March 17, 2005 4:00 AM PST

Dell packs up white-box program

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About 60 percent of that, or $15 billion, is likely to come from PCs, Technology Business Research estimates. Printers, although they are likely double in revenue during the same amount of time, are only likely to total some $4 billion, or about 5 percent of the projected $80 billion in revenue.

Looking ahead, much of Dell's growth will come from expanding its presence in so-called emerging markets such as China and India, and also from taking market share from rivals, instead of efforts such as selling white boxes or working with resellers, Gray predicts.

"You have to expect (Dell is) going to be the leading vendor--unless IBM-Lenovo somehow usurps it--in driving low-cost systems throughout the emerging market, en masse," he said. "HP is completely vulnerable right now and a sizable portion will come from HP market share acquisition."

But Dell is also putting pressure on white-box makers themselves, said Roger Kay, an analyst with IDC.

Most white-box companies are small and sell to local governments, educational institutions or small businesses, which often know their proprietors. But like other players in the PC industry, white-box makers are under assault from Dell, which can also offer low prices, and which has a good reputation for service, despite some hiccups.

Most of the growth in the PC industry of late has gone to Dell, Kay said, meaning times have changed for the white-box market since Dell launched its white-box program in 2002.

White-box makers are "doing OK, but not great," he said. "Growth has certainly slowed and life is tough."

Although Dell is no longer dabbling in the white-box PC market, it is still working with resellers, both in the United States and elsewhere, to sell Dell-brand products.

Dell, for example, offers a reseller program for Eastern Europe, the Middle East and Africa, sometimes dubbed EMEA, to foster more sales in those regions.

Some dealers would like to see Dell do even more with reselling.

"You could expand it a lot if Dell could give (bigger) discounts on retail products," said Doug Lynn, proprietor of Lynn Computer Products, a North Lauderdale, Fla., systems integrator.

Lynn generally hand-builds the specialty computers, such as graphical workstations, that he sells. But he uses a white-box maker to put together low-price PCs. Generally, he said, resellers would like to see more built-in profit than the 4 percent or 5 percent Lynn says Dell offers him now.

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2 comments

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Dumb to Pay for Logo
Shouldn't this article actually be titled, "Corporate Customers Willing to Pay an Extra $100 dollars per PC for Dell logo and 11 other stickers conveniently placed on the trackpad or other ill-suited location?"
Posted by jbelkin (167 comments )
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The real reason is Dell's predatory practices
The program has ended because dell has consistanly usurped the channel. They will allow us the small sales, but when the numbers to a single buyer are large, somehow (wink - wink) the deal ends up direct.
Posted by DosHog (8 comments )
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