The strengths that see white-box makers dominate the heavily commoditised desktop market are not helping them fight multinational vendors in the notebook arena, with white-books only making up 5.9 percent of Australia’s notebook market in the first quarter of this year.
Confident local system builders, such as TodayTech, feel it is only a matter of time before its white-book offerings see the same success in this country as white-boxes.
The white-box market has a decade head start on the white-book market but will soon catch up, says TodayTech marketing manager Jennifer Hsieh.
"White-book is parallel to where PC was 10 years ago. We really see a parallel between the two and we really believe it’s only a matter of time before the white-book concept will be as popular as the white-box concept," Hsieh says.
"The new technology and design is far more advanced from where white-books emerged years and years ago. Resellers need to build up their confidence and explore the hottest trend of mobile technology. If they believe in their abilities, they are definitely ready for the next step in the notebook evolution."
Fellow Australian white-book builder, Optima, is optimistic about white-book’s potential – having recently fended off multinational vendors to win a contract to supply more than 2400 white-books to the Northern Territory’s Department of Employment, Education and Training.
As in the white-box market, a strong service offering is just as important as competitive pricing, says Optima managing director Cornel Ung.
"The Northern Territory deal is one of the biggest single orders we’ve received from a government department," Ung says.
| State of play |
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Whereas the initial price difference in the desktop market between local and multinational offerings helped entrench white-box’s supremacy in Australia market, white-book entered a much more level playing field.
As such, Ung says it will "take a while" before white-book’s market share in Australia approaches that of white-box.
"Unfortunately multinational pricing is very, very aggressive at the moment, so I couldn’t see how white-box and whitebook will increase their market share in the short term," he says.
Industry watcher IDC’s PC hardware analyst Michael Sager cannot foresee a time when white-book will capture half of the Australian market.
"This year white-book will not take off, maybe 2006. If they can get 30 percent of notebooks within four years, that would be a somewhat reasonable target," Sager says.
"It probably depends on the manufacturing. They have to decide upon what the standard notebook platform is going to be. In a desktop the components are standard, you can mess around with a tower and build it however you want. Notebooks are an entirely different scenario and, until standardisation happens, it’s going to be an inhibitor to white-book growth."
Kevin Ho, product manager at drive manufacturer Seagate Technology, says, however, that the white-book market is still new and the industry had to facilitate initiatives to generate awareness and build infrastructure for future growth.
"Through these efforts, the white-book market will grow accordingly.The whitebook market should continue to grow with the overall demand of mobile computing," he says.
Local assembler Westan abandoned the white-book market several years ago but is still ‘keeping on eye’ on the market, says Westan managing director Victor Aghtan.
"We were one of the first players in the white-book market with TwinHead but at the time the quality was a bit unstable and eventually we had to give it up because it was hurting us more than it was benefiting us," Aghtan says.
"It’s also easier for the channel to adapt if you have a standard platform."
Chip manufacturing giant Intel is working with third parties to provide a number of standardised ‘building blocks’ for white-books to coincide with next year’s launch of its planned Napa platform, the chip maker’s executives said at the XChange Tech Builder conference in Las Vegas last month.
Such standardisation will be a "good opportunity for white-book manufacturers," says Intel area sales manager for Australia & New Zealand,Andrew McLean.
"Thanks to standards, local system builders can build thin, attractive, Centrinobased notebooks now," McLean says.
| The problems |
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Optima’s Ung is yet to see results from Intel’s push towards modular design but is still hopeful it will be a boost to whitebook builders.
"Intel want to have a modularised white-book concept so people can build to an industry standard, to allow them to put a product together like the desktop by having different industry standard components. They have been pushing modular for about two years, but I haven’t seen any success yet," Ung says.
"Still, Intel pursued the tier 1 manufacturers in Taiwan to support the white-book market. This sort of modular model will provide flexibility to the local vendor, who can then offer custom-built products to the customer’s requirements."
AMD’s Australia and New Zealand marketing manager Caroline Francis does not share Ung’s optimism that notebook standardisation will deliver benefits to the white-book builders.
"The standardisation of white-books in the Australian market will create less differentiation for white-book manufacturers and reduce the amount of flexibility in the offerings they bring to the customer," Francis says.
"AMD offers a high degree of flexibility across the range of processor families through the validation and recommendation of multiple motherboard and chipset designs. This flexibility allows white-box vendors to position a differentiated product range at competitive price points without locking them into a proprietary solution, thus remaining competitive in an aggressively priced market."
While some local system builders might see standardisation as the saviour of white-book, multinational players are also quick to point out that design innovation is a key factor in their current domination of the notebook market.
Access to the existing notebooks standards – such as those for hard drives and CPUs – has not seen white-book take off, says Toshiba Information Systems general manager Mark Whittard.
"It is the differentiation through design and technology innovation that will continue to reward companies like Toshiba who continue to invest in research and development, design, engineering and manufacturing," Whittard says.
"A simple example is the standardisation of the CPU. In a thin and light notebook chassis you have heat dissipation and thermal reliability issues that need to be resolved through engineering expertise, innovative patented designs and manufacturing processes."
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| Toshiba's Whittard: Generic features working against local builders |
"Therefore whilst these are unbranded there is lack of differentiation from one white-book to another so that only leaves price and local service and value add as your differentiator," he says.
"Additionally white-box products typically are assembled using lower quality components due to the fact that global brands ensure priority supply of premium quality components for utilisation in their brand products."
Buyers have a very different criteria when considering notebooks as opposed to desktops, says Lenovo offerings manager David Nicol.
"We’re talking about size, weight and battery life – criteria that require more sophisticated technology and design than a desktop and are therefore more difficult for a local assembler to deliver," Nicol says.
"As long as major notebook vendors including Lenovo continue to strive to deliver customers the thinnest and lightest notebook and differentiate ourselves by design features, for example titanium casing and metal hinging, then it’s going to be difficult to achieve a standard form factor that takes interchangeable components."
Local system builder Pioneer Computers Australia has been building white-books for eight years. A lack of standardisation leaves system builders at the mercy of component manufacturers, says Pioneer Computers Australia product manager Jeff Li. "For a desktop you can build them locally, you can get the motherboard and everything locally and support locally, but for notebook you have to have a long term, good relationship with one of the top five or 10 notebook manufacturers in the world."
These manufacturers are unlikely to agree on notebook standards in the near future, Li says. "When one company tries to go open standard, no-one follows them because they want to control the market. They wanted their own standard to get more market share," he says.
"These top five factories try to kill each other in Taiwan and China, so how are they going to reach agreement on a standard?"
Sony Vaio business manager Gordon Kerr agrees that white-book builders should not put their hopes in standardisation.
"If you’d asked me 18 months ago I would have said there was a good future for notebook standardisation, looking forward now I’m thinking otherwise because of the direction that laptops are taking. Now they have multimedia adaptors and socket and as many things as you can fit onto it, because it’s becoming a utility device," Kerr says.
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| ASUS' Chen: White-book still has its niche |
Notebooks have also become fashion accessories like mobile phones before them as, unlike desktop computers, people spend more time with their notebook and have a far more intimate relationship with it.
"Just like some people update their mobile phone every three months, people are updating their notebook every six months for the new styling even if the processor is the same – it’s based on styling and feature set," Kerr says.
"I think white-book will exist to a certain extent for some of the corporate people who just want a standard shape. In the mid-sized notebook, where they’re not caring too much about design, then there is a position for white-book."
A fashionable notebook is something to be seen with, agrees Hewlett-Packard new channels manager Rosalie Boyd. "A notebook is still seen as a status symbol, like the car you drive. A desktop sits in your office, it’s not attached to you, whereas a notebook is really an emotive buy."
Standardisation of notebooks will result in a lowest common denominator design, leaving them looking like "a big brick", says ASUS Australia/New Zealand director Ted Chen. "Of course notebooks can go standardised, but standardised means you can not have the optimal thermal and space settings, it means your notebook will look like a big brick. So long as people are happy to carry a heavy brick when they travel around the world, the white-book market will get up."
ASUS is one of the more recently players in Australia’s notebook market, having entered in the past few years along with other multi-nationals such as Samsung, BenQ and LG. Service and support is the key to the notebook market, Chen says.
"The notebook market is a big logistics war, you need a very formal approach to win market share," he says.
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| AMD's Francis: Standardisation creating less differentiation for white-books |
In a growing notebook market, Chen says new entrants such as ASUS have not stolen market share from the white-book builders as the prohibitive costs of service and support are holding them back.
"White-book still has a niche to survive in, such as built-to-order, but most of the white-book makers can only offer a return to base service and only keep a very limited spare parts," Chen says."They still have a market, but can not be as prosperous as the white-box market."
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