John Chamberlain
Developer Diary
 Developer Diary · You Heard It Here First · Tuesday 30 December 2003
Generic Laptops Coming?
Did you know your Dell laptop is not made by Dell? Nor are HP laptops made by HP. The same goes for Toshiba and IBM. All these companies just install the OS and attach their logo to a device produced by another company--and add $500 to the price. In Dell's case the laptops are actually made by Quanta, the largest notebook manufacturer in the world, and Compal. Other big notebook OEMs include Elitegroup Computer Systems (ECS), Clevo, Arima and Asus. All of these companies are located in Taiwan.

In fact even these companies often don't really make the laptops either. Most of their manufacturing, called "factory work", is done in China. Taiwan is increasingly becoming only a design center. For example, Inventec, a latecomer to China just set up a big factory in Shanghai earlier this year.

So why pay an extra $500 to have Dell/HP/IBM emblazoned on your laptop? Well, until recently it was because laptops were hard to configure, had odd peripheral requirements and needed support. All of that is changing however. A lot of companies won't even provide much support anymore and the other items have all undergone standardization. White box laptops are becoming more popular especially among companies that have a technical staff to install the OS and provide in-house support. Makers are responding to this new demand and many direct sales outlets now offer OEM direct laptops. Here are a few:

Top Micro
AVA Direct

Sharp power users can also get even better deals including grey market access using resources like Price Watch.

The impact that this is having on the brand names is that they are having to cut prices. Dell has slashed prices repeatedly this fall. For the big brands this means cutting into one of their historically most lucrative areas of business. The changes are especially hurting IBM because the Thinkpad line is aging and big blue's wide margins are especially vulnerable to price competition.

At a time when the server and workstation markets are weakening now the laptop profits are going south too. Look for a shakeout.

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Developer Diary · · bio · Revised 30 December 2003 · Pure Content