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Mark Hollands Principal ITR

Mark Hollands Principal ITR. Whitebox buying beliefs of Australian SMBs. The Price is. White. Strategies to Differentiate. Mark Hollands, Principal. The Whitebox Market. What do we mean by ‘whitebox’ 1 Custom-built computer with name-brand internal components

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Mark Hollands Principal ITR

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  1. Mark Hollands Principal ITR

  2. Whitebox buying beliefs of Australian SMBs The Price is . . . White Strategies to Differentiate Mark Hollands, Principal

  3. The Whitebox Market • What do we mean by ‘whitebox’ • 1Custom-built computer with name-brand internal components • 2Generic computer systems that don't carry any mainstream brand names • 3Sometimes 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

  4. 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

  5. ‘Whitebox’ incidence among 251 organisations This chart shoes the penetration of whitebox computers among 251 Australian organisations. From this sample, 40% of organisations are currently running some whitebox systems. PCs or workstations 37 Servers 22 Notebooks or laptops 7 None 60 0 20 40 60 80 100 % of Respondents; All Contacts (n=251)

  6. How common are whitebox computers? 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 Employees Don’t know All are 1% >20 20-99 100-250 whitebox 17% All are Whitebox 21% 18% 12% Very few are whitebox 44% Most are Whitebox 18% 12% 24% Most are Some are Whitebox 18% 24% 18% whitebox 18% Very few are Whitebox 42% 42% 47% Some are whitebox Don’t know - 3% - 20% Base: Total Respondents (n=100) Base: Organisations with ‘whitebox’ computers

  7. Recency of purchasing a whitebox computer 50 Purchase within the last year = 53% Purchase within the last 3 years = 77% 40 36 30 % of Respondents (n=100) 22 20 17 17 10 7 1 0 Within the last 6 Up to 1 year ago Up to 2 years ago Up to 3 years ago More than 3 years ago Don’t know months Base: Organisations with ‘whitebox’ computers

  8. Where organisations buy whitebox computers? Base: Organisations with ‘whitebox’ computers

  9. 100% 3 3 4 3 9 5 9 3 13 15 80% 21 42 60% 45 % of Respondents 39 53 40% 52 20% 33 33 15 0% Total < 20 Employees 20-99 100-250 (n=100) (n=33) (n=33) (n=34) Very Satisfied Satisfied Very Disatisfied Ambivelant Overall satisfaction with whitebox purchase

  10. Very Reliable Reliable Unreliable Don't know Perceptions of whitebox computer reliability 100% 1 3 3 3 8 18 80% 48 67 56 60% % of Respondents 53 40% 48 20% 35 30 26 0% Total < 20 Employees 20-99 Employees 100-250 Employees (n=100) (n=33) (n=33) (n=34) Base: Organisations with ‘whitebox’ computers

  11. Are businesses loyal to whitebox vendors? Base: Organisations with ‘whitebox’ computers

  12. Do they specify build or rely on advice? Base: Organisations with ‘whitebox’ computers

  13. 56 8 8 6 5 4 4 3 1 5 0 20 40 60 80 100 Price is driving organisations to purchase ‘whitebox’… Price Specification Performance Reliability/Quality/Guarantee Support/Maintenance Not my choice Customer Service Local purchase Base: Organisations with ‘whitebox’ computers Speed of delivery Other % of Respondents (n=100)

  14. Influences on the PC purchasing decision 100 % Highly Important [Extremely / Very Important] 80 68 64 60 59 60 52 52 % of Respondents (n=100) 45 43 40 21 20 0 Support/ Customer Specification Price Replacement Purchase Purchase Speed of Brand name Maintenance Service policy from regular from local delivery distributor supplier Base: Organisations with ‘whitebox’ computers

  15. Highly Important {1-2} Moderately Important {3-4} Not Important {1-2} Don't know Influences on the PC purchasing decision Support/ Maintenance 68 22 9 1 Customer Service 64 29 6 1 Specification 60 31 8 1 Price 59 36 5 Purchase from reg dist 52 38 10 Replacement Policy 52 35 12 1 Purchase from local supplier 45 31 23 1 Speed of Delivery 43 48 9 Brand name 21 42 37 0 20 40 60 80 100 % of Respondents (n=100) Base: Organisations with ‘whitebox’ computers

  16. Perceptions of whitebox computer prices More expensive 1% Don’t Know 7% No difference in price 24% Less expensive 68% Base: Total Respondents (n=100) Base: Organisations with ‘whitebox’ computers

  17. Are brand-name systems preferred over whitebox? Don’t Know 5% No 39% Yes 56% Base: Total Respondents (n=100)

  18. 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

  19. Processor Preference AMD Other 2% 5% No preference 34% Intel/ Pentium/ P4 59% Base: Total Respondents (n=100)

  20. 50 40 30 20 20 17 14 10 10 9 9 10 8 3 0 Less than $5,001- $10,001- $20,001 - $5,000 $10,000 $20,000 $40,000 Claimed annual PC spend Average Spend = $36,000 Median Spend = $18,375 % of Respondents (n=100) $40,001 - $50,001 - $70,001 - $90,000 + Don’t know $50,000 $70,000 $90,000 Base: Organisations with ‘whitebox’ computers

  21. Expected trends in PC spend over the next 12 months Base: Organisations with ‘whitebox’ computers

  22. 100 80 74 60 40 20 10 5 3 3 2 1 1 1 0 No increase 1-10% 11-20% 21%-30% 31-40% 41%-50% 51%-60% More than 100% Percentage increase expected over the next 12 months Average Increase in PC Spend = 5.86% % of Respondents (n=100) Don’t know Base: Organisations with ‘whitebox’ computers

  23. Don't Know Decrease 1% 15% Increase 29% Remain The Same 54% Large Company and Govt. agencyDesktop Buying intentions See rating colours % Respondents (n=300)

  24. Desktop buying intentions by vertical

  25. Average desktop spend increase ‘Average % spend increase’

  26. Notebook Buying Intentions See rating colours % Respondents (n=300)

  27. Norebook buying intentions by vertical

  28. Average notebook spend increase ‘Average % spend increase’

  29. Back to the White Box community . . .

  30. Likelihood of vendor loyalty through price guarantee 100% 36 38 80% 42 51 60% 9 18 % of Respondents 14 15 40% 55 44 44 20% 33 0% Total < 20 Employees 20-99 Employees 100-250 Employees (n=100) (n=33) (n=33) (n=34) Total likely Total Unlikely Don't know/Makes no difference to me

  31. Usage of the Internet to purchase 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? Yes 13% No 87% Base: Total Respondents (n=100) Base: Organisations with ‘whitebox’ computers

  32. Interest in on-site PC evaluation Base: Organisations with ‘whitebox’ computers

  33. Importance of PC disposal policy Base: Organisations with ‘whitebox’ computers

  34. 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! • 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)

  35. 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

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