Hardware Vendors Should Address White Boxes Instead Of Focusing On Dell

Which brand has gained 25 points of share among the number of solution providers citing it as their best-selling brand over the past year? Which brand has never wavered from its original strategy of addressing specific customer needs, despite the fad trends that arise on a regular basis? Which brand is strongest in small businesses, has leveraged its strength with the channel to build momentum in servers, and now is showing signs of gaining significant share in portable units as well?

The white box, of course.

In February of last year, about 30 percent of solution providers named clones as their best-selling desktops. One year later, that number has jumped to 55 percent.

More remarkable, in my opinion, is the slow but steady growth of white-box portables. Historically, this has been a difficult market for white-box manufacturers because portables are one area where big-name vendors can gain an advantage through innovative technology.

But the percentage of channel players citing a white-box offering as their best-selling portable stood at 14 percent last month, up from just 3 percent the year before. The white box also continues to gain share in the server arena, climbing from 37 percent at this time last year to 41 percent now.

The rise of the white box is, of course, a function of solution providers pushing white boxes over branded machines.

In the SMB market especially, the solution provider is the brand. The business owners they service trust, listen and accept their guidance almost without question.

But we also need to look at where white boxes are gaining traction. Of the respondents participating in the monthly poll from which this white-box research is derived, 22 percent can be classified as systems integrators, 18 percent would be considered e-business/IT consultants, and 17 percent identified themselves as network integrators.

The distinctions are important because these types of organizations generally call on midsize or corporate accounts and do not exclusively service the SMB market.

I've been fascinated by the white-box market as far back as the early 1990s, when CRN launched the monthly tracking of the market and discovered its size was much larger than anyone had thought. What amazes me, however, is that instead of trying to gain market share against white-box makers, the big hardware vendors continually focus on Dell.

Rather than address the SMB market and the huge potential it offers, the big boys and girls keep chasing low-hanging fruit in large corporations. As a result, solution providers' profit on white-box sales typically remains higher than that on any branded machine.

It seems IBM is the only major manufacturer that has figured out that it doesn't make sense to try to beat Dell at its own game. While the company clearly views Dell as a major competitor in systems, it is in no way trying to emulate it.

The same cannot be said for Compaq Computer and Hewlett-Packard. They both continue to try to compete against Dell in an arena where the prize is razor-thin margins and unsustainable market share.

During my panel at CMP Media's recent Solution Provider Xchange conference in New Orleans, one solution provider asked the vendor participants why they were so focused on large businesses and encouraged them to build more and better programs to help his company service small businesses.

He was on target. That's where the opportunity really lies.

Make something happen. I can be reached at (516) 562-7812 or via e-mail at rfaletra @cmp.com.