but they can try it if they want. I am actually installing a new hard drive this way this week.)
I usually spend several days to research my recommendations. One day is spent researching the new technologies; one day is spent researching the various products; and a few hours are spent checking prices. Someone who builds more than one PC every 6 months would spend much less time per PC because their knowledge would remain current.
I spend my life entertaining my brain.
...getting in touch with Asian suppliers who "are more than willing" to give you discounts,
Those Asian suppliers are obviously more than willing to meet Dell's ridiculous demans for lead times that force their suppliers to rent warehouses in Austin at their own expense, store large stocks at their own expense, have every product return by a customer -- even if it has nothing to do with that supplier's hardware -- counted against them and generally be treated like dirt, bullied around and periodically be bumped off the supplier list with no warning just "to keep them on their toes".
Dell knows how to use their massive buying power and that a Chinese factory will work at cost or below just to avoid firing their employees.
Stop worrying about the risks of nuclear power and start worrying about the risks of not using nuclear power.
From the article:
Actually I prefer Glowing Box vendor, but what the hell. With WindowsXP and a bunch of free and open source programs (Fire/Thunderbird, etc) a small time vendor can do alot more than any time in the past ten years to provide a safe and good user experience to the massses. And I'm too busy trying to be a small time vendor working from home while my wife works outside the home, keep the two tech savvy friends who work as my full time road techs working (and one more part-timer/trainee), and get my new 2004 website online to actually sit down and write something about it.
HighSchool Startups building basic companies for dummies
Tech from home Part 1 and Part 2 A must read from someone who has "done it"
Incorporate or LLC Online One stop business creation for any state
U.S. Business Advisor sponsored by the SBA and a great resource.
Jonah Hex
Horror & SciFi Erotic Nudes
So interesting though the Chinese processor is, a SPARC based on one of the open specifications, is what I'd like to see turn into a viable business.
I don't see programmable gate arrays getting the sort of speed we want, at the sort of cost, in the near future, but again, knowing that processors can be built in those devices is reassuring.
> What you're talking about has happened.
> And failed.
Sometimes it takes a lot of tries for a
new thing to stick. There were many
hypertext systems before Tim
Berners-Lee did his variant. There
were many pen computers before
Palm broke through. Early failures do
not indicate a hopeless idea.
You forgot the loyal customer base. Apple was hurting not only because they couldn't bring in as many new customers. but a lot of dedicated Apple users left, not always willingly. Apple ditched the braindead managment, and brought back the iconic steve jobs. He got rid of a lot of the unnecessary variety, and concentrated on what Apple was good at. Not only did he pick up new customers, but brought back many that left. Now how can Dell generate that kind of loyalty?
Have you see the benchmarks? You're not going anywhere if you use those....
I have always viewed this business as being divided into three distinct groups:
1) Those who make things happen,
2) Those who observe what's happening, and
3) Those who wonder what the Hell happened.
Concealed Handgun License Courses in Plano, Texas
I've worked at a lot of companies big and small (120,000 employess down to 20 employess)
I've learned that big companies are doomed to becomming appalingly inefficient. I mean, words just can't describe how inefficient they are. The worst part is, most people at big companies started there, and have always worked there, or at another big company so they have no idea what the other world is like.
Honestly there are things that take a month at a big company that take 5 minutes at a small one. (Not because of cutting corners on needed process, but just plain inefficent stupidity).
So how do big companies survive? Just what eveyone's been posting, margin and big-company bullying. This is what balances things out.
But don't assume you can't beat Dell because you don't have their margins. You also don't have their inertia.
Incidentally, one exception is Microsoft (yah I worked there too, probalby should post AC). MS operates like a small company with 20,000 employees. My group consisted of 31 people: 30 engineers, and 1 admin. That would be unheard of at any other big company. They feel much better with like 5 working engineers, 5 people with engineer titles that do nothing, and 20 people that make spreadsheets that track what day today is, and what day tomorrow will be etc...
So we've focused on a different market. There is no "Dell or Compaq" in the server market - sure they sell rackmount machines, but they can't get the same discounts on them as they do on desktop hardware, so small companies like us can compete with the "big guys" (and we usually come out below their prices). We also offer better quality workmanship and customized modifications (something that can't always be said of our competitors) - the case manufacturers don't always understand that 1/16 of an inch tall or wide can make a difference between "fits" and "doesn't fit" in a rack, or that certain pieces of metal sticking up might short out certain motherboards.
Do you really need reason for beer? Wingman Brewers
I hope you have such joyful experiences with
a pre-built piece of shit that you throw it out
the window onto your car windshield.
All this is true on the assumption that cheap is good. Cheap is good so long as computers are expensive (i.e. over $300 in my opinion). When the price gets to about this level, cheap will stop equating to good, and people will start looking for what is really better. In this scenario high quality makers like Apple and Sony will be the winners.
As a comparison - look at the audio/video equipment. People no longer look for the cheapest camera/dvd player/tv, they look for the highest quality (for as long as it is not obscenely expensive, and even then it's not a problem). I made the mistake of buying a cheap cd-player last month for the kids - it lasted about a week. I think computers are going this route as well.
Dell is who they are because no one else can duplicate their business model.
Sure, you can say you line up Asian manufacturers, blah blah blah blah blah.
Do you think that IBM or HP/Compaq or Gateway haven't tried that?
Dell's business model is a one-of-a-kind distribution/supply chain mechanism that no one has been able to duplicate. They have such incredibly tight controls over inventory and they have pounded their suppliers into giving them everything that they want in terms of how their parts are delivered, when, at great prices.
The PC hardware business has a razor-sharp margin, and this this situation, the only way you can make big money is by volume. They have such great control over prices, they actually make money on the depreciation your computer undergoes by the time you place your order and by the time they ship your CPU.
I have built every single computer I've owned since 1988. My latest computer, Intel 2.4 GHz 800 FSB was a Dell for $412. How the hell can anyone compete against that? For $412, I'm getting a 40 GB hard drive 128 MB ram, 2.4 GHz CPU with a motherboard that supports AGP 8x, SATA, etc. And best of all, Dell's CPU cases are awesome! Not one single screw I need to use, everything is snap on. The case alone is worth $100+. So instead of building and making my computer, I went with Dell.
This is why you can't compete against them.
Just-in-time assembly. I imagine they're not stocking parts in a just-in-time fashion, at least not all of them.
In a purely JIT shop, everything would be obtained as it is needed (purely pull, no forecasts, no stock in principle). The primary downside is lag - you can't deliver until the slowest part has arrived/been produced and assembled.
The point is to use JIT where it's needed, on parts that drop fast in value / become obsolete very quick.. I'm sure they have lots of stock in Dell casings, ATA cables and Dell stickers (or companies which are basicly Dell inventory holders, if not), and very little of *the* fastest CPU/GFX card at any given moment.
JIT isn't a wonder cure, it needs to be applied with some sense. Computer assembly is a something of a star example though - well defined interfaces (PCI, AGP, CPU sockets) and modularity. It's no doubt it's the most important factor in Dell's success.
Kjella
Live today, because you never know what tomorrow brings
Anonymous Cowards are mentally deficient.
correct but only one piece of the puzzle ...
successful innovations had some, or all, of the following features: they were moderately new to the market, based on tried and tested technology, saved money, met customers' needs and supported existing practices. By contrast, the products that failed were based on cutting-edge or untested technology, followed a "me-too" approach, or were created with no clearly defined solution in mind.
Economist, Expect the unexpected talking about Why Innovation Fails , Carl Franklin
peterrenshaw ~ Another Scrappy Startup
Since when did CRAP become an obscenity needing *s in place of letters? Bro - you did this twice! What's next, we can't say "yellow" anymore because it's too suggestive of pee which is too suggestive of poo?
The flag just makes more sense than the constitution. - Judas Gutenberg
help quite a bit with this. Why? Services.
Anyone can sell a cheap box, so folks shop for the cheapest they can find. Well, every last one of those people are going to have problems. Next time they buy, they are going to be looking for solutions.
The current state of affairs strongly discourages this. What the big software companies want you to do is sell the cheap box, and their software. You build their business while just getting enough to sustain your own. Oh, you get the front line support calls too --thanks for playing!
With OSS, you can provide solutions and services that solve problems on a local scale. Now you get the customer and the dollars for servicing them. Each and every one of those support calls is now a chance for you to build your business instead of your suppliers...
Blogging because I can...
This story is great. I never thought of that.
Now would the writers just be so kind as to fork over the 100k I need in startup capital.
Sorry, I've seen this way too many times on /. to let it slide again.
The word is "niche"
.
If it's really all about the services, it would be great to see the XBox services offered to the other platform which would obviously cope: PC. Yes, we have everything the XBox has...
Karma: It's all a bunch of tree-huggin' hippy crap!
Here's to Slashdot and all the armchair geeks!
Manipulate the moderator system! Mod someone as "overrated" today.
you need money,
so you need to start saving up to buy a lot somewhere, then you need money for advertising, then you need money to buy low end parts.
So, here's a plan:
start your store up as a kind of computer thrift store, and rebuild old computers and everything, sell them for low cost, and accept donations, and contribute a chunk of your profits to some noble cause (such as cacner or opensource, etc)
and eventually start building your own quality line of computers, that will start having their own part of the store..
and while you're at it open a small coffee shop area that allows people to browse the net at a small fee like most net cafes, do things that bring people to your store, then wit the more money you get, open more stores, and then just keep it all up.
get contracts with companies like bawls and get some vending machines and snacks people can get, soon you'll have a place that will appeal to your hardcore customers. namely the gamers and the geeks.
Add in assembly and a warranty, and Dell is cheaper than buying parts.
For a "good enough" consumer PC for my family, I prefer that they buy a PC from Dell, at about what I'd pay for the parts. They get warranty support from Dell, I get to keep the time I'd have spent assembling a machine from parts.The mid-range Dell personal desktop machines are actually very good. While I've run into complications upgrading Gateway and Compaq machines, it's easy to add storage, drives, and cards to Dell. Just about anything except the motherboard and powersupply is standard and can be replaced.
I do not deploy Linux. Ever.
Oh, that's a "G". Never mind...
Oh! A "G"! [long pause] Oh!
It took me way to long to get that. Sorry.
My other car is a 1984 Nark Avenger.
I'll sell it on eBay.
Monkey's work, and one would have to have a monkey's intelligence to have the desire to enter the "whitebox" business.
There are a bunch of us techies that know their stuff in computers. The real way to do is to work together and make an employee owned version of a dell.
Here's how we do it:
1. we get a central group together that sets up a distribution center, gets the asian low cost, volume deals and then a JIT supply chain. The center assembles and ships the computers either to customers or our local reps. This entity would have a salary cap on "executives" so that there wouldn't be some big CEO, CFO, etc that takes the company profits. There would be an employee based oversight committee on major changes or those affecting executive salaries. All profits by this main entity would be put towards the business, marketing the main brand or profit sharing. News and technical information would be shared with all members.
2. In local comminities, those like us would be trained / certified to handle PC support. These reps would work somewhat like technical francises.
There would be a shared repository for problems and solutions that would be shared. We'd quickly develop support best practices and our high level of knowledge would enshure customer loyalty. Certain support plans would cost more money.
We'd stick to some standardized PC choices to limit the number of configurations, like just 1 or 2 motherboards for each of the AMD/Intel lines.
Bottom line, if we worked together, it could really be something. Once it hit our stride it'd be like open source going against microsoft.
I was going to build a PC for my girlfriend.... but all the cases at the parts shop were either silver, black, or beige.
....but all it took was a pink case (hard to find) which sealed the deal.
So she found a company that built computers in pink cases, because pink looked "cute".
Actually they took about 2 weeks to build it, and it was damn cheap.
READY.
PRINT ""+-0
I haven't read the article. Sorry about that. Having said that, I'll inject my thoughts :)
:( I personally would rather attempt to start a small business that INNOVATES and introduces something new.
I think what the thread proposes is MUCH HARDER than people think. If the proposal is correct, how come the thousands of small business stores that sell clone PCs aren't doing it? I'm sure one of these stores would have tried it. I mean, there are probably 300 PC stores in Toronto. I would imagine some of them would have tried it.
I see several potential problems. First of all, margins in the PC industry are VERY LOW. You are literally making nothing. This might sound good to a small business since they can accept lower margins than large corporations. That's true in some cases but not here. The large corporations simply will have higher ECONOMIES OF SCALE. They will also be able to get better prices from their suppliers. Someone who ships 10,000 PCs has greater clout and can get lower prices than someone who ships 10. Companies like Dell won (in the 90's) because they competed with others like IBM, etc who had higher costs. Unfortunately for you, you'll be competing with Dell's present day low margins. I'm not sure you can win against that. Sure, you have lower advertising costs, are more flexible, can possibly ship lower cost software (eg. GNU/linux), but I don't know...
I think it'll end up being similar to the small farmer vs agribusiness issue. The small farmer loses all the time (unless some socialist ideal is used to save the farmer eg. subsidies, heavy restrictions on how big a farm and how many farms a large corporation may own, etc).
Having said all that, I don't want to discourage any of you. If you like it, do a market study and if it seems viable, go for it. It's just that I don't see it working out--but then again I'm a loser
Sivaram Velauthapillai
Sivaram Velauthapillai
Seeking the meaning of life... @slashdot of all places
That is a myth.
Microsoft didn't invest...they paid a settlement to avoid being found guilty over patent infringement. Which I don't need to point out is another predatory practice so many companies are fond of when they don't have any ideas of their own...same as Dell.
The whole webpage is a "recommendation", so it is defined as an opinion. It is MY opinion, but still just an opinion. I am glad you enjoyed it.
--- Operating System ---
I was an avid gamer. (I have not had the time for a couple of years, since I am trying to launch several software products.) Windows98SE is still the best gaming platform. The PCs I build are for single-user, so the multi-user abilities of the NT line are more of an annoyance than a benefit.
A friend uses Win2K, and had problems with many games. We tried to troubleshoot them, but he eventually just gave them to me. We also had a few hardware issues. (He returned that stuff.)
I do not like WindowsXP. I do not like the interface, and even after changing everything back to "normal", it still performs differently in ways I do not like. (I also use several Linuxes, so just different would not bother me.) I also seem to have the ability to crash XP often. I know people who are using it, but I cannot recommend it.
My recommendations have not stopped several of my friends and family from running XP. It does mean they have to listen to me say "I told you so" every time they call me for software support, which is much more often than the Windows98SE users.
--- AMD vs. Intel ---
I did start that recommendation with "I do not understand".
The savings is less than $100. According to SharkeyExtreme's DEC 31 CPU Price Guide, the P4 2.6Ghz 800Mhz bus is $162. The "equivalent" Athlon XP 2600+ (2.08GHz) 333Mhz bus is $90. So you save $72.
- The P4-2.4 800bus is $153. Athlon XP 2400+ (2GHz) 200bus is $75, so the savings is $78, but the AMD bus is one fourth the Intel.
- You are running a slower chip and get less than half the bus speed. Does the higher latency more than halve the speed of the bus? Is the equivalency valid when comparing to the 800Mhz bus?
- AMD's fastest CPU is 2.2Ghz, but even the Athlon XP 3000+ (2.16GHz) costs more than the P4-2.6, so you cannot compare at the same CPU speed. According to AMD's chip speeds, every 80Mhz increase for AMD is equal to a 200Mhz increase for Intel. Can this be true?
- Apple has been selling better quality but slower speed CPUs for years, so the "equivalency" system has tradition. It feels like AMDs equivalency system is a marketing ploy from when AMD had the faster bus and could prove the numbers, but it is still used because AMD fell behind in the 32-bit CPU technology and needs to appear better.
- $72 is not much when the system still costs over $1000. If buying the Intel makes the system usable for a few more months, and gives better performance during its life, than it is worth it. My whole recommendation is about spending the money where it makes a difference.
If using an AMD gives a true perfomance increase, then please give me details. If it is to save a few bucks at the cost of any perfomance, then I would prefer to stay with Intel.
I spend my life entertaining my brain.
This does not surprise me in the least. Where I work, we generally do computers at 17.5% margin, large parts (eg colour laser printers) at 20%, software at 25% and normal parts at 35%. Laptop accessories (specialized equipment) is typically done at 35%.
:)), and if something can't be solved in 10 minutes (over the phone), then we say that it's easier if you can bring your machine in...
We get away with it, and have for just over 10 years. We are the only local manufacturer with English-speaking staff and good service, which probably helps.
All of our stuff is off-the-shelf componentry. Typically, a system will contain motherboards from Gigabyte, Seagate Hard Drives, AData RAM, Intel CPUS, Hyena or Enermax Power Supplies, Dynalink (Askey) or US Robotics Modems, Panasonic Floppy Drives, LG optical drives, LG, AOC or Viewsonic Monitors (depending on CRT/LCD), Genius or MS Keyboards/Mice, Genius, Altec Lansing or Creative Speakers... all pretty good stuff. Not necessarily top of the line or tweaked to perfection, but it works, and we have very few problems.
Stuff that we do have problems with is generally fixed within 2 days or so. The staff (well, mostly me, anyway) is knowledgable in most fields - be it Hardware or Software related. (Well, I do have some quips...)
(Those that live in NZ will roughly know the story of why NZ's LARGEST manufacturer went bust... check www.nzherald.co.nz and type PC Company in the search box... look for stories around September/October 2003...)
We keep a balance of good service by not supporting software to a great extent (like, we tell customers, nicely, to piss off if they ask us how to use Kazaa or Grokster or if they are having problems with that stuff on their systems... We can fix it, but we charge
Just my donation of 2c.
Founder & COO, Hayai India (hayai.in) / USA (hayaibroadband.com)