Black Cloud Hangs Over Whitebook Space

Custom-system builders also put the blame on component suppliers, saying they favor large branded vendors over smaller custom builders, which makes it hard for the latter to compete.

High component costs, falling name-brand prices make it increasingly difficult to sell whitebooks.

Rising component prices have led Steven Plotz, owner of Computer Systems of Tampa, a Gibsonton, Fla., system builder, to consider dropping whitebooks all together.

"The biggest problem is finding [a notebook shell] cheap enough to make money on. ... By the time you get the shell [and] add the components, it costs more than a name-brand notebook PC," he said.

For example, Plotz said he can buy a Sony notebook with a 1.6GHz mobile Pentium processor, 15-inch screen and Wi-Fi for $1,495, while a custom unit based on a shell from Compal costs around $1,700.

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Also, vendors take responsibility for service on branded systems, while solution providers must absorb the service costs of custom systems, Plotz said.

"When you have to service [a whitebook], you lose more money on the sale," he said.

Jiashi Duan, vice president of purchasing of AmpexCompu, a Malvern, Pa.-based system builder, agreed it is hard to be price-competitive. Duan said he can build a system with an Asus shell, 15.4-inch LCD, CD-RW drive, 40-Gbyte hard drive, Windows XP Pro, 512 Mbytes of memory and a processor for around $1,270. A similar unit built and preconfigured by Acer costs $1,000.

Whitebook builders say a big reason for the problem is component suppliers don't take the market seriously.

Todd Swank, director of marketing at Northern Computer Technologies, a Burnsville, Minn.-based system builder that assembles whitebooks for other VARs, said suppliers concentrate primarily on OEMs over small builders.

"Chassis builders are not marketing-savvy. They have no training for us, and their Web sites are out of date. There's a huge opportunity for a manufacturer to step up to the plate," Swank said.

Duan said Intel also shares part of the blame for the whitebook market difficulties.

"Intel has to look at the whitebook channel," he said. "Intel gave us training and made us excited. But. ... even if I make 500 units a month, we can't do it."