ChannelPro Magazine - System Building: Where the Money Is Now

(27-Apr-10)  Despite pricing pressure from top-tier computer vendors and an overall weak economy, system builders continue to succeed—and in some cases thrive—by focusing exclusively on niche products, selecting best-of-breed components, and emphasizing service.

This marks a big change from the original days of custom PCs and servers, when lower prices lured customers to custom-built or off-label computers. “In the heyday of white boxes, it was all about being able to provide a price point that was 30 percent to 40 percent less than the brand names,” recalls James Alexander, senior vice president at Info-Tech Research Group and a former VAR. “The rise of the tier-two player has filled in some of that price delta and pulled down the top brands in price. So it’s not worth the effort [for builders].”

In fact, the top five PC manufacturers, with HP and Dell leading the pack, owned 76.7 percent market share in the United States in Q4 2009, according to IDC’s Worldwide Quarterly PC Tracker released in January. “While overall desktop unit shipments have increased approximately 20 percent from their lowest levels in 2008, manufacturers such as HP and Dell hold a majority market share due to their ability to drive prices down by leveraging their size and scale,” says Tom Hogan, director of vendor management, components division, at Ingram Micro Inc. in Santa Ana, Calif.

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