Motherboard vendor Foxconn Electronics, seeking to buy into the channel just months after launching its U.S.-based business, has began an aggressive price play for North American resellers through the end of August.
One of the company's top channel executives acknowledges the company is sure to lose money with the strategy, but said Foxconn believes it can win over system builders that adopt its boards initially based on price.
|The company is willing to lose money with an aggressive price-play plan for system builders.|
"It is very competitive," said Mark Roslawski, channel operations manager at Foxconn, the Fullerton, Calif.-based unit of Hon Hai Precision Industry, a Taipei, Taiwan-based component manufacturer. The parent company is a high-volume motherboard producer for other OEMs.
"We are a new player to the market," Roslawski said. "We do have to make an investment into the channel somehow. The only way we can get into the channel and be a tier-one player is to make this kind of investment.
"It is costing the company money," he added.
Foxconn launched its U.S. motherboard operation earlier this year and has quietly lobbied system builders at several trade shows, including the Intel Solution Summit in Las Vegas. The company is a sister to CasEdge, a maker of PC cases and chassis, also based in Fullerton.
Under its pricing deal, the company is offering its 865A01-PE-6LS motherboard"based on an Intel 865PE chipset"for $65. Foxconn also has a higher-end board at $68. Both, it says, are priced $15 or $16 below reseller cost through distribution for motherboards made by rivals.
The motherboard space has been an aggressive battle zone in the channel.
"Foxconn is trying to get their name out there," said Steve Bohman, vice president of Columbus Micro Systems, a Columbus, Ohio-based system builder.
"Intel and Asus are actively engaged in trying to win market share, and there is, to some degree, a battle over motherboard supremacy."
The channel may be poised for a soft motherboard pricing environment, in any event.
According to the CRN Monthly Solution Provider Survey for June, only 1 percent of solution providers questioned said they found "severe shortages" of motherboards during the month, down from 6 percent in May. Those reporting "severe" or "moderate" shortages of motherboards in June dropped to 17 percent from 27 percent in May--a significant, one-month drop in reported constraints.