The general manager of Superior Computers in London, Ont., a system builder and VAR, “fought like crazy” against adding a white book offering to the company’s product lines until realizing the margins would be better than those on brand name laptops.
But Superior, which does some $28 million a year in sales, largely by building computers and servers, is not participating in the year-old Verified By Intel (VBI) program, under which Intel warranties laptops built around approved chassis and parts. Instead the company builds white books under a program set up by chassis manufacturer Compal – which, ironically, is part of the VBI program.
However, Intel executives said here during their annual Solutions Summit changes will soon be made which they hope will lure more VARs to the program.
These include a new aggregator to buy parts and therefore lower prices, a better supply line and a wider range of chassis with the May 9 launch of a new Santa Rosa Core 2 Duo mobile processor.
One problem Wright identified in an interview during Intel’s annual Solutions Summit, is that while the VBI program can ensure parts like batteries and hard drives are swappable, if an entire system needs to be repaired it has to be shipped to the U.S.
“I don’t want to get into sending stuff across the border and getting stuck there,” he said.
Other Canadian system builders interviewed here have problems with the program. “We did our best to support that,” said Gil Guertin, president of Winnipeg-based Pro-Data Inc., a white box manufacturer that sells its systems to some 2,000 resellers in Western Canada. His company made some 1,000 VBI laptops, competition from OEMs like Acer, Dell, and Hewlett-Packard made it unprofitable.
It’s a common complaint.
Doris Kiu, manager of Vancouver’s Varsity Computers, a $2 million a year VAR, said the company prefers to sell Toshiba or Lenovo laptops because customers want brand names.
Under VBI, Intel got chassis manufacturers Compal, Asus and Quanta to create shells powered by Intel Celeron, Core 2 Duo or Core Duo CPUs with 15.4- and 14.1-inch screens that partners can build systems around using optional parts such as hard drives, optical drives, memory and batteries. Some 15 suppliers are now listed in the catalogue.
In Canada, VBI distribution is handled through Tech Data Canada and ASI Canada.
The goal is to fight OEM laptop makers by lowering costs, allowing the channel to build systems with enough options to differentiate themselves from the brand names and make better margins.
It’s not the first time Intel has tried to push a white book model, and company execs admit the latest attempt has been shaky.
“It’s been slow,” said Justin Whitney, Intel’s North American business development manager for notebooks, who acknowledged the border problem is a big impediment.
He also said that OEMs can still undercut a VBI-assembled white book by $100 to $200.
On the other hand, he added, a promo last December with rebates for some Intel CPUs that lowered the prices on some VBI models to US$699 sold out. So did models priced at US$899.
The danger for channel partners selling only OEM laptops is the inability to differentiate themselves from other VARs, Whitney said.
Partners have to realize that they can improve their margins through Verified By Intel-assembled white books by selling second batteries, backup and even their own extended warranties, he said.
“We’re only a year into this,” Whitney said in defending Intel’s record.