David Versus Goliath

While this may hit white-box sellers where it hurts, they have more than one trick up their collective sleeve. Nimbleness and the ability to quickly bring new technology to market is another of white-box’s strengths compared to its multinational competitors, says Pioneer Computers Australia product manager Jeff Li.

"In the technology area we try to stay three to six months ahead of multinationals, but this can be difficult," Li says.

"Multinationals have direct support from Microsoft and Intel, and for CPUs we have to pay full price, but multinationals sometimes get special deals from Intel and even a special model you can’t get anywhere."

Pioneer sells desktop and notebook PCs via three main channels -- government, resellers and mass retailers such as Harvey Norman. Local support from Intel and Microsoft was crucial in gaining a foothold in the mass retailer channel, Li says.

"Locally, Microsoft and Intel really support us, AMD as well, but they have to fight with the US parent companies because all the special deals are done over there," Li says.

"For our first order from Harvey Norman we had huge support from Microsoft and Intel. Intel paid for the advertising and Microsoft provided some software for free."

Pioneer is a member of the Genuine Intel Dealer program started 10 years ago in Australia, which now has 160,000 resellers and system builders worldwide.

A significant amount of the silicon sold in the white-box market comes from Intel, says Intel area sales manager for Australia & New Zealand, Andrew McLean.

McLean denies Intel favours multinationals over local white-box builders, insisting local assemblers have access to new products within seven days of launch. "We have been extremely supportive of the local channel and we are very supportive of our multinational customers as well. We continue to work very hard with local system builders to put them in a position where they can have new product in a very timely fashion," McLean says.

"Intel provides to both local companies and multinationals the building blocks to build standards based PCs so the quality of product that can be manufactured by local system builders is very high."

Intel’s Mclean: Assemblers have access within seven days

"Occasionally we work specifically with the white-box vendors. An example of this is the Windows XP Media Center Edition launch where, prior to the availability, we worked with the systems builders to help them understand the technology and opportunity for them," Baxter says.

"Under the Microsoft Partner Program we’re about to launch a new white-box competency called the OEM Hardware Solutions Competency.This competency will enable system builders to reach the Certified or Gold Certified Partner level in the Microsoft Partner Program by recognising a system builder’s specialisation and expertise in building PCs, servers and devices, and pre-installing Microsoft software."

The Australian launches of Windows XP Media Center Edition and Intel’s Pentium D dual core processor both showcased computers from local system builders.While the rapid introduction of new technology is a strength of the white-box market, IDC’s Sager does not consider either of these technologies another string to their bow.

"Dual-core is a big advantage, but every 12 to 18 months there’s a technology upgrade so it’s not as though it’s something completely new. Dual core is completely new, but not the upgrade cycle," Sager says.

"I think the biggest thing is that there’s no killer app attached, until Longhorn comes out. If it’s good, that would be the next killer app."