Editorial: Bleak outlook for local whitebook

Editorial: Bleak outlook for local whitebook

While the position of local system builders in the desktop market continues to worsen, the community is looking for ways to get a toehold in the more lucrative mobility space.

Leading members of the whitebox channel were in China last week for the Intel Solutions Summit (see page 6 of ARN May 3 edition), where a central message was the chipmaker's plans to help them compete in the notebook market.

Moves to standardise notebook production through its Common Building Blocks (CBB) initiative are a step in the right direction but it remains to be seen whether the plan will be effective.

Taking a positive view, CBB should help local builders put together notebooks more cost effectively. That can only be a good thing. But as some whitebox manufacturers have already pointed out, the definition of standardisation also introduces a lack of differentiation. As we have seen in the broader PC channel, competing on price alone is a dangerous game where there is little money to be made. The multinationals have already used their deeper pockets to make life increasingly difficult for whitebox vendors in a desktop market where the smaller local companies were already well established in verticals like education and government.

It is a very different story in the notebook market; where the brand names have dominated from the word go. When a number of multinational players are finding it difficult to justify their presence in an over-crowded Australian mobile computing market, it is hard to see how local builders can wrestle share from the dominant players and their marketing machines.

One option being considered by a number of local manufacturers is a move away from Microsoft operating systems (see page 1). ASI Solutions' boss, Ken Lowe, claimed Australian system builders currently paid about three times as much for the software as their branded competitors. ARN understands members of the local whitebox community have raised concerns with Microsoft about price breaks being offered to multinational PC vendors. If the situation is not resolved to their satisfaction, it is thought a number of players are considering the Linux option. NSW-based Pioneer has already offered its resellers a $799 notebook running a Linux operating system. But would a mass exodus to open-source software suddenly make local builders competitive in the notebook market? It is hard not to think this is unlikely.

Local builders offering unbranded whitebooks with non-Microsoft operating systems might be a little cheaper but any such move would be highly unlikely to gain widespread consumer or business acceptance. Even if it did gain market support, what would stop multinational vendors offering open source models? Local builders would be straight back to square one.

Nevertheless, the fact that the local community is even considering such drastic action should still sound an alarm bell for Microsoft. Let's not kid ourselves that losing the support of these partners would hurt the software giant but it should act quickly to heal this rift, even if only as a public relations exercise.

Either way, the long-term future of local notebook builders looks fairly bleak. The only way to survive will be to find a niche, work hard on points of differentiation and offer top service levels. Even then, life will continue to be tough.

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