Branded Systems May Be Declining, But The White-Box Market Is Dynamic

The white-box market,or more accurately, the custom-system market, as we here in the CMP Channel Group prefer to call it,is not without its challenges.

During the opening research presentation at last week's XChange Tech Builder conference in Summerlin, Nev., Channel Group Research Director Monty Cornell asked a few questions whose answers indicated that the move toward building more custom notebooks and servers is in full swing.

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ROBERT FALETRA

Can be reached at (516) 562-7812 or via e-mail at [email protected].

It makes sense, of course, given the opportunity in notebook sales and the fact that servers are a highly customized product.

But attendees at the show, which is owned by CMP's Channel Group, noted that the supply of components necessary to build whitebooks is anything but reliable.

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That will change, of course, as this market builds. CRN data indicates that 13 percent of solution providers deal with whitebooks. That compares with more than a third of the channel that is selling nonbranded desktop and servers.

This fact is not being lost on the distributors that are leaders in the white-box market and manufacturers that covet a bigger piece of this market.

Distributors such as D&H have full offerings in the whitebook market and see this space as a healthy growth area. But D&H is moving on other fronts in this market as well and forging new relationships that will help its customers compete.

Last week, for instance, D&H announced at XChange that it would begin offering new system-builder packs of eTrust antivirus software from Computer Associates.

The white-box market is also of particular interest to Intel and Advanced Micro Devices, who actively work it.

It's important to both companies that the white-box community be healthy and growing. While Intel would never admit to it publicly, the fact is, a healthy and growing white-box market is becoming more important as more branded-system manufacturers exit the market.

Intel loses some pricing power when the market consolidates and it has fewer OEM customers. Market-share gains by Dell and Hewlett-Packard give those two manufacturers more clout in negotiations for CPU prices.

For AMD, this community offers a bright spot in its battle with Intel. The white-box market is a more level playing field for AMD and one where it can gain share against its archrival.

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'CRN data indicates 13 percent of solution providers deal with whitebooks, compared with more than a third of the channel selling nonbranded desktops and servers, a fact not lost on distributors and manufacturers.'

But while the distributors and microprocessor manufacturers aggressively work this market, Microsoft tends to dance around it. Microsoft is certainly much less aggressive here, given its monopoly position.

It's a market Microsoft ought to pay more attention to, and that day is coming. In addition to a growing number of solution providers building whitebooks, CRN numbers are also showing that more custom system builders are offering Linux as well.

The number isn't huge by any stretch of the imagination. But it's a number that is very likely to increase. While Microsoft is focused on fighting Linux in other parts of its business, it also needs to pay attention to the inroads that the open-source software movement is making in this community.

All this just goes to show you that opportunity does exist in this market.

While hundreds of branded-system manufacturers have gone out of business over the past 15 years, the white-box market continues to grow along with the rest of the market.

Make something happen. I can be reached at (516) 562-7812 or via e-mail at [email protected].