Whitebox Wonderland

"The work I do with a lot of my clients, basically what we've been doing is getting the wiring in, the structured cabling in, and then we wait until the industry comes along with the computer products that real people can really use," said the owner of Business Technology Consulting, a one-man digital home and small office system integration shop based in San Jose, Calif.

McDonnell said his customers are looking for everything from purpose-built entertainment centers to home servers. His challenge goes out to both the big vendors and small custom system builders alike: build easy-to-use, affordable devices that deliver what users want and they'll get snapped up like hotcakes.

It just so happens that vendors like Santa Clara, Calif.-based Intel Corp. and its whitebox partners are thinking the same thing.

The Thick And The Thin Of It
The mini-ITX form factor, which Intel also calls the nettop, is one that excites digital home integrators like McDonnell and John Goldenne, president of Palatine, Ill.-based Digital Home Technologies.

Goldenne is looking for devices that can serve as fully loaded digital home entertainment centers with Internet connections, both to update content and for storage in the cloud.

"Off-site content and off-site storage is a great idea. It's already happening in the commercial industry," Goldenne said. His requirement for a mini-ITX-based entertainment center?

"I look at ease of installation and ease of programming. I don't want to have to get a degree on a product, nor do I want my techs to have to either," he said. Goldenne said his clients increasingly want to download movies and television episodes onto their computers and then watch them on their flat-panel screens. But there aren't many affordable out-of-the-box devices that let them do that, and jerry-rigging a solution means constantly plugging and unplugging wires from a laptop to a TV set.

Next: Sounds Like A Job For A Nettop Sounds Like A Job For A Nettop
Intel recently announced the channel availability of its D945GCLF2 motherboard, a nettop platform formerly code-named Little Falls 2, which is based on the chip giant's ultra low-voltage Atom processor. Intel envisions a number of markets for its partners' Little Falls 2-based products. These include everything from basic PCs to more exotic vertical usage models such as Internet kiosks and thin clients.

"There's a vacuum in the sub-$500 devices which allows for first-time users in the emerging markets, or basic users or second PC users in the mature markets, to access the Web, in a simple and affordable manner," said Tom Rampone, general manager of Intel's Channel Platforms Group.

Of course, Intel isn't the only company with new value propositions for system builders and integrators. Advanced Micro Devices Inc. of Sunnyvale, Calif., is waiting to see what happens in whitebooks before jumping into that arena, according to executives. But AMD has been very active of late on the custom desktop front, marketing its AMD Live, Game and Business Class white-box platforms to the channel following the successful reception of the chip maker's 7-Series chipset and latest ATI graphics products.

Meanwhile, thin is increasingly in as a client solution. NComputing, a Redwood City, Calif.-based developer of desktop virtualization solutions, recently crossed the million mark in sales of its X-series and L-series products, mostly used in educational installations and to build workplace clusters.

The good news for the channel? NComputing does about half of its business through white-box, own-brand system integrators who build the central PCs themselves, said CEO Stephen Dukker.

Even better news is that NComputing partners are seeing 25 percent gross margins on platform sales, according to Dukker.

Next: Walking In The Footprints Of Giants Walking In The Footprints Of Giants
It used to be simple for white-box builders. You put together general-purpose desktop PCs with the hardware supplied by vendors like Intel and Seagate Technology LLC, Scotts Valley, Calif., and made a tidy profit doing it. Today's computing market is much more variegated.

Notebook sales are about to overtake desktop sales globally. Smaller computing devices are exploding in popularity, from smartphones and mobile Internet devices to netbooks and nettops. Thanks to virtualization and Software-as-a-Service, thin client solutions like NComputing's are on the rise.

"Years ago, the chip maker would just throw a processor over the wall to the OEM. Those days are gone," said IDC analyst Shane Rau.

Today's system builders depend on hardware vendors to develop entire platforms tailored for specific system needs. Platforms, Rau said, "represent the current dominating trend—multiple components under one brand."

And not a moment too soon.

The problem in recent years for the white-box channel has been that even as hardware margins slipped for their bread-and-butter products, it became increasingly difficult for small system builders to keep up with giants like Hewlett-Packard Co., Palo Alto, Calif., and Dell Inc., Round Rock, Texas, as they rolled out attractive, easily customizable products.

Strategies for dealing with declining hardware margins and increasing product diversity in the PC market have met with mixed success. Some white-box builders, in making the case to customers against buying from corporate giants, have attached robust services to their sales, tightly tailored their solutions for specific verticals and played up the virtues of an exclusively local market presence.

Quite a few others have simply joined the big boys, going from independent system builders to resellers of HP, Dell, Lenovo and the like. Still others have left the business entirely.

But new initiatives could go a long way towards reinvigorating the small- and midsize system builder and integrator ecosystems.

These Solutions Aren't Going To Build Themselves
Intel's Rich Creek 2 notebook platform, based on the Santa Clara, Calif.-based chip maker's latest Centrino 2 mobile technology, has regional system integrators like Seneca Data of Syracuse, N.Y., excited about the prospects for a legitimate whitebook ecosystem.

The CRN Test Center has given Rich Creek 2 and its Intel Mobile Board MGM45RM the thumbs-up. Seneca Data Vice President Steve Maser said he's "more excited" today about the Nexlink Carbon notebooks Seneca Data has built on the Rich Creek 2 platform than when his company signed on to Intel's whitebook pilot program.

Antec Inc., a Fremont, Calif.-based chassis and power supply maker, is supplying clamshells for Rich Creek 2 notebooks.

"A lot of white-box makers and system integrators have said the time is right for this. Their customers are asking them for mobile computing solutions and there haven't been good answers in the past," said David Forster, Antec's director of channel relations.