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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


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’

    • 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

  • 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

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?

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

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?

Base: Organisations with ‘whitebox’ computers


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


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?

Base: Organisations with ‘whitebox’ computers


Do they specify build or rely on advice?

Base: Organisations with ‘whitebox’ computers


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

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


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

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?

Don’t Know

5%

No

39%

Yes

56%

Base: Total Respondents (n=100)


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

AMD

Other

2%

5%

No preference

34%

Intel/ Pentium/ P4

59%

Base: Total Respondents (n=100)


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

Base: Organisations with ‘whitebox’ computers


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


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


Average desktop spend increase

‘Average % spend increase’


Notebook Buying Intentions

See rating colours

% Respondents (n=300)


Norebook buying intentions by vertical


Average notebook spend increase

‘Average % spend increase’


Back to the White Box community . . .


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

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

Base: Organisations with ‘whitebox’ computers


Importance of PC disposal policy

Base: Organisations with ‘whitebox’ computers


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 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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