Business | Features
Channel Sponsor
What's in a laptop brand?
Laptops are very similar in terms of their components, which encourages companies to market other features, such as weight, size and functionality.
- By Scott Shuey, Chief Business Reporter
- Published: 23:58 April 14, 2008
- Acer isn't alone in rebranding notebooks. All of the major brands, including Toshiba, Dell, Sony, Lenovo rebrand laptops purchased from third parties.
- Image Credit:
Who makes the best computer?While many people think they know, Krishna Murthy, deputy managing director for Acer, says you might not know as much as you think about laptop brands.
To begin with, Murthy points out, most of the laptops on retailers' shelves are not made by the company whose logos they bare. He defends the strategy, which is widely used by other giants in the industry including Dell, Sony and Toshiba, as a way to provide a better product for users.
"In the entire retail chain, everyone has to be more efficient in what they are doing, so we are giving the best value to the end users," he says. "That is why we give it to the manufacturers to get the best out of the manufacturing. We are a brand company, so we position our product with the right kind of values. Distribution is given to the distribution masters, which are the channels, and then the dealers and the retailers, who are again the masters in there own areas."
Acer isn't alone in rebranding notebooks. All of the major brands, including Toshiba, Dell, Sony, Lenovo rebrand laptops purchased from third parties. A report by iSuppli, a market research company, in 2006 found that more than 80 per cent of PC notebooks are made in Taiwan by original equipment manufacturers (OEM) and original design manufactures (ODM). ODMs produce products that will be rebranded under another name, while OEMs sell products that have been rebranded.
That same year, a media report from China Economic News Service said that two Taiwanese companies, Compal Electronics and Quanta Computers, were expected to ship about 40 million notebooks in 2006, more than half of the global market, which stood at about 75 million.
Market segments
That doesn't mean the brands such as Acer, Dell and Sony aren't involved with what goes inside, but since the components are often made by a limited number of third parties - the vast majority of CPUs are made by either Intel or AMD for example - the brands often work with distributors to produce machines that cater to a specific segment of the market.
According to Gautam Srivastava, AMD's managing director for the Middle East, Africa and Pakistan, the ability to make a laptop stand apart is an important trend in the industry, especially given the lack of different components. "What you're seeing is increasing differentiation in the laptops, and they're becoming more like consumer electronics," he says, adding that consumer expectation has increased since the release of the iPhone. Buyers want to be able to view videos, listen to music, and browse the web with only a few buttons.
Yet, Srivastava says he isn't yet seeing computers manufacturers doing enough to distinguish themselves in terms of graphics. Consumers are going to want higher resolutions than most notebooks currently allow, he adds. AMD is also the owner of ATI, a company that makes graphic processing units.
Dell Computers, which offers both the Latitude and XPS brands, has two strategies. Dell has built up the Latitude's reputation for being a reliable business computer by developing software-driven features such as faster startup speeds and energy efficiency. The XPS, which is Dell's major retail computer, aims to deliver the latest technology to high-end consumers, with a specific focus on gamers. "In the past 20 years, Dell has always been first to market with technology, and we're trying to be first to market and keep prices down," says Sameh Al Deeb, a PC product manager for Dell.
"[The XPS] was built from day one as a premium brand - premium meaning form factor [size and shape of the computer], weight, size, the quality of materials being used and the highest technology. If you look at the technology-adoption curve, it always starts with XPS and then other competitors follow."
For example, Dell's claims to have been the first to include in a notebook include Solid State drives (SSD), which unlike traditional hard drives require no moving parts, and touch screen tablet PCs.
Like Dell, Acer also works with third party manufactures and directly controls the procurement of the components in its machines, but Murthy says his company focuses more on catering to smaller markets segments, including children, housewives, high school students, and professional gamers, to name just a few. Acer focuses most of its energy on the retail market with its Aspire models and on the small and medium-sized businesses with it Travel Mate series.
HP has followed a strategy similar to Dell's, focusing on delivering new technology as early as possible, but the company also conducted a marketing campaign to emphasis the "personal" side of its notebooks. The marketing campaign followed a 2006 worldwide study conducted by HP, which found that consumers prefer such things as dark colours and a glossy appearance in home technology. Where the marketing campaign was responsible is hard to determine, but at the end of 2006, HP surpassed Dell as the world's largest computer manufacturer.
"Customers are responding to HP's focus on delivering the best customer experience and making the computer personal again," says Serdar Urcar, general manager for HP's Personal Systems Group in the Middle East. "A combination of industry-first features, cutting-edge physical design and customised services and buying options have awakened customer interest in the brand and boosted HP to the world's leading technology retailer and largest PC company".
But what really differentiates a brand, in Murthy's view, is how the brand is marketed. "The simplest way to put it is that we apply the marketing mix in the right way," says Murthy. That mix, he continues, is the product's position, price, place, and usage. It also includes ensuring that customers are not paying for features they don't want such as hardware accessories for home entertainment, he says.
Murthy adds Acer also does not include preinstalled, temporary software, which has to be registered, usually at a fee.
But having the latest technology or the right components isn't always as important as being portable. A spokesman for Sony Vaio admitted that the company's entry line of laptops is very similar to other brands in regards to what's inside - it was only in the high-end computers that consumers where more likely to find exclusive technology - but Sony's market strategy is to hit road warriors where in hurts: the shoulder. The Sony Vaio generally weighs as little as 1.2 kilogrammes with some models reaching 2.6 kilogrammes, still about half of the weight of the Dell's XPS, which can weigh in at almost five kilogrammes. Sony even produces a laptop with a 7.5 inch screen which weighs only 520 grammes.
The drive to differentiate their notebooks has even driven some companies to improve their after-sales services. Laptop companies have learned that it isn't just what's inside the box that can distinguish them to consumers interested in how well their investment will function a year after it's been out of the box.
In Dubai, both Dell and Acer have established warehouses in Jebel Ali. Acer, which also has a local call centre, technical support centre, central repair centre and a spare parts centre, estimates that it holds five million spare parts at its warehouse. This, in combination with pickup-and-deliver services, allow for faster turnaround times since parts are available locally.
Not everyone buys into the mass production strategy though. When it came to the design of Lenovo X300, David McQuarrie, executive director for its notebook business, claims the company retained control of the entire production process. The company still purchases from Compal and Quanta for its other product lines.
"The aim was to put a lot of product in a slim device," he says. "You start with an idea and then you work with an engineering company to make it real." That draws a series of challenges, he says, especially in how to get lower power usage and maintain an appealing form factor. "Being in control of [design and production] is critical for us," McQuarrie says, who adds that the X300 was based on customer feedback.
The strategy worked. The X300 made headlines following its release last month, thanks in part to Apple. Steve Jobs happily promoted the MacBook Air as the "world's thinnest notebook" when it was released in the first week of March.
The Air's claim to fame barely made it to the end of the month, depending on where you measure the X300. Lenovo uses the figure of only 19 millimetres, about a hair thinner than the Air. Beyond that, the differences were slight.
But in the end, that isn't what Lenovo, nor presumably Apple, wanted. Both were hoping to make their notebooks stand apart on their merits, but in the end, it may come to something not very technological: price.
That, McQuarrie says, is not what they wanted. "Price is not a healthy way for the industry to differentiate," he said.
Laptop companies have learnt that it isn't just what's inside the box that can distinguish them to consumers interested in how well their investment will function afterit's been outsidethe box.
Share this article
More from Business Features
More from Business
Popular in Business
-
Budget travel
Airlines in the region
Take a pictorial look at some of the budget airlines in GCC
Business Editor's choice
-
Credit swaps... a fair trade
Would you swap an unbuilt unit at the Lagoons for an apartment at JBR?
-
New face of safety
Volvo reveals a sleeker S60, ready to hit the roads early next year
-
When the Web lives worldwide
Cutting-edge firms are building massive data facilities all over the globe
