Building up a profit with components

The PC components channel is rarely cited as the sexiest sector of the IT industry. People are often more interested in the final product than the nuts and bolts which make it possible. However, that does not mean the components space is void of attractive money-making opportunities, if resellers know how to efficiently operate in the space.

The components channel has a slightly more diverse mix of resellers than many IT channels. Partners in the components space vary from system integrators, white-box makers, more traditional resellers and a large spread of retailers offering upgrades. With this in mind, it is interesting to note just how vendors use the channel.

Using the channel

Caleb Leung, country manager A/NZ at AMD, said: “When we deal with the channel we offer partners a differentiator to ensure that resellers are positioned differently in the market. If you look at components resellers today, they could be focusing on the SMB sector, government or retail, but they have been evolving over the past couple of years and moving more into areas like the gaming space.

“The gaming area is not 100 percent hardcore gaming people buying $4,000 to $5,000 machines,” he said. “They are buying $2,000 PCs, too. It is also about more people using the internet for entertainment, such as watching video and overseas programs. That has been happening over the last couple of years and has added a new ingredient to the white-box space.”

Leung said the opportunity in the desktop space remains strong with graphic and CPUs to be a focus over the next 12 months.

Thomas Tapsas, area sales manager for A/NZ at rival Intel, said: “The channel is our biggest customer worldwide. It enables us to market the latest technology faster and let customers access these products. When we want to ramp up a new technology, the channel is ideal.”

Tapsas underlined the concept of the components channel having a diverse range of players. Intel partners include large system integrators who build PCs, mobiles and servers, with these firms building machines in the hundreds. “We also have the smaller guys that do their business more locally. When you take away the big guys, the majority of our channel serves the SMB market,” commented Tapsas.

The Intel camp also stresses the opportunities in the low cost computing space, though Tapsas questions how big it will be in Australia: “[The market] is new and growing, but there is not a lot integrators can do as the model for the low cost computers will be similar to mobile where you add it with a service.”

Tapsas added: “The video market is also very exciting at the moment with growth in the graphics area. Desktops may not be in double digit growth, like notebooks, but the space is still growing. I am positive about the future of the desktop, with components remaining quite strong.”

Alan Chen, managing director of Gigabyte Australia, said: “We have two types of channels: [the first is] our distribution channel where we have four distributors who deal with the resellers. The second type is us selling directly to system integrators who use Gigabyte products to build PCs.

“The PC growth every year is very significant. But a lot of this growth is from the mobility segment. Desktop sales are mainly coming from emerging markets, such as China, India and Russia. Desktops will remain stable or decline in Australia, and as a developed country we will be looking towards notebooks. Low cost PCs will become a main focus for vendors like Asus, HP, Acer and Dell, and low cost PCs will become mainstream.”

Earlier this month, Gigabyte extended its channel reach after appointing ultra mobile PC (UMPC) and tablet PC-specific distributor, Tegatech Australia.

“Gigabyte has several devices targeted at this new sector, of which Tegatech will play a role to promote and distribute them to the A/NZ sector,” said Hugo Ortega, principal of Tegatech. “In this space, as a distributor we will be expected to support, warrant, stock and advertise Gigabyte’s range. Tegatech will also be expected to target channel resellers and look at retail opportunities to help sustain volume expectations.”

Kevin Hartin, marketing manager at distributor Altech, said: “The distributors are the link between the component vendors and the resellers. When you break it down, nine out of 10 vendors want numbers. We are here to sell their products. The other one in 10 are the larger vendors with a more holistic approach and put a lot more into building their brand.”