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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

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

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


Opportunities challenges in the whitebox market

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

‘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)


How common are whitebox computers

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


Recency of purchasing a whitebox computer

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


Where organisations buy whitebox computers

Where organisations buy whitebox computers?

Base: Organisations with ‘whitebox’ computers


Overall satisfaction with whitebox purchase

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


Perceptions of whitebox computer reliability

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


Are businesses loyal to whitebox vendors

Are businesses loyal to whitebox vendors?

Base: Organisations with ‘whitebox’ computers


Do they specify build or rely on advice

Do they specify build or rely on advice?

Base: Organisations with ‘whitebox’ computers


Price is driving organisations to purchase whitebox

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)


Influences on the pc purchasing decision

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


Influences on the pc purchasing decision1

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


Perceptions of whitebox computer prices

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


Are brand name systems preferred over whitebox

Are brand-name systems preferred over whitebox?

Don’t Know

5%

No

39%

Yes

56%

Base: Total Respondents (n=100)


Reasons for brand name system preference

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

Processor Preference

AMD

Other

2%

5%

No preference

34%

Intel/ Pentium/ P4

59%

Base: Total Respondents (n=100)


Claimed annual pc spend

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


Expected trends in pc spend over the next 12 months

Expected trends in PC spend over the next 12 months

Base: Organisations with ‘whitebox’ computers


Percentage increase expected over the next 12 months

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


Large company and govt agency desktop buying intentions

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)


Desktop buying intentions by vertical

Desktop buying intentions by vertical


Average desktop spend increase

Average desktop spend increase

‘Average % spend increase’


Notebook buying intentions

Notebook Buying Intentions

See rating colours

% Respondents (n=300)


Norebook buying intentions by vertical

Norebook buying intentions by vertical


Average notebook spend increase

Average notebook spend increase

‘Average % spend increase’


Mark hollands principal itr

Back to the White Box community . . .


Likelihood of vendor loyalty through price guarantee

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


Usage of the internet to purchase

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


Interest in on site pc evaluation

Interest in on-site PC evaluation

Base: Organisations with ‘whitebox’ computers


Importance of pc disposal policy

Importance of PC disposal policy

Base: Organisations with ‘whitebox’ computers


Meeting new challenges

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)


Meeting new challenges1

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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