Servers, Notebooks Drive Growth For Custom Systems Builders

The venerable white-box desktop, once the mainstay of the custom-system channel, is continuing to lose its luster with commodity pricing, weak refresh cycles and the ever-increasing popularity of notebooks, the 2007 CRN Leading System Builder Survey indicates.

Servers, notebooks, storage and "other" systems accounted for nearly one-third of the units assembled last year by the companies on the 36 Leading System Builders list. Desktops, meanwhile, grew a tepid 7 percent, falling below the overall 12 percent unit growth.

Even for some large system builders such as AMAX Information Technologies, Fremont, Calif., desktops are becoming less of a focus, accounting for just 8 percent of its total volume. AMAX President Jean Shih said she thinks the desktop is going to become a consumer-electronics product, like the television.

"We still have a lot of schools and a lot of customers buy our desktops, but we don't really market them anymore," Shih said. "We just market our servers and storage."

Source Code, a Waltham, Mass.-based system builder, reported an 8 percent decline in its desktop business last year, but it isn't worried, either. Overall unit sales were up 34 percent, aided by its acquisition of Jetta International, a notebook specialist in Monmouth Junction, N.J. Brian Corn, marketing director at the company, said Source Code had been trying to establish a notebook line for years, anticipating the market shift, and finally decided to buy one of the leaders after Intel revved up its Verified By Intel (VBI) program. "We're geared up to be greater than 50 percent notebooks and less than 50 percent on desktops," Corn said. "And we can let the desktop decline."

That was not true for everyone, of course. Among the top five desktop growth leaders were two gaming systems specialists—Puget Custom Systems, Portland, Ore., and AVADirect, Twinsburg, Ohio. Meanwhile, Datel Systems, San Diego, and Chipco Computer Distributors, Columbia, S.C., were doing a brisk mainstream desktop business, selling into education markets where spending on desktops continued unabated.

For system builders, though, the question of whether Intel's retooled whitebook program will enable the channel to compete in the category looms large. And, here, the survey indicated the answer may be yes.

For the Leading System Builders, notebook sales rose to 12 percent of total volume in 2006, growing 27 percent over the prior year. The whitebook volume leaders included Equus Computer System, Chem USA, Newark, Calif., Computer Technology Link, Portland, Ore., Seneca Data, Syracuse, N.Y., and Jetta, now a unit of Source Code.

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