Mark Hollands Principal ITR

Mark Hollands

Principal

ITR

Whitebox buying beliefs of Australian SMBs

The Price is . . . Mark Hollands,

Principal

Strategies to Differentiate

The Whitebox Market

What do we mean by ‘whitebox’ 1 Custom-built computer with name-brand internal components 2 Generic computer systems that don't carry any mainstream

brand names 3 Sometimes called clones, not major brands such as IBM, Dell etc.

Research on whitebox in Australia is thin Estimates of Market size

IDC 46% Gartner 44% AMD internal figures - 50+%

We interviewed Small Businesses and Government agencies

To find 100 companies that use whitebox computers, we had to ring 251 organisations

Opportunities & Challenges in the Whitebox Market Competitive Challenge:

Price, Price Price Making brand name computers more affordable Move from PCs to Notebooks Organisations embracing wireless and mobile computing

Differentiation & Advantage

Service, Service Service Customers looking to differentiate beyond price

Flexibility Major attraction to generic brands

‘Whitebox’ incidence among 251 organisations

60

7

22

37

0 20 40 60 80 100

None

Notebooks or laptops

Servers

PCs or workstations

% of Respondents; All Contacts (n=251)

This chart shoes the penetration of whitebox computers among 251

Australian organisations. From this sample, 40% of

organisations are currently running some

whitebox systems.

How common are whitebox computers?

Base: Total Respondents (n=100)

Most are whitebox

18%

Some are whitebox

20%

Very few are whitebox

44%

Don’t know1%All are

whitebox17%

Q.5. Within your organisation, are all of your computers whitebox, most of them, some of them or very few of them?

Business Size: Number of Business Size: Number of EmployeesEmployees

Don’t knowDon’t know

Very few are Very few are WhiteboxWhitebox

Some are Some are WhiteboxWhitebox

Most are Most are WhiteboxWhitebox

All are All are WhiteboxWhitebox

--3%3%--

47%47%42%42%42%42%

18%18%24%24%18%18%

24%24%12%12%18%18%

12%12%18%18%21%21%

100-250100-25020-9920-99>20>20

Base: Organisations with ‘whitebox’ computers

Recency of purchasing a whitebox computer

36

17 17

7

22

10

10

20

30

40

50

Within the last 6months

Up to 1 year ago

Up to 2 years ago

Up to 3 years ago

More than 3

years ago

Don’t know

% o

f R

esp

on

den

ts (

n=

10

0)


Purchase within the last year = 53%

Purchase within the last 3 years = 77%

30

2624

12

6 7

0

10

20

30

40

50

A local computershop (not a chain

store)

Direct from localassembler (e.g.Soltek, Optima,

Compucon)

Computer Distributor Service provider whomaintains and

repairs your systems

A Major retailer Other

% o

f R

esp

on

den

ts (

n=1

00)

Where organisations buy whitebox computers?


Overall satisfaction with whitebox purchase

33

52

33

15

45

42

39

53

13

3

15 21

53

9 3

4 39

0%

20%

40%

60%

80%

100%

Total(n=100)

< 20 Employees(n=33)

20-99(n=33)

100-250(n=34)

% o

f R

esp

on

den

ts

Very Satisfied Satisfied Very Disatisfied

Ambivelant

Perceptions of whitebox computer reliability

Very Reliable Reliable Unreliable Don't know

35354848

3030 2626

5656

4848

6767

5353

8833 33

1818

11 33

0%0%

20%20%

40%40%

60%60%

80%80%

100%100%

TotalTotal(n=100)(n=100)

< 20 Employees< 20 Employees(n=33)(n=33)

20-99 Employees20-99 Employees(n=33)(n=33)


% o

f R

esp

on

den

ts%

of

Resp

on

den

ts


Are businesses loyal to whitebox vendors?

44

20 22

11

3

0

20

40

60

80

100

Always purchase fromthe same vendor

Mainly purchase from thesame vendor

Use a combination ofvendors

Use different vendorseach time

Don’t know

% o

f Res

pond

ents

(n=

100)


Do they specify build or rely on advice?


57

17 16

10

0

20

40

60

80

100

Components specified Joint effort Leave to Service Provider(who maintains and services

PCs)

Leave to Distributor(who builds PCs)

% o

f R

esp

on

den

ts (

n=1

00)

5

1

3

4

4

5

6

8

8

56

0 20 40 60 80 100

Other

Speed of delivery

Local purchase

Customer Service

Not my choice

Support/Maintenance

Reliability/Quality/Guarantee

Performance

Specification

Price

% of Respondents (n=100)

Price is driving organisations to purchase ‘whitebox’…


Influences on the PC purchasing decision


6864

60 5952 52

45 43

21

0

20

40

60

80

100

Support/Maintenance

CustomerService

Specification Price Replacementpolicy

Purchasefrom regulardistributor

Purchasefrom localsupplier

Speed ofdelivery

Brand name

% o

f R

esp

on

den

ts (

n=

10

0)

% Highly Important

[Extremely / Very Important]

Influences on the PC purchasing decision

21

43

45

52

52

59

60

64

68

42

48

31

35

38

36

31

29

22

37

9

23

12

10

5

8

6

9

1

1

1

1

1

0 20 40 60 80 100

Brand name

Speed of Delivery

Purchase from local supplier

Replacement Policy

Purchase from reg dist

Price

Specification

Customer Service

Support/ Maintenance

% of Respondents (n=100)

Highly Important {1-2} Moderately Important {3-4} Not Important {1-2} Don't know


Base: Total Respondents (n=100)Base: Total Respondents (n=100)

Don’t KnowDon’t Know7%7%

More expensiveMore expensive1%1%

No difference in No difference in priceprice24%24%

Less expensiveLess expensive68%68%

Perceptions of whitebox computer prices


Are brand-name systems preferred over whitebox?


YesYes56%56%

Don’t KnowDon’t Know5%5%

NoNo39%39%

Reasons for brand-name system preference

38% Better Customer Service

27% Better Warranty/Guarantee

27% Trusted Brand Names

21% Reliability

9% Maintenance and Support

9% Quality/Better Product/Performance

20% Other

Processor Preference


OtherOther5%5%

AMDAMD2%2%

No preferenceNo preference34%34%

Intel/ Pentium/ P4Intel/ Pentium/ P459%59%

Claimed annual PC spend

9

1720

14

810

3

9 10

0

10

20

30

40

50

Less than$5,000

$5,001-$10,000

$10,001-$20,000

$20,001 -$40,000

$40,001 -$50,000

$50,001 -$70,000

$70,001 -$90,000

$90,000 +Don’t know

% o

f R

esp

on

den

ts (

n=

100)


Average Spend = $36,000

Median Spend = $18,375

Expected trends in PC spend over the next 12 months


No change65%

Don’t know2%Decrease spend

7%

Increase spend26%


Percentage increase expected over the next 12 months

7474

101055

11 22 33 11 11 3300

2020

4040

6060

8080

100100

No increaseNo increase1-10%1-10% 11-20%11-20% 21%-30%21%-30% 31-40%31-40% 41%-50%41%-50%51%-60%51%-60%More thanMore than100%100%

Don’t Don’t knowknow

% o

f R

esp

on

den

ts (

n=

100)

% o

f R

esp

on

den

ts (

n=

100)


Average Increase in PC Spend = 5.86%

Large Company and Govt. agencyDesktop Buying intentions

% Respondents (n=300)

See rating colours

Increase29%

Remain The Same54%

Don't Know1%Decrease

15%

Desktop buying intentions by vertical

3929 27 27 24

4955 54 58

52

12 16 18 1224

1 2

0%

20%

40%

60%

80%

100%

Health (n=51) Finance & insurance(n=49)

Manufacturing (n=95) Government (n=84) Utilities (n=21)

% o

f R

esp

on

den

ts

Increase Remain The Same Decrease Don't Know

Average desktop spend increase

‘Average % spend increase’

22.9019.77 18.70

16.18 16.12

0.00

10.00

20.00

30.00

40.00

50.00

Utilities Manufacturing Health Finance &Industry

Government

% o

f Res

pond

ents

(n=3

00)

Notebook Buying Intentions

% Respondents (n=300)

See rating colours

Increase37%

Remain The Same46%

Don't Know1%Decrease

16%

67

41 3932 32

19

3949

51 51

1420

1217 14

1 2

0%

20%

40%

60%

80%

100%

Utilities Health Finance & insurance Manufacturing Government

% o

f R

esp

on

den

ts

Increase Remain The Same Decrease Don't Know

Norebook buying intentions by vertical

Average notebook spend increase

‘Average % spend increase’

23.7620.77 19.18 19.07 18.32

0.00

10.00

20.00

30.00

40.00

50.00

Health Government Finance &Industry

Manufacturing Utilities

% o

f Res

pond

ents

(n=3

00)

Back to the White Box

community . . .

Likelihood of vendor loyalty through price guarantee

44443333

55554444

1414

1515

991818

42425151

3636 3838

0%0%

20%20%

40%40%

60%60%

80%80%

100%100%

TotalTotal(n=100)(n=100)

< 20 Employees< 20 Employees(n=33)(n=33)



% o

f R

esp

on

den

ts%

of

Resp

on

den

ts

Total likelyTotal likely Total UnlikelyTotal UnlikelyDon't know/Makes no difference to meDon't know/Makes no difference to me

Usage of the Internet to purchase


Don’t Know5%

No47%

Yes48%

Q.14 Have you or someone in your organisation used the Internet to purchase a “whitebox”

computer for the organisation?

Q.14a. Would you consider using the Internet to purchase “whitebox” computer in the future?



No87%

Yes13%

Interest in on-site PC evaluation



No48%

Don’t Know4%

Yes48%

Importance of PC disposal policy

126

1812

36

30

33 44

5161

48 44

0%

20%

40%

60%

80%

100%

Total(n=100)

< 20 Employees(n=33)

20-99 Employees(n=33)

100-250 Employees(n=34)

% o

f R

esp

on

den

ts (

n=1

00)

Highly Important Moderately Important Not Important


Meeting new challenges

Exploit flexibility and expertise 57% spec their own systems 17% want help Specs are 2nd highest criteria for buyer

Price Key competitive advantage in this market -

don’t lose sight of that!don’t lose sight of that! 39% would go to brand name if budget permitted 44% want price guarantee - only 7% say ‘no’

Emphasise support Brands do badly here, especially cheaper end Lay-out strong replacement policy & on-site

evaluation (48% want this service)

Meeting new challenges

Market still spending PC growth projected at 10+% 1:4 say they will increase spend 65% to maintain spend Only 7% to decrease

Loyalty weak - no ‘80-20 Rule’ 52% buy from regular distributor 45% from local supplier Increase marketing in niche / SMB areas to exploit

lack of loyalty Strategise offers aimed at loyalty - eg price

guarantee etc. Exploit lack of brand value equity of competitors

Drive Internet purchase Take cost out of your own business to keep prices low

Date post:	04-Jan-2016
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Mark Hollands Principal ITR

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