While many resellers will look to white-books as a possible saviour, IDC’s Sager says resellers could not compare the past success of white-boxes against branded desktops with the notebook market.
"White-boxes have been able to be price competitive and build economies of scale," he says. "But with notebooks, the multinationals are heavily favoured and are about three years ahead of any white-book vendor."
However, in the last quarter, white-books have gained a little, going from 5.2 percent to 6 percent of the notebook market, Sager says.
"It’s going to take them a while to figure out how they will approach the market and a lot of it will be on the back of what Microsoft and Intel can do to support them," he says.
David Wu, general manager of Queensland-based reseller Computer Australia, disagrees with the value of white-books for a number of reasons.
One is stock. With white-boxes, lots of parts can be kept on-site and sold individually, whereas customer demand for such parts for notebooks was low.
"If resellers do keep parts and prices drop or technology changes, you get stuck with the stock, or you won’t have the right stock for the customer," he says.
Second is the issue of warranties and quality control. Different manufacturers produce different parts and only warranty their own products. The white-book produced by a local shop cannot
compete with international warranty offers, leaving customers exposed when overseas, Wu says.
Third, large notebook manufacturers often get a lot of funding from Microsoft and Intel and use that funding, plus their own, to heavily market their own notebooks.
"For example, ASUS has done a lot of press, TV, radio, magazine advertising lately, whereas local white-book producers can’t afford to do that because of a lack of funding," Wu says. "So their brand will not be as well known as those larger multinational brands."
Nowadays, the fact white-books are not that much cheaper than brandeds was not the only challenge facing white-book manufacturers and distributors, Toshiba’s Whittard, says.
"A white-book guy has to do his own marketing, has to spend a bare minimum of 3 percent of their turnover just to make a noise, and they have to then do their own collateral, do their own PR, create their own sales tools, advertising, create a brand, and differentiate themselves and get the message out there," he says.
Then there’s doing their own packaging, providing their own website, creating their own bios and drivers, providing service infrastructure, having the resources for repairs, carrying spares inventory, and in case of an epidemic failure of some sort you have to have accruals in your balance sheet to cover that, he adds.
It seems even all that is not enough to deter some. Henry Lee, notebook product marketing manager for local white-book manufacturer Optima, says white-books will always have a future against well-established brands as they continue to provide flexibility in terms of specifications, local logistics and service.
"With white-books around, the channel will continue to enjoy competitive pricing and specs," Lee says. "Many customers and end users who purchase from local resellers prefer the closer relationship they get and generally better service."
Jeff Li, product manager, Pioneer Computers Australia concurs. ‘Notebook sales are going well, better than last year,’ he says.
"As we know other brands are making a loss on the sub-$1000 notebooks, but we’re still making money and dealers are making money."
Pioneer builds to order in Malaysia and Sydney, and Li says the company has 20 build-to-order models, whereas most of the others only have four to six. Li says Pioneer was the first to have face recognition technology on its notebooks, and in two weeks, notebooks with AMD’s dual-core technology will be available.
"We have been in this market for eight years," he says. "We work very closely with the factories; if you don’t have that relationship, you won’t do notebook business. The first couple of years were tough, but now it’s picking up."
To try to give Pioneer more muscle, Li says the company is working with Intel on a new build-to-order program for dealers with huge nation-wide advertising.
White-book players know the multinational companies have a head start over the channel in terms of brand awareness, but distributor TodayTech is not deterred.
Its marketing manager, Jennifer Hsieh, says you have to take it step by step, gradually getting the word out, holding seminars, showcasing the latest technology and notebooks to customers.
"With build-to-order, the reseller has more control over the product they sell, and can get a competitive edge," she says. "For resellers there’s more money in customised and fully configured white-books, helping resellers expand their business. Freedom to control their business is slowly converting resellers."
Following this approach, TodayTech is launching a series of notebooks called Macron, Hsieh says.
"These notebooks are a fully integrated unit," she says. "How it works is we’ll have a starting point for resellers and if they want, they can put in a different CPU or a different chipset or graphics kit."
She also says TodayTech will have two machines fully available with the Napa platform in January — in both Macron series and barebone series.
"And by end of Q1 2006 we will have six models with Napa," she says. "I believe we’re one of the first to have the Napa platform."
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