Six months later, Centrino ads blanketed prime time TV, ASI had started dabbling with channel notebooks, and D&H had teamed with FIC to bring the MB02 whitebook into the channel, but the effort still had a lot of logistical cracks in it, and it didn't take D&H long to start casting about for alternatives. Whitebooks were like a candle flickering dangerously in the breeze.

By the end of 2003, Intel had decided to intercede with its MVAD (Mobile Value-Added Distributor) program, a noteworthy step and expense considering that Intel could have more easily decided to let the large OEMs keep their traditional stranglehold on the mobile market. The MVAD program partners major Taiwanese notebook ODMs (Asustek, Compal, Sabio Digital/Quanta, and such) with prominent distributors. MVAD is rarely mentioned in North America, but the partnerships involve distributors offering full or partial integration services, net credit with no minimums, private labeling, plenty of on-hand spare parts, and streamlined, user-friendly RMA processes and policies on par with the tier-one OEMs. By late 2003, it had become obvious to everyone that without such services available at the distribution level, whitebooks were doomed.

Whether Intel's MVAD support was more moral than practical remains hard to gauge, but the net effect was that 2004 was the year the whitebook market began to solidify into a channel. When we reported on the space in May of last year, there were more whitebook designs available and more people willing to go on record as being optimistic.

"Those two years [up to 2004] really helped to get the message out," says Raymond Chen, vice president of marketing for ASUS in North America. "We had literature, documentation, co-op sales events with channel manufacturers that let us go out and tell resellers about this white box notebook opportunity. Over that time, we were also very dedicated to the whitebook platform. Just look at the models and price points we have now. We started with one whitebook model; now we have at least seven. We have four different screen sizes and even a thin and light whitebook."

Today, we can safely say that whitebooks are out in force and here to stay. This may fly in the face of some reports. Last month, for example, Taiwan's DigiTimes ran a story stating that "demand for clone notebooks has not picked up, with the segment seeing its lowest market share in two years at 19.6% in the first quarter of 2005, [channel] sources said." Never mind that we're suspicious of unnamed "channel sources," but 20% market share for clone notebooks is huge. AMD noted to us that "about 10% of the notebook market goes through distribution." In January, IDC noted that 7% of notebook sales in Australia were whitebooks. So given that the whitebook business virtually didn't exist three years ago, 7% to 20% share depending on the market is outstanding.

"Sales basically doubled last year from the first year this got going," says Intel's Wes Sieker, channel marketing manager for mobile products, "and our expectations are that it's on a similar trend this year. We're happy with that. Obviously, we'd like to see it grow even faster, but it is on track for our expectations, which were aggressive to begin with."

Last year, IDC estimated that mobile PCs will comprise 43% of the total PC market by 2007, outstripping desktop growth by a factor of four. D&H vice president of marketing Dan Schwab confirms that his distributorship is seeing 20% to 30% growth in whitebooks and mobile components quarter over quarter. The rise of mobile PCs can't help but pull whitebox business up along with it.

The key ingredient Whitebooks cannot survive as a category without strong distribution, and ASI, which delivers value-adds ranging from software bundles to two-day delivery, is quickly emerging as the yardstick by which channel notebook distribution is measured.

This is the new battle for survival. Before, the challenge was how to build and market white box PCs that could compete against the OEMs. Those who solved the puzzle survived the ‘80s and ‘90s. Those who didn't went to work for Radio Shack. Now, notebooks will be the decisive sales category by the end of this decade, but it will take patience, brains, and faith to capitalize on the opportunity. As Synnex business development manager Jim Poston points out, the resellers who kept plugging away at selling one or two whitebooks a month during the doldrums of 2004, when Acer slaughtered the mobile market with $699 machines, are now using the lessons they learned to win large bids in 2005.

"I wouldn't go so far as to say whitebooks are common today," says D&H vice president of marketing Dan Schwab, "but they've definitely reached acceptance as part of a solution provider's arsenal that they offer to certain segments. What we all hoped for a year ago has come true, and the really positive thing is that there's no end in sight. The month-over-month growth is incredible. If you're not taking advantage of it, it's out there waiting for you. The risk is gone, the machines are validated. If you've been waiting for this to become proven and reliable, that's done."

Making the Case for Whitebooks

There is not a single PC niche or demographic left that doesn't use if not rely on mobile computing. Consumers and SMBs are no-brainers, but enterprise? According to the Meta Group (April 2004), mobile-equipped enterprises gain an average of six hours per week in useful work per employee, which explains why 65% to 75% of enterprises will deploy notebooks by 2007. Everyone needs notebooks, and, just as with desktops, a significant number of buyers don't require a big brand on the lid anymore.

But being generic is never a path to stardom. As with other PC types, you need to figure out why your whitebook offering is better than your competition and make that message into a mantra.

Maximum versatility MSI, one of the largest names in OEM PC components, now tackles the whitebook market with units such as this S-series model, featuring a 12.1” widescreen, dual DVD burner, 802.11b/g, and integrated Bluetooth.

"A lot of resellers struggle with what their value proposition is going to be to their clients," says Kent Tibbils, director of business development for distributor ASI. "They have a real good understanding of that on the desktop, but they're not quite sure on notebooks. A lot of them have fallen into the trap of making the notebook purchase about price, and they have a hard time competing with Acer and Dell with their $599 or $699 laptops. They still have that problem with desktops, but they're used to being able to say, ‘Hey, I'm local, and I'll be here to take care of you with parts that I can grab locally.' But with notebooks, you can't just go out and get a motherboard or keyboard. That has to come from the distributor. The question is how easy does the distributor make that process for the reseller and end-user."

Without a strong mobility distributor beside you, you have no sustainable whitebook business, and ASI is aggressive on whitebooks like few others in the industry. The distributor, which carries models from ASUS, Compal, and Sabio Digital, doesn't charge for system integration, pays for two-day delivery on new builds, and also pays for two-day delivery each way on warranty RMA services. The company also frequently runs incentive promotions on whitebooks, such as the $110 to $150 discount on first-time ASUS and Sabio whitebooks in play during this writing. ASI even throws in free copies of Computer Associates anti-spyware and antivirus as well as Phoenix recovery software with each new whitebook build.

Big dog, small design ASUS is arguably the most popular whitebook ODM in the channel, and the new Z33A shows why. From its rimless touchpad design to a svelte 3.3-pound weight to a nearly 8-hour optimized runtime, this model can convert even hardened tier-one notebook fans.

Service models such as ASI's should be one of your first and best selling points. A one-week or better end-to-end turn-around on warranty repair is exceptional in comparison to tier-one policies unless the user is willing to shell out big bucks for an on-site contract. In poking around the Web, we found stories of users being quoted two weeks for a Dell fan repair and similar tales for other OEMs.

Similarly, another feather in the whitebook cap is quality. OEMs are notorious for remaining vague about the brands and fine-print specs of their notebook components. As we sit here looking at a Gateway M360X configuration page, there's no way to tell the brightness or contrast of the screen options, brands and cache sizes on the three possible hard drives are unlisted, there are no runtimes given for the batteries, and so on. Incredibly, there isn't even an option for memory sizes. Customers are expected to buy while half-blind. You have the ability to go over components on your whitebooks with clients just as you do on desktops and not only sell them but upsell them on component quality. Think low latency memory, faster disc burn times, low voltage CPU options, etc. This level of granularity is your key to persuading end-users as well as managers on sizable bid purchases.

Tried and true ECS was one of the first and biggest names in the whitebook space. Now, with models spanning from AMD-based thin and lights through 17” widescreen media centers, the company has more to offer the channel than ever.

"I think resellers have been afraid to spec unbranded notebooks on bids with their large customers," says Synnex's Poston. "It was unfamiliar territory. But Intel has been out banging on people to give this a shot. We had one reseller who agreed to try a whitebook on one of their bids for 90 units. We helped them get a unit through our seed program. They built it up and whaddya know—they won the bid. And they were just shocked at the quality of the barebones. These were ASUS models. They got 90 barebones, built them up, and had only one that was bad. Most resellers don't understand yet that the quality here is as good or better than a tier-one solution."

Synnex, which stands right across the street from ODM partner ASUS in Fremont, CA, is another heavy hitting mobility distributor. The warranty from Synnex is a standard one year on the barebones, but if a customer gets a unit and has a problem in the first 30 days, he or she can call an ASUS technician toll-free. There are two technicians at this ASUS location solely devoted to such support. If they confirm that the notebook is DOA, they authorize Synnex to send out a brand new barebones. After 30 days, the customer is responsible for getting the notebook to ASUS however he or she sees fit, but ASUS will repair it within 48 hours and pay for overnight delivery on the return.

As time goes on, the MVADs do increasingly good work at differentiating their service offerings such that each distributor has some unique twists to offer its client base. Wintec Industries, for example, has stood out from the whitebook pack on the merits of its advanced replacement offering. "When it comes to mobile computing, there isn't always time to wait a day or two for logistics," says Wintec's Richard Stafford, senior corporate marketing manager. "So we figured one of the best value-adds we could make available to our resellers was an advance replacement program. Once our tech support finishes troubleshooting, we'll foot the bill on anything up to and including overnight delivery. Components go to the reseller so he can make sure the installation goes smoothly, but we can drop ship configured systems straight to the end-user if that's what the reseller wants."

Early on, whitebooks were plagued with boring industrial designs and absolutely average specifications. The FIC MB02 was a perfect example. We still have two MB02s up and running at RAM, neither of which ever had a hitch, but they are completely forgettable in appearance, presumably to appeal to a "strictly business" professional audience, and the two-spindle, 15" XGA design is meant to attract basic productivity buyers. However, as the whitebook market has matured, vendors are increasingly able to bring fresh, exciting features to their offerings, often considerably before the tier-ones can.

Wintec advances With one of the broadest whitebook selections of top-name ODM designs available through distribution, Wintec is working to put more value into its portable PCs with bundle deals, faster service turn-around, generous. rebates, and advance RMA cross-shipments.

"The key benefit of whitebooks is time to market," says ASUS's Raymond Chen. "For instance, when Intel comes out with a new mobile CPU, a manufacturer like ASUS will be the first to deliver that platform so channel resellers can build on it. Big brand OEMs usually have to spend a few months on qualification, marketing programs, finalizing SKUs, and stocking their channels with finished product. And their sales model is more focused on profitability than the technology behind the product or performance or the users' needs. Big brands will often delay new CPU releases to get the sales volume up for existing parts. People have to wait for the new technology. That's very common. But in whitebooks, we don't have this burden. Our design flexibility is simply the best."

Not least of all, one of the greatest assets a white box reseller has is his ability to educate. Custom systems always have the capacity to outperform competitors and more finely accommodate the needs of the buyer. All that's needed is some basic, honest communication. In the case of notebooks, customers need to be jolted from the preconception that every mobile PC should cost $699. According to ASI's Kent Tibbils, the average price for notebooks is now in the $1,300 range. At $699, there's very little value a system builder can offer; at $1,299, there's quite a bit. The reality is that customers will end up spending this much money on a big brand system anyway, but with a whitebook, they now have the ability to get a lot more value per upgrade dollar.

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