Custom Systems: Component Shortages Hurt Market Presence
By John Roberts
CRN
Oct. 20, 2005
For the second straight month, custom systems saw a decline in their market presence. This marks a reversal of the trend in the preceding three months, in which white boxes made strong gains in the small- and midsize-business market for PC hardware.
The slide in September was likely exacerbated by an across-the-board increase in component shortages compared with August. In some areas, such as memory, the percentage of custom system builders reporting severe shortages hit their highest level in the past year. For motherboards, the percentage of white-box builders reporting severe shortages doubled, from 7 percent in August to 14 percent in September. In LCDs, where shortages (and prices) have been declining over the past year, nearly a third of custom system builders reported moderate to severe shortages last month.
Component availability is crucial to the success of the custom systems market. Past CRN research and analysis has shown a clear and strong relationship between the percentage of solution providers building and selling custom systems and the level of component shortages.
After a pause in August, the upward trend in the percentage of custom system builders choosing to exclusively build their own units resumed in September. Interestingly, there are nascent signs that a growing percentage of white-box builders are making the decision to exclusively build systems themselves or exclusively outsource construction to other system makers, rather than work with a hybrid business model that uses both elements.
This trend, if sustained, could also play a role in the future strength of the custom system market. The more custom-systems builders that exclusively build their own systems, the better it is for the continued growth of white boxes in the SMB market for PC hardware. This would have implications for custom systems and the branded vendors whose products compete against them.
QUESTION: Do you build your own custom systems for resale to your clients or to other solution providers, or do you buy custom-built systems (already assembled) from a system builder for resale to your clients?
(percent of respondents involved in the custom systems market citing each)
Desktops
| |
Sept. 2005 |
Aug. 2005 |
July 2005 |
| Build my own |
23% |
21% |
30% |
| Buy already assembled |
40% |
38% |
30% |
| Do both |
37% |
41% |
40% |
Notebooks
| |
Sept. 2005 |
Aug. 2005 |
July 2005 |
| Build my own |
11% |
5% |
16% |
| Buy already assembled |
68% |
72% |
57% |
| Do both |
21% |
23% |
27% |
Servers
| |
Sept. 2005 |
Aug. 2005 |
July 2005 |
| Build my own |
21% |
16% |
28% |
| Buy already assembled |
45% |
45% |
40% |
| Do both |
34% |
39% |
32% |
Base: 125 to 135 responding custom-system builders surveyed each month
Source: CRN Monthly Solution Provider Survey
Component Availability
(percent of VARs that build custom systems citing each level of availability)
MICROPROCESSORS
| |
Sept. 2005 |
Aug. 2005 |
Sept. 2004 |
| Severe shortages |
13% |
10% |
6% |
| Moderate shortages |
12% |
9% |
20% |
| Few/no supply problems |
75% |
81% |
74% |
MOTHERBOARDS
| |
Sept. 2005 |
Aug. 2005 |
Sept. 2004 |
| Severe shortages |
14% |
7% |
6% |
| Moderate shortages |
14% |
11% |
15% |
| Few/no supply problems |
72% |
82% |
79% |
MEMORY
| |
Sept. 2005 |
Aug. 2005 |
Sept. 2004 |
| Severe shortages |
9% |
7% |
10% |
| Moderate shortages |
13% |
9% |
18% |
| Few/no supply problems |
78% |
84% |
72% |
HARD DRIVES
| |
Sept. 2005 |
Aug. 2005 |
Sept. 2004 |
| Severe shortages |
10% |
4% |
5% |
| Moderate shortages |
14% |
8% |
14% |
| Few/no supply problems |
76% |
88% |
81% |
LCDs
| |
Sept. 2005 |
Aug. 2005 |
Sept. 2004 |
| Severe shortages |
10% |
4% |
12% |
| Moderate shortages |
20% |
11% |
20% |
| Few/no supply problems |
70% |
85% |
68% |
VIDEO GRAPHICS CARDS
| |
Sept. 2005 |
Aug. 2005 |
Sept. 2004 |
| Severe shortages |
9% |
4% |
5% |
| Moderate shortages |
14% |
13% |
16% |
| Few/no supply problems |
77% |
83% |
79% |
NETWORK INTERFACE CARDS
| |
Sept. 2005 |
Aug. 2005 |
Sept. 2004 |
| Severe shortages |
7% |
4% |
2% |
| Moderate shortages |
9% |
4% |
10% |
| Few/no supply problems |
84% |
92% |
88% |
Base: 125 to 135 custom system builders responding each month
Source: CRN Monthly Solution Provider Survey
JOHN ROBERTS is CRN's director of research. He can be reached at jorobert@cmp.com.
| 
