Microsoft Needs To Step Up To The Plate With Systems Builders Once And For All

As reported by CRN, Intel—in an effort to help custom-system builders increase production of unbranded whitebooks—has stepped up to the plate and is promising that components and barebones models of its new notebook platform code-named Napa will be available to system builders out of the chute.

Intel, in my opinion, is more aware of the strategic importance of this market than its partner in the Wintel monopoly, Microsoft. Sure, there&s more to be done. But at least Intel seems to understand the situation and is taking some batting practice.

Considering the consolidation we&ve already seen and continue to expect in the PC market, the health of the so-called white-box or custom-systems market should be a top priority for Microsoft as well as Intel.

System builders consistently complain about their lack of competitive pricing for the operating system and Microsoft Office. While it hasn&t ignored these complaints, Microsoft isn&t giving off signals that it views this issue as an important priority. But it should.

Maybe Microsoft believes there is still enough competition in the systems market for it to be able to rule the roost for the foreseeable future. But Intel seems to be looking at it differently. From where I sit, Intel appears to be saying it wants a strong system-builder community as a hedge against the continued consolidation in the branded PC market.

I look at it this way: If Dell and Hewlett-Packard become so dominant in the market and both decide they will not ship the next version of Microsoft&s operating system on their systems until at least six months after it has been released, what could Microsoft do about it?

Let&s face it, we are getting very close to an oligopoly in the PC desktop space, and I think Intel is concerned that the same could happen in the notebook arena. Given that more notebook PCs than desktops will be shipped this year, it&s a legitimate concern.

Intel is clearly looking at ways that it can help the system-builder market thrive as a healthy competitor.

Intel&s sensitivity to this issue is at least partially driven by the fact that it has a competitor in AMD, and branded PC makers already are using AMD chips. So a strong system-builder market gives Intel some leverage.

Microsoft is more dominant, and, as a result, it may think it can ignore system builders. But should Dell or HP snub their noses at shipping a new operating system on Microsoft&s schedule, Microsoft CEO Steve Ballmer might think differently.

With the price of desktop computers in the sub-$500 range, the cost of the operating system has become a larger percentage of the basic cost to the system builder, and Dell&s volume pricing discount puts it at a huge advantage.

System builders don&t expect pricing comparable to Dell&s. That would be an unrealistic request. But Microsoft should figure out ways to take a swing at this issue, be creative and help the system-builder market—even if just for selfish reasons. For one thing, I believe better programs and pricing for system builders would reduce operating system piracy.

While there continue to be more strong branded vendors in the notebook market than in desktops—Toshiba being one very strong one—building a healthy whitebook-systems market is in Microsoft&s and Intel&s best interests, and both need to do more to help it along.

Make something happen. I can be reached at (781) 839-1202 or via e-mail at [email protected].