OCZ Transforms Custom-built This 17” Montevina has it all, from optical SPDIF and integrated biometrics to dual hard drives and discrete dual-GPU graphics. At last, the channel has a notebook that can crush the big boys.

This sad condition is changing, and not a moment too soon. Perhaps the best example of what we hope becomes the future in custom-built mobility is OCZ’s DIY gaming notebook. As of this writing, just before the Montevina launch, the company has a single 15.4" kit based on the Intel PM965 chipset and NVIDIA GeForce 8600M GT discrete graphics. Hardware-wise, there isn’t much that’s exceptional about the unit. Rather, the product’s draw lies in the fact that it’s a barebones product accompanied by excellent assembly instructions and a list of approved add-in components.

Enthusiasts like to build desktops; OCZ is telling the same crowd that now they can build notebooks—a relatively new and untried message to consumers. While the product is sold through retail, etail, and the channel alike, resellers can add value to the product by matching the retail price but adding some assembly mentorship. According to Eugene Chang, OCZ’s product manager for notebooks, the company is noting an unexpectedly high number of mainstream consumers—not just the expected enthusiasts—taking home the DIY SKU, and this is the group that can benefit most from reseller involvement.

As intriguing as OCZ’s DIY model may be, it’s not our chief interest. With the Montevina launch, OCZ will add a 17" widescreen model to its DIY lineup, and this unit is remarkably different from anything else we’ve seen before. For starters, the notebook features two 2.5" hard drive bays, a feature we’ve seen before only on ultra-high-end designs from the likes of Voodoo PC. With this RAID 0, RAID 1, and Matrix Storage become easy enhancements.

Even more exciting is the fact that OCZ’s unit will feature two Mobile PCI Express Module (MXM) graphics slots, potentially enabling technolgies like full CrossFire and SLI (not just the hybrid approaches) on mobile platforms. MXM is an interconnect standard for mobile GPU cards that does away with the proprietary interconnects and soldered-down approaches of traditional notebooks. MXM, or something very much like it, is a necessary step if we’re ever going to have channel notebooks that are customizable to the extent that desktops are today.

“Our 17" model will be an MXM solution that can enable dual graphics,” says OCZ chief marketing officer Alex Mei. “You’ll have the option to pick either an AMD or NVIDIA solution. The other notebook guys haven’t even wanted to touch that. A Tier One doesn’t want you to have the ability to change out that MXM card. They want the card to be sold with the notebook. The card may even be proprietary to that notebook. We’re trying to work with partners to build general spec MXM cards, and if they’re not able to do it, we’ll do it ourselves and come up with an MXM card so that people can customize, configure, and change out the unit as necessary. We’re trying to create a new niche here.”

With dual graphics, two hard drives, an optical drive (Blu-ray is an available option), and a 12-cell battery, the 17" OCZ Montevina weighs in at just over nine pounds. Figure in Wi-Fi, Bluetooth, a Web cam, and a single HD 3870 MXM card, and OCZ anticipates that reseller pricing should fall around $1,180 at launch. That seems very aggressive given the compelling value-adds in this design, originally made for OCZ by Flextronics.

“This notebook was designed specifically for the channel but with all the Tier One features and functionality designed in at the time of launch,” adds Mei. “So the good stuff isn’t just for Tier Ones anymore. Now everybody else can play. That’s why we think that it’s fine to offer the DIY kit as a distribution product, but there’s also a big opportunity here for boutique resellers to compete against Dell and Alienware and all those guys.”

Resellers can buy this notebook directly from OCZ and sell it either as a parts kit or add the value of building it in-house. With the 15.4" Santa Rosa kit, we didn’t see a strong story behind this latter approach, but the 17" Montevina, with its advantages over competing Tier One designs, is compelling enough to warrant selling as a pre-built unit. Yes, you’ll be fighting for sales against the retail/etail channel, but Mei notes that resellers can expect a “huge” delta between reseller and retail pricing, starting at 12% to 13% on lower-end notebooks and reaching 15% to 20% on the higher end.

WHEN LESS IS MORE Proving to buyers that they can save money while performing better is a compelling pitch. Try using a wattage meter at the wall to show just how much juice your configs are drawing.

Resellers can snag even more margin than this if they push additional value-adds, such as custom paint jobs. Of all the large mobile integrators we’ve seen, no one has conquered the custom paint value-add better than Microsel and its Q2 Designs notebook line (www.q2designs.com). Microsel has been distributing to channel resellers for 14 years and now has production facilities dedicated to custom notebook painting and logo application.

“If you look on the ’Net for people who paint, prices start at like $400 for a notebook job,” says Microsel CEO Chris Schmidt. “There’s definitely a market for customization, just like in the automotive world. People want something personalized, and they’re willing to pay for it. We have pre-painted in 12 colors, so literally we can spin orders for resellers on a daily basis. If you want anything specialized, we do it in a seven- to 10-day turn time.”

Reseller pricing on Q2 custom paint jobs runs like this: $99 for a colored A panel; $129 for an A panel with artwork and color; $129 for coloring on the A, B, and C panels; and $179 for A/B/C panel coloring with artwork. Given that the precision of the work and the fact that the entire notebook has to be disassembled and reassembled, these prices seem very reasonable. Naturally, a reseller can mark up these costs as much as he wants, but the simplest sales approach may be to take the buyer to the Q2designs.com site, have him select his configuration and customization options, and then log back in under your own reseller account and get the same system at a 10% reseller discount.

SERIOUSLY CUSTOM Microsel may be the best paint shop in the channel. The company can customize notebooks to practically any color and integrate the customer’s own top-panel design, not some oversized sticker from Kinko’s.

“Our resellers who’re really grasping this are finding that they’re making more than 10% because of the differentiation,” says Schmidt. “You don’t have any competition! Who’s your competitor? Just us, right? And we don’t sell to the end-user market except through this Web site. But resellers aren’t even bringing up the Q2 name. We’re branding these for them. A reseller is going into his corporate accounts. They’re also making inroads into education. That’s because we’re putting the name of the school on the top of the notebook. Number one, it brands the school. Number two, it’s security. Who’s gonna steal a notebook custom-painted with Hollywood High School on it? They’re not gonna steal it, because it would obviously be stolen. We also do limited editions. For some of the gaming companies, we’ll custom paint them these notebooks with an image from one of the games, then we’ll number them. So it’s limited edition, one of a hundred. So now there’s value—only a hundred made! You better get one! The names Q2 or Microsel never come into the discussion. These are total deals we do in our customized program for resellers.”

Another reason we like Microsel is for its exceptional reseller-friendliness. This includes offering standard things like invoicing terms, but the real pluses hinge around things like infrastructure enablement. The company offers resellers a “support closet,” or extra parts for all the products they’re buying. Microsel owns the parts, but the reseller keeps them at its location so it can do any warranty work. There are a few conditions, such as the reseller having to do at least 10 notebooks or desktops each month, but in return the reseller gets extra motherboards, power supplies, memory, and so on, all at no cost.

RMA cross-shipping is another key facet of Microsel’s program, and there’s even a repair reimbursement program. Just as Tier Ones like HP will negotiate reimbursement for repairs done by the reseller, Microsel will actually pay for the reseller’s service time. This lets Microsel avoid the expense of shipping the product back, the cost of doing the repair, and shipping it back out.

For a broader selection of custom-build notebooks, we quickly grew to appreciate Jetta (www.jettaus.com). Today, the company’s Jetbook line spans from the 12.1" and 4.0-pound 930S to the 17" and 7.6-pound 1719R, although this doesn’t account for coming Montevina models. More than anything else, Jetta director of marketing and product development Brian Corn refutes that channel notebooks have to operate at a pricing disadvantage from the get-go. At the $699 and under band, yes, he concedes that there’s no way presently to beat a Tier One. But at the mainstream level ($800) and above, Corn states that his resellers can easily beat Dell and still make 15 to 20 points.

“With Intel’s tick-tock strategy refreshing everything every six months,” says Corn, “it’s very hard to keep on top of what you have and stock the product, turn warranties around, and turn systems around quickly. If you’re only selling 10 systems a month, you’re in a tough position to be able to stay on top of that and manage it. But if you work with a partner like me, maybe I’m doing a thousand systems a month, I can pass those costs on more cheaply. Maybe I’m buying more, stocking it better, warrantying it more efficiently—whatever. That’s why I can charge only $45 for assembly. A smaller reseller can’t even come close to that.”

Rugged and Powerful With more than 60% of notebooks being damaged from drops and 30% from spills, it can pay to have a semi-rugged unit like this Nexlink 2000d from Seneca Data among your mobility offerings.

One of the most exciting SKUs in the Jettabook lineup is the D150SB Semi-Rugged Edition. This 15.4" widescreen Santa Rosa unit is meant to go up against Panasonic’s equivalent Toughbook offerings. Jetta’s model features a magnesium top and bottom, anti-shock mounting for the hard drive and LCD, and a spill-resistant exterior. Corn notes that he recently helped a reseller win a bid against a Panasonic competitor that came in with a price tag around $3,500. The semi-rugged Jettabook was $1,500 and offered Santa Rosa performance against the Toughbook’s aged 945-based design. Big names like Panasonic with niche-oriented models simply can’t move from design to launch fast enough in a tick-tock world. Meanwhile, the channel has a way for resellers to slip in and win this business, particularly in vertical accounts. Note that Jetta is currently prepping a semi-rugged Montevina SKU. GammaTech is another integrator with a decent range of ruggedized models.

The political notebook landscape with Intel and AMD is no less treacherous than in the presidential race. More often than not, the contenders are damned if they do and damned if they don’t. Intel has invested untold millions of dollars into trying to build a custom-built notebook business for the channel with practically zero help from any other major vendors, but the results have been less than stellar. With the original Centrino generations, the support infrastructure was practically non-existent, forcing system builders to stock massive amounts of parts and wait extended periods for RMAs. The VBI program sought to remedy this by letting resellers buying specific Centrino models obtain service directly from Intel, but VBI was doomed to a premature demise.

“VBI was a great initiative,” says Jetta’s Brian Corn. “The problem was that Intel brought together some ODMs and got them to start agreeing on some common standards—the Common Building Blocks. Where they went wrong was having to get the product through an aggregator. There weren’t many distributors carrying it. And the program was kind of confusing in that you bought the shell and had to put it together, but a lot of resellers didn’t have experience putting notebooks together. So instead of pointing people to companies like Jetta that did have that experience, they decided to go the VBI route, and that didn’t work. The real fix is what they have today: MCL.”

MCL stands for Mobile Channel Leader, Intel’s latest program aimed at taking the top notebook integrators and helping them to bring a wide range of reseller-friendly designs to the channel, both ready-to-ship and build-to-order. As of the Montevina launch, MCL partners include ASI, Aviva Mobility, Chem USA, CTL, Equus, GammaTech, Jetta, Microsel, Prostar, Sager, Seneca Data, and Spartan. Mobile designs run across vPro, rugged, gaming, tablet, and mainstream sectors, putting to rest the notion that channel notebooks have to be boring vanilla.

THE NEXT LITTLE THING? If you thought the Asus Eee PC was a fluke, consider these “netbook” designs Intel’s Sean Maloney displayed earlier this year at Computex. These may be your next high volume technology.

MCL integrators have direct relationships with the ODMs and are required to stock Common Building Block components and other parts for ready availability to resellers. An MCL must be able to service every SKU it sells. Moreover, the integrator should be ready to move 1,000 or more units each quarter and have the desire to help double the channel’s notebook share.

“In desktops and servers, build-to-order represents about 20% of the market,” says Intel mobile channel marketing manager Bill Davidson. “Notebooks are less than one percent. So there’s a huge growth opportunity, right? There’s a long road to go, but we believe that the channel can be successful and differentiate.”

Is MCL the right mix of local touch and large-scale volume to make custom-built notebooks a thriving channel business? We’ll see. The only sure thing is that Intel feels the channel is a vital part of its success, and mobility is key to the channel’s future well-being. Love or hate the company’s efforts, you can’t knock it for trying its hardest.

Meanwhile, there’s AMD, no less of a channel ally than Intel but with a wholly different philosophy on custom-built notebooks.

“We would love nothing more than to be a part of a viable whitebook ecosystem that was plug-and-play, interchangeable parts, just like the good ol’ whitebox desktop market we know and love, but it’s just not happening,” says AMD North American channel chief Gary Bixler. “And I don’t think it’s happening on the Intel side, either, to the extent that people have as a vision of what it should be. There’s very limited success we’ve seen to date on that side. We don’t have the resources or the desire to try to force something that’s not going to be successful or in the best interests of the channel.

“We’re going to make sure that smaller guys have lots of good options for selling AMD-based notebooks,” adds a keenly honest Bixler, “but they’re not going to be traditional whitebook, buy a barebones, integrate all the parts, and put your own brand on it. We’re going to encourage them to sell the channel-friendly OEM brands, like MSI or ASUS or even Acer. Quite frankly, we think it’s in the interests of the smaller guys to market and sell those units rather than try to deal with the nuances and difficulties of the whitebook market right now, taking that inventory risk, service and support deficiencies, and all the things like that. To date, those things have been insurmountable for these guys. The trade-off is they’re not going to make the margins on those notebooks they’re used to making on desktops. It’s just the reality of the business.”

As channel advocates, we at RAM can’t help but encourage the move toward custom-built systems. At the same time, we acknowledge the past difficulties of making a go of mobility in this space and the advantages of showing customers a recognizable, feature-laden name brand unit. In their own ways, both camps are right, and both have new platforms with a tremendous amount to offer resellers.

No matter which way you vote—and in this race there’s nothing wrong with voting for both parties—be sure you become an activist. Learn these platforms, pick your partners, and bring your choice designs to your customer base. The less proactive you are with the new platforms, the easier it will be for people to buy outside the channel. Push hard, be different, and win big.