Whitebooks Offer Promise, Challenges

Simply put, Ingram Micro has stayed out of whitebooks thus far because of technical challenges associated with the distribution of these products. "No question, these products offer plenty of opportunity for VARs, systems builders and white-box assemblers," says Geno Marcoux, general manager and vice president of Ingram's components and white-box business unit.

In fact, the margins on these products can be better than those on standard, desktop and even low-end server configurations. But until the standardization of parts and inventory of these devices come to fruition, Ingram Micro plans to lay low. "You can sell a basic model, but try getting add-on parts or internal components," Marcoux says. "That's a world without borders."

Those who have jumped into this space agree. That includes Calvin Lam, president of Avus Systems, a City of Industry, Calif.-based niche distributor. Lam, too, acknowledges that miniaturization and lack of standards in notebook computers offer new challenges to those looking for a low-cost alternative to brand-name notebook systems. But, he adds, whitebooks are here to stay. "The key is to offer standard configurations wherever possible. And to make sure that all of the components that you offer are from top suppliers that will be there year after year," Lam says.

Others, however, suggest a paradox exists in the whitebook space that does not exist in the traditional desktop market: White-box customers care about the tactile, ergonomic aspects of a standard PC. That puts enormous demands on the designers and OEMs of such devices to stay abreast of market trends that are as ephemeral as plastic colors and trackpad designs.

Then there are real-world engineering limitations. How many motherboards can Avus, Intel and others afford to design? And do they need them for every subsegment category, including ultralight notebooks and beyond? Each design adds costs and nullifies the cost savings partners can offer their customers due to smaller unit volumes.

Partners who have tried to add whitebooks to their portfolios say the margins they hoped to collect have not materialized. In fact, some, including Seth Horen, president of Milford, Conn.-based Hi-Tech Consultants, says the whitebooks some distributors have added to their line cards are priced the same as notebooks from leading tier-one companies.

To wit, whitebook suppliers are still struggling to gain parity with tier-one players, which have price advantages when it comes to operating-system software from Microsoft, in particular. "The market has taken longer than expected to come together," Lam says. "But it is showing signs of great promise. That goes for my company and companies like yours."