Viewpoint: How to make an ass of yourself

Suppliers now offer carrots to the bespoke builders who were the donkeys of the industry, says Dave Evans

There?a an old Ethiopian aphorism which argues that without a donkey, you are a donkey. The idea, of course, is that you can either do the graft yourself or let someone else shoulder the burden. Resellers naturally understand this. Tin manufacturers, software developers et al might put in situ the initial manufacturing capital and R&D, but thereafter it?s generally down to the channel to shift the goods to the consumers. And for this, dealers and Vars are duly fed a few carrots. It?s what makes the wheels go around, as they say in the donkey ?n? cart trade.

But things are changing rapidly, and no more so than on the PC front. The problem is that the unending onslaught of upgrades to create ever more powerful computers has led to an endless reshaping of the systems that resellers are expected to bolt together and sell. And if that isn?t enough, there is the further headache ? at least from the suppliers? perspective ? that there just aren?t enough donkeys around. At least not ones that, after coping with one lot of upgrades, will happily go back and pull the next set to market without some reciprocal generosity on the carrot front, if only in terms of a fairer relationship.

It?s a situation that has led to two separate developments. The first is that a new community of resellers has started to evolve, able to build bespoke systems faster and cheaper than the asinine plodders who hitherto have sought only to shift standard configurations. To compete with systems offered through retail stores by first and second-tier vendors, players in the niche, build-your-own and custom assembly markets are seducing buyers with the lure of better spec machines, typically throwing in a voice/fax modem and 16-speed CD-Rom for the same price of an inferior box from a more bulk sales- oriented rival.

The second development is that the suppliers have recognised this is happening and are now wooing these more fleet of foot channel beasts lest they lose a share of this newly emerging market. For chip makers especially, the donkeys are now a cherished breed. At no other time in computer industry history have microprocessor manufacturers focused their marketing activities more heavily on the bespoke build market.

In the US, Intel has already started its own huge channel push with the aim of doubling its number of resellers over the next year through an entire restructuring of its reseller programme. And with their own partnerships and OEM channels maturing, the smaller chip companies ? especially AMD and Cyrix ? have similarly placed reseller support high on the agenda. The timing for such a move could not be better for AMD and Cyrix, with both companies in the throes of introducing new microprocessors to compete against Intel?s Pentium II. It is here that fortunes stand to be won or lost by the chip manufacturers, and where the donkeys can expect juicier carrots ? providing they?re harnessed to the right cart.

Intel, meanwhile, has a lot of ground to make up with smaller PC vendors which have long moaned about being pushed around by the world?s dominant chip supplier. Many were less than happy at being saddled with older Pentium stock when, with little warning, Intel launched the MMX multimedia processor earlier this year. Another Intel manoeuvre that has left smaller dealers smarting is the purported decision to give co-operative funding to first-tier dealers that promote the latest Slot 1 architecture, while relegating second and third-tier dealers to the old Intel Inside campaign.

With even first-tier vendors and OEMs hinting that they too might defect to the K6 processor, AMD?s rival to the Pentium II, Intel has good reason to fear the wrath of smaller custom PC builders who feel they have been shabbily treated in the past. Throw in the latest reports about bugs in the Pentium II and it would only take a few major end users to start demanding compensation before PC OEMs and the reseller community alike to cry: enough is enough.

Indeed, that Compaq, IBM and Hewlett Packard are studying AMD?s K6 chip could be sufficient in itself to spur dealer interest in rival offerings. As one San Jose Var recently put it: ?Intel should be panicking right now. This is the time when we?ll see if AMD and Cyrix will make it or not.? Perhaps most important of all, resellers collectively will have to decide whether it?s healthy for any one manufacturer ? be it Intel or anyone else ? to have so much power over the industry.

Intel chips already drive more than three-quarters of the world?s PCs, much in the same way that Microsoft applications overwhelmingly dominate the desktop. Monopolies favour suppliers, but rarely those further down the distribution chain. Think bespoke, think competition, think carrots.