White-box resellers fill a critical need in
satisfying diverse requirements.
When I talked to Michael Chang a few days ago about
his company's decision to sell Microsoft XP Media Center in
quantities of one, it soon became clear that this
wasn't a mom-and-pop operation screwing computers
together in the backroom. No, what Chang and his
company Directron.com have become is a maker of custom solutions. He is, you might say, a bespoke tailor for the new century.
While many of his customers probably look to Directron as a low-cost source for everything from parts and components to complete computers, in fact the company goes far beyond that modest role. While Chang's company does, in fact, sell those parts as well as complete computers, he also provides larger customers with a source for custom-designed and -built machines configured exactly as those customers need them.
During our conversation, for example, he told me of
a contract he has for 4,000 computers for a
school system. He prepares and ships those computers
as the school system needs them, making changes as
requested.
Because of this, the school system might, for
example, order a few hundred Media Center computers,
followed by a few hundred more that have, perhaps,
smaller hard disks and standard productivity software,
followed in turn by something else different still.
Because he builds the computers as they're requested,
he avoids the high costs of warehousing, and he also
increases his flexibility.
It's the flexibility along with the reasonable
costs for his products that keeps Chang's company in
the running, he said. But this also demonstrates why
Microsoft made the obvious decision to stop
restricting its Media Center edition to only major manufacturers.
While Directron may not sell the volume of
computers that you'd find at HP or Gateway, this
50-person Houston company isn't exactly tiny. More
important, the differences between his computers and
those from the major manufacturers are fairly small.
Agreed, he doesn't have a big-company logo on the box,
but look inside and you'll see the same stuff that
you'd see inside nearly any other computer, whether it
came to life on the Dakota prairie or across town at
HP.
Well, there are a few other differences.
Directron sells most of its products to other
resellers, so the support load is fairly light. Those
resellers will provide the end users with support that's
required, and this cuts Directron's costs even
further.
But in reality, the equation is the same whether
those resellers were providing the end users with computers
from Directron or from a vendor such as Dell or IBM.
Yes, there would be a familiar logo on those boxes,
but the resellers would still be providing the
support. So how much is that logo really worth?
As I talked with Chang, I reflected on the days
when I was reselling computers to the government. In
those days I would have given a lot to have had a
means of providing a completely configured computer,
with all of the specialized hardware installed and set
up, delivered to the place where we'd be doing the
work. Instead, we could always count on opening each
machine, adding network cards or whatever, and then
updating the software before we could move ahead with
the installation. I still shudder when I think about how
many staff hours were wasted doing such things.
But things have changed. Through what can best
be considered custom manufacturing, resellers are
getting exactly the product they need delivered to the
end user in exactly the place where it should be,
exactly when it should be there. I think it must have
been abundantly clear to Microsoft that companies like Directron.com and similar white-box providers were really the manufacturers that stood an excellent chance to spread Media Center into businesses.
Commentary 
