Multimedia Holds Plenty of White-Box Opportunities For the SI/VAR

White boxes are built from standard components with little to no differentiation, but the SI/VAR can tailor them to a client's specifications to become highly differentiated and competitive.

Selected Segments
There are several profitable segments for white-box SIs/VARs to pursue, such as gaming-and-enthusiast PCs, entertainment PCs, connoisseur and hot-shot PCs and workstations.

The difference between a gaming PC and an entry-level to midrange workstation is the quality of audio and, often, the disk size. Therefore, gaming PCs and generic workstations dovetail neatly to be easily supplied from the same graphics add-in-board (AIB) vendors: ATI (Radeon) or Nvidia (GeForce FX).

Technical workstations used in the field, such as high-end CAD, require workstation graphics, such as AIBs from 3Dlabs (Wildcat), ATI (FireGL) or Nvidia (Quadro).

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Gaming-And-Enthusiast PC
The gaming-and-enthusiast PC is one area where the SI/VAR can offer a great value-added service. Some of the current interests or characteristics of a gaming PC are the fastest over-clocked CPU, the most high-speed memory, the biggest disk, the baddest graphics AIB, the loudest sound system, the best display and the coolest open, piped, neon-lit box.

In computer graphics and gaming, too much is never enough, and that means opportunity for the savvy SI/VAR who recognizes that. The gaming enthusiast spends some $4,000 on his or her PC, peripherals and games. Furthermore, these users tend to upgrade every other year.

Entertainment PCs (EPCs)
The EPC is the most technically challenging category, but one where terrific margins and service contracts can be had. It could also lead into the home-automation market. There are three types of EPCs: Linux-based, Windows-based (non-Media Center) and Media Center Edition.

The non-Media Center Windows-based EPCs are the largest and oldest segment of the market. The Microsoft Windows XP Media Center PCs are not a white-box choice and are sold only by the major brands. The new Linux-based EPCs, also known as "ABM"--anything but Microsoft--are mostly home-built, but SI/VARs who understand Linux, user interfaces and other technicalities can get involved.

The Opportunities
The workstation segment--one of the smaller markets and as technically challenging as the EPC market--can offer great margins. To be successful in the workstation market, you have to know about and understand the applications and vertical markets the users are in. The leading segments of those vertical markets are DCC and video editing, stock traders and investors, CAD/CAM designers, architects and designers. Workstation users require performance. They also want support and no downtime, and often buy a system with the applications preinstalled.

Beyond Games
Even though games get all the headlines, the heart of the PC industry is graphics, and the graphics processors of today enable many more interesting markets. For example, video is becoming a key component of the PC industry, and its importance will grow as digital cameras see wider use and recordable DVDs join recordable CDs as market drivers. Likewise, audio has become popular as users gravitate to home recording.

In addition, new technologies such as DVD audio, which offers increased audio quality at 24 bit/96 KHz, opens up opportunities for companies catering to "boutique" segments of the market. For example, the connoisseur and hot-shot PC markets cater to customers who are looking for products with cachet. As a result, boutique brands, such as AlienWare, Shuttle, Voodoo PC and VPR Matrix, are on the rise.

The workstation market is generally application-specific and includes turnkey products and product certification, and so carries high margins. It also offers a stable customer base.

The bottom line is there's gold in the white-box market for the SI/VAR who knows where and how to dig for it.

Dr. Jon Peddie ([email protected]) is president of Jon Peddie Research in Tiburon, Calif.