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By Richard Morochove
First published January 21, 1999
Reports of the death of the PC clone have been greatly exaggerated. According to Bill Fournier, director of research for Evans Research Corp., a Toronto-based market research firm, there's a boom in computer resellers that build their own PCs.
Two years ago the non-branded clones or white box PCs, as they are sometimes called, were thought by many to be on the way out. Price cuts from brand name computer makers such as Compaq and IBM put the squeeze on the clonemakers.
Originally, the big sales advantage of the clone was thought to be the cut-rate price. In the early 1990s you could save $1,000 or more off the price of a brand name PC by purchasing a clone. When cost-cutting moves by the brand name manufacturers shrunk the price gap to a few hundred dollars, analysts believed the no-name clone was doomed.
Yet it turns out the low price wasn't the only advantage of the PC clone.
The clonemakers have survived and thrived because they pay attention to product customization and fast delivery, according to Fournier. He says Compaq, Hewlett-Packard, IBM and other big name brands have failed to provide adequate flexibility in their product lines.
Experienced buyers looking to purchase new PCs usually know exactly what they want in the way of processor, hard drive capacity and memory. Yet when you order a custom PC from a major manufacturer it can take six weeks for delivery, says Fournier.
On the other hand, computer dealers who take advantage of Acer's AOpen program can design their own computers on the Web, picking and choosing elements from a menu of components that are certified to be compatible.
The advantages of delivering a computer that has just what you want has burnished the image of the dealers that sell the white box PCs.
"It used to be considered poor taste to say you built your own PCs," says Fournier. "Now they feel proud about it."
What are the differences between a brand name and a white box PC?
It's hard to tell simply by looking under the hood. At one time Compaq had many components specially made for its PCs to offer optimum performance, but cut them out when it found this route too expensive.
Most of the components inside today's PC are manufactured by a few outside suppliers. For example, there are three principal suppliers of processors used in Windows PCs: AMD, which currently has the lead in inexpensive PCs, Intel and the Cyrix division of National Semiconductor. Other important components such as hard drives, memory chips and video cards or chips are also made by others.
There's little difference in way PCs are assembled. In fact the assembly of many brand name computers is contracted out to a few specialty firms.
One of the few functions still performed in-house by the big brand names is the design of their PCs. However, almost all of the models that are churned out by the top names are bland beige or dark grey boxes. Among the brand names, only Sony and Apple regularly make computers that display a distinctive flair.
One of the strongest arguments in favour of buying a brand name used to be the support you received after purchase. But the once-commonplace three year warranty has gone the way of the dinosaur, replaced by a one year parts and labour guarantee.
Independent researchers have shown the tier one manufacturers gaining market share for the past couple of years. According to Fournier, those gains have come at the expense of AST Computer, which has left the Canadian market, Digital Equipment, Apple Computer and some large Canadian PC makers.
However, those gains by the big name brands may be overstated since sales by the small time PC makers haven't been adequately tracked, according to Fournier.
"We've been wrong about the overall size of the Canadian PC market," says Fournier. "We're not catching that low-end, probably a couple hundred thousand units a year."
Evans Research is now studying the sales of computer motherboards in an effort to get a more accurate fix on the size of the small time clonemaker market in this country.
Don't expect Compaq and IBM to take the news of a clone revival lying down. I suspect they will react by streamlining their own production procedures, letting you create and order your own PC on a Web storefront.
How can you order a PC if you don't have access to the Web? Fournier believes PCs will soon be sold in non-traditional retail outlets that use kiosks, a type of automated sales machine that lists all your options and prices out your selection. Then you'll be able to buy a truly personal PC. CW
Richard Morochove, FCA, is a Toronto-based computer consultant.
Copyright ©1999 by Morochove & Associates Inc. All rights reserved. This work may not be copied or distributed by any means without our prior written permission.
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