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Resellers look to built-to-order clones for profits

Resellers look to built-to-order clones for profits

It just doesn't make sense for resellers to build their own white box PCs any more, according to Laurie Carmichael, managing director of distributor Digiland.

Last week, Digiland announced a new division of the national distributor, which would supply built-to-order clone PCs to resellers, sourced from its parent company GEC in Singapore. The move is part of a general restructure which will also see Digiland distribute higher-end Hewlett-Packard equipment that it has traditionally dealt with.

The new sales tax laws which have stopped resellers from "supplementing their margins" by dodging tax, means that the profit is no longer there to justify a reseller building its own systems, according to Carmichael.

With Digiland's economies of scale, it can supply its white box PCs at a similar price to what it costs a small reseller to build the box themselves.

Warranty cost

This is especially so when the cost of adding a warranty is taken into account, he said.

What's more, because the PCs are built-to-order, resellers still see have the same flexibility to skew the configuration for specific customers, Carmichael said.

"The white box still has a very substantial share of the market, because it allows resellers to maintain their margins and their brand."

"Every PC sold with a Compaq or IBM badge on it does nothing but enforce that Compaq or IBM brand."

Sub-distributor

Digiland has picked up considerable PC skills and experience from DAT Computers, a customer that recently "ceased to trade". Ten people have moved over from DAT, which was a "sub-distributor" selling PCs to resellers.

Digiland are clearly bracing for the addition of Ingram Micro/ERA to the Hewlett-Packard distribution ranks. It has been broken down into three divisions: the clone business, a dedicated Hewlett-Packard business, and a Computer Products Division which will supply non-HP equipment like Epson and NEC.

The company has scored something of a coup with the hire of Daniel Gard, formerly HP's manager of its specialised wholesaler program, to come on board as general manager of the HP business.

"We are shoring up our Hewlett-Packard relationship," said Carmichael. Gard told ARN that Digiland will now sell more than the consumer HP products it is traditionally known for and will branch into areas like high-performance PCs and servers.


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