What's next for the white box?

A number of unconnected announcements, and a couple of conversations this month, got me thinking about the future for the white box market.

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By  Mark Sutton Published  February 24, 2002

A number of unconnected announcements, and a couple of conversations this month, got me thinking about the future for the white box market.

Guy Mathew covered this subject in some depth in last month’s CRN, but there are a few additional points that have come up since, that raised some questions in my mind.

The first was the declared intention of two of the biggest PC brands worldwide, to spend more money on marketing in this region.

Both Dell and Fujitsu Siemens have been operating in this region for sometime, with different degrees of success, but neither has really made much of an impression on the market—Dell has done the numbers—but neither has the sort of market share that they enjoy in their home territories.

Now both brands have made announcements that are going to start spending more time and money to get into the market, and mostly through leveraging the channel to hit that SMB sweet spot.

NEC, makers of the Packard Bell brand are also going after more market share. It will be interesting to see if any of them try to build the same sort of regional presence as Compaq, HP, Acer or IBM.

Considering the ongoing squeeze on PC margins, and the fact that Gateway has already withdrawn from this market, it is interesting that these companies feel the need to build their market share here.

It suggests two things to me. Firstly, with the HP-Compaq merger managing to get as far as regulatory approval, the big players can see there will soon be an opening in the market for another PC brand, and are positioning to take up the slack from the merged giant.

The second is that the local assembler market may be under real pressure. Intel has also announced recently that it will be putting a lot more into educating local assemblers to build servers, not just PCs.

There is also a growing sector of local assembly notebooks. Is the market diverging because it is maturing, or is it because the straight vanilla PC business is no longer profitable? I have put the question to a couple of distributors in the past week. In both case their answers can be met with ‘well he would say that, wouldn’t he’, but I think that between them, they get to the heart of the matter.

One says that regardless of what anyone thinks, the Middle East market is just the same as the US, just the same as Europe, just a little behind. As soon as the big name brands start to put proper effort into marketing, services and support, which, to a greater degree requires the local channel’s investment, then the white box market will take a massive hit. People will prefer to buy those big name brands, for the global level of support, and for the power of advertising.

The other believes that fundamentally, this market is different. Best price, flexibility and fit with the customer needs will override global marketing campaigns, brand awareness. People won’t spend an extra $300-400 just to get a familiar label on the front of the box. Local assemblers will always be able to offer that little bit of extra value, that Western buyers have just lost sight of.

I don’t know which of them is correct. I suspect that a concerted effort by Dell, Fujitsu Siemens and the rest might make a serious difference, especially to the ever expanding first time buyer market, both corporate and home. But when my name brand PC needs replacing, I’m self-building. After all, everyone wants the best price, right?

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