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Custom Systems/White Box

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I really liked this site. Very neat, and time well spent.

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Some custom systems builders privately worry that Acer’s recent market share gains may be their loss. The Taiwanese manufacturer surged past Dell this year to become the world’s second largest PC manufacturer, largely on the strength of its notebook sales.

 

The fear is that a lean global PC company with buying power that rivals market leader Hewlett-Packard can build and sell systems at a significantly lower cost than custom systems builders. So what else is new? Fifteen years ago it was Dell that was going to eat custom systems builders’ lunch. Then, a few years back, HP solved most of its inventory and manufacturing problems, resulting in quick to market systems with prices rivaling those from systems builders.

 

HP, Dell and now Acer may have figured out the pricing gambit, but what they struggled with is how to match the service and support offered by custom systems builders. Got a problem with an Acer system? Try calling customer support for help.

 

The custom systems business ceased to be a pricing game years ago. People buy custom systems because they can get exactly the system they want from a solution provider who supports the product he or she built. Over the years, systems builders haven’t just built PCs; they’ve built trust.

 

Rather than wringing hands over a rising global PC manufacturer, systems builders need to leverage the trust factor to grow their businesses. Global PC manufacturers have yet to figure out how to conjure trust from a price list or a spreadsheet.

 

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Since the netbook first hit the scene back in late 2007, the market has been dominated by devices powered by Intel’s Atom processors. The second wave has come with Atom-ION netbooks, or Atom processors paired with Nvidia 9300/9400 graphics. Late to the party but showing up nonetheless, AMD and its Congo platform are finally taking off as well.

 

So, it seems as though all the major players are deeply trenched or at least wading in the netbook market. However, there is some new tech that could make the netbook sector very interesting for system builders over the next 6-12 months.

 

System-on-a-chip, or SOC, is the new direction for netbooks come 2010, and Intel and its Pineview platform won’t be the only contender in the ring. Nvidia’s Tegra platform has been around for some time now, in devices like the Zune HD from Microsoft, and will likely be seen in netbooks in the coming months. What really has my interest piqued is the new Zii StemCell SOC coming from Creative and ZiiLabs. This SOC platform has finally manifested in the form of a smartphone reference design, and the promised performance is pretty amazing.

 

The StemCell SOC promises 1080p video output via HDMI, something that the vast majority of Atom-based netbooks still can’t achieve after a two year head start. The latest Zii SOC has features like 24fps encoding for film-based media, HD video conferencing, OpenGL ES 2.0 support for games, an integrated HDMI controller, X-Fi audio and Flash acceleration. All this is combined with an ARM Cortex A8 processor running at 1 GHz.

 

There won’t be any Zii/StemCell netbooks at CES next month, but if manufacturers pick up on the Zii SOC for smartphones and PMPs, and the tech can live up to its promises, system builders would be wise to give Zii a second look.

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Secure Digital Extreme Capacity (SDXC) is finally coming to fruition, and sooner than you think.

According to reports that were leaked yesterday, SDXC will be coming to laptops in a big way starting in early 2010. Manufacturers including Dell, Lenovo and HP are working on new notebooks that will include the latest SD card standard.

These newest products will be based on the upcoming 32nm Arrandale mobile processors from Intel. The Arrandale chips have integrated graphics in the same package as the CPU, which means lower power consumption and heat, two crucial factors when it comes to notebooks.

The SDXC platform is very attractive for both mobile and desktop system builders. Regardless of the system, SDXC will give your customers 300 MB/sec. transfer speeds along with capacity up to 2 TB. For notebook systems, and especially netbook systems, this means near-unlimited storage is available without trying to fit the latest and greatest hard drive inside the machine. For desktop systems, this is attractive for system backups, transferring media, and bringing media from your main system to a media player connected to a TV.

Reaching the 2 TB capacity milestone will probably take some time, but you can expect initial capacities of 32, 64, and 128 GB.

The only real drawback to SDXC right now is bandwidth. In current systems, SD and SDHC cards are read via an internal USB 2.0 connection, which is too slow for SDXC. For now, system builders will need to use an internal PCI Express connection, or if the system is configured for it, a USB 3.0 connection.

The Consumer Electronics Show is just over a month away, and you can bet the farm that dozens of different system builders and accessory manufacturers will bring SDXC tech to their booths.

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Windows 7 is flying off the shelf. So what? Systems builders largely sat out the Vista debacle, instead choosing to stick with the more stable and reliable XP. Now that Windows 7 is at last sparking interest in a new Microsoft operating system, custom systems builders were hoping that would quickly translate into the much hoped for PC refresh cycle.

 

So far many systems builders report more tire kicking than actual sales. Systems builders hear from their home users that they’ve been holding off purchasing new PCs until the Windows 7 release, but solution providers note they haven’t yet seen a holiday rush to buy Windows 7 systems.

 

The one exception may be gaming systems preloaded with Windows 7. While solution providers say that holiday sales for gaming systems is much stronger than last year, it’s tough to tie the bump to Windows 7 alone.

 

In other words, Windows 7 is not yet a cure for the economic hangover.

 

Still, many SMB customers that have been stuck for so long on XP are now starting to buy prototype Windows 7 systems to start testing in preparation for a transition to the new operating system. One ominous sign that the economy still trumps Windows 7 excitement is that larger businesses and public sector accounts have expressed guarded interest in transitioning to the new operating system.

 

But one systems builder told me he has reason for hope. “We’re pleased with Windows 7 sales so far and we do believe it’s leading to new business opportunities that maybe weren’t here a year of six months ago,” he said.

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As reported earlier this year, the next wave of Core iX processors from Intel will be hitting the streets in the first quarter of 2010. Dual-core, 32nm, LGA1156 Core i3 and i5 processors with clock speeds ranging from 2.93 to 3.46 GHz should offer some excellent performance value for system builders interested in entry-level and/or mid-range desktops. Some of these Clarkdale chips are even more attractive due to low pricing, which goes from USD $284 for the dual-core 3.46 GHz Core i5 all the way down to $123 for the dual-core 2.93 GHz Core i3. There is even a 2.8 GHz dual-core Pentium chip for $87.

 

What really catches our eye is the upcoming Core i9 series. Based on the LGA1366 socket, these 32nm, six-core Gulftown processors will run on 130W of power, come with 12 MB of L3 cache, and have an operating frequency of at least 2.8 GHz which will ramp up to at least 3.23 GHz thanks to Turbo Mode. No exact release date or pricing is available yet, but we do have some benchmark results.

 

PC Lab in Poland got their hands on a six-core Gulftown chip, and the performance was head and shoulders above comparable Core i7 chips. The 2.8 GHz Gulftown showed a 50 percent overall performance jump over a Core i7 920, which isn’t a surprise since the Core i9 has six cores instead of four.

 

When it came to overclocking, the Core i9 chip made to a blistering 4.32 GHz, which is extraordinary when you consider the BIOS and motherboard hurdles the Core i9 had to deal with. X58 motherboards have the proper socket, but current models and BIOS versions aren’t meant to mingle with six-core processors. Knowing Intel, a new chipset will accompany the Core i9 processors, or at the very least you will see a plethora of board revisions and BIOS updates.

 

If you consider yourself a high-end system builder, then the Core i9 family is certainly a game-changer for you. Anyone who demands the highest performance possible should be on the lookout come January.

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Face to face marketing works best, but Facebook to Facebook may be the next best thing. Custom systems builders caught in the conundrum of  “I need to spend more money on marketing to grow my business” and “I can afford to spend money on marketing” are turning to social media as a way to speak directly to customers.

 

Everything Channel research has long shown that fastest growing solution providers are the ones who spend most on marketing, often upwards of 10 percent of their annual revenue. But in this economy tithing on marketing is a tall order. A research number I like better is one showing 83 percent of college students access a social media site daily.

 

This phenomenon is not lost on custom systems builders. Component shortages with corresponding rising prices are just one of the issues creating both confusion and opportunity in the market. And instantaneous free marketing on social media sites may be the best way to capitalize. One custom systems builder, for example, alerted customers that memory prices had doubled and were likely poised to double again. His Facebook marketing message: Don’t put off new system purchases or memory upgrades. A few days later, when memory prices jumped again, he updated his Facebook customers with the message that DDR2 prices had reached parity with DDR3 memory so opt for DDR3 on your next purchase.

 

Systems builders now understand that better and faster applies to marketing and not just systems building. Those that don’t take social media marketing seriously risk falling behind.

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Systems builders hoping to sell virtualization to their SMB clients might consider giving it away for free. Some custom systems builders report that they’re installing the free version of VMware on new servers as well as putting it on customers’ existing systems. Of course the free software is a stripped down version and is more of a marketing ploy to give SMBs a taste of virtualization. But who cares?

 

Marketing is what’s needed if custom systems builders are to sell virtualization to their smaller SMB clients. If you listen to VMware, the company claims that its fastest growing customer segment is companies with fewer than 100 employees. And some market research companies project that 50 percent of SMBs will embrace virtualization in the next year.

 

Geez, that must mean that SMBs have experienced a virtualization epiphany and are flocking to VMware in droves. I don’t think so. SMBs, if they do understand the benefits of virtualization, still struggle with why, as a little guy with just a few servers, do they need it.

 

SMBs can go directly to VMware and download the virtualization software on their own. But I don’t think many are. SMBs need to be shown the virtues of virtualization by a trusted partner that understands their business. That’s what many custom systems builders do. The virtualization conversation is a great way to cement existing relationships, build new ones, and sell more consulting services along with custom systems. Sometimes it makes sense to give stuff away for free.

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This past Tuesday, we talked about Nvidia and its lack of presence in the DirectX 11 category. Now, let's focus on ATI, a company that is in a completely different position.

 

Where Nvidia has stumbled, ATI has sprinted towards the finish line. In the past two months, ATI has launched its latest line of graphics cards, the Radeon HD 5000 series. With five different models to choose from, ranging from the $150 5750 to the $400 5870, ATI has its bases covered at every price point. This is excellent for every kind of system builder, from the budget box to the gaming goliath.

 

ATI added yet another card to its 5000 series today: the 2 GB 5970. Doing away with the "X2" moniker for dual-GPU cards, the 5970 is one card with two 5870 GPUs on board. At $600, this is certainly not for the frugal system builder, but it is hands down the fastest single card graphics solution on the planet.


In less than two months, ATI has launched not one, not two, but five different graphics cards, all of which are DirectX 11-compatible. So, for all you builders out there who are aching to put together a Windows 7-based system, ATI is waiting in the wings with a plethora of graphics hardware to choose from.

 

Until Nvidia gets around to launching the GT300 series, ATI is king of the DirectX 11 realm. The only snag at this point is keeping up with demand. A quick trip over to NewEgg shows that over half of the HD 5000 cards listed are currently out of stock. Hopefully, stock will be replenished in time for holiday shopping, but since there's no DX11 competition in sight, ATI can breathe easy...for the moment.

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Direct X 11 is here, so where’s the new graphics hardware from Nvidia? Nowhere to be seen…

 

When Nvidia first announced its GT300 series of GPUs, the release date was set to 10/2009. Well, October has come and gone, and no next-gen Nvidia cards showed up – although the release of more GT 200 card models is good for the mid-range system builder. There has been little in official word from the graphics giant. However, during a financial conference call with analysts, Nvidia CEO Jen-Hsun Huang said that the GT300 cards would be delayed until Q1 of the 2011 fiscal year, which for Nvidia is January 26 through April 26 in 2010.

 

If one is to give Nvidia a little elbow room, the delay means we wouldn’t see new hardware until February, or maybe even March. Going with the latter means the GT300 cards (presumably a GTX 380 and GTX 360) would hit the market roughly six months after AMD’s Direct X 11-capable HD 5000 series cards.

 

Not only does AMD have four high to mid range models available in the 5800 and 5700 series already, but a dual-GPU 5970 is expected within the next few weeks, and 5600 and 5300 series cards should arrive in the next few months.

 

While no official reason is being given for the delay, the culprit may be the lack of 40nm chips available for use in the GT300 series. Taiwan Semiconductor Manufacturing Company (TSMC) has yet to reach its full manufacturing capacity when it comes to 40nm processors, and everyone involved is feeling the squeeze.

 

If the GT300 series doesn’t launch until Q1 2010, Nvidia is in real danger of losing some serious market share to their friends over at ATI.

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Are systems builders the stepchild in the Windows 7 launch? Let’s hope not. Windows 7 is sure to get a quick boost from systems builders anxious to put the new operating system in their gaming PCs. And for small businesses unsure of whether to upgrade, custom systems builders are ready to incorporate features and offer the support necessary for SMBs to take the Windows 7 leap.

 

Whether it’s a new operating system from Microsoft or new chipsets from Intel or AMD, custom systems builders are the gateway to early adoption of new technology for small business customers. System builders are more nimble and less risk averse than major vendors when it comes incorporating new technologies into their PCs.

 

More nimble, that is, if they are given equal access and comparable pricing offered to the major systems vendors.  Too often systems builders are an afterthought to manufacturers eager to sell their technology to PC vendors. Take care of HP and Dell and oh by the way get around to the custom system folks.

 

But vendors taking that attitude do so at their peril. The reasoning has been that the HP and Dell volumes warrant special treatment, while the low-volume custom systems builder gets the dregs.

 

This divide and conquer market view is wearing thin. When you aggregate custom systems volumes, they rank as one of the top PC vendors in the world. It’s amazing to me that vendors seemingly so brilliant at inventing new technology can’t do this simple math.

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As a system builder, you’re probably living by the “best performance at minimal cost” philosophy. Going by this mantra isn’t a new revelation by any means, but new technology will always give a system builder a moment of pause. In most cases, adopting new technology, be it hardware or software, is the best course of action. However, there can be scenarios where the latest and greatest tech can be placed on the backburner until a more appropriate time, or just skipped altogether.

 

An upcoming example of unnecessary early adoption is the new SATA standard, SATA 3/SATA III/SATA 6Gbps, whatever you like to call it. Does SATA 3 offer a substantial performance gain over SATA 2? Theoretically speaking...yes. SATA 3 will offer speeds up to 600 MB/sec., compared to the 300 MB/sec. max with SATA 2. Double the throughput is always good, but even in 2009, this is overkill. Current hard drives aren’t even taking full advantage of the 300 MB/sec. throughput of SATA 2, so there really is no rush to adopt a standard that's twice as fast.


If you really want to get SATA 3 in your system(s), there are some options available. Several P55 and X58 motherboards have SATA 3 on board, including the Gigabyte boards we mentioned in the USB 3.0 post a few days ago. When it comes to hard drives, the $300 Seagate Barracuda XT is the only SATA 3 drive on the market at this time.


Just like USB 3.0, a lot will change come CES in 2010. I think the biggest difference between the adoption of USB 3.0 and SATA 3 is the time between them and their respective older brothers. USB 3.0 is coming nearly a decade after USB 2.0 hit the market, so there is a lot of catching up to do. With SATA 3, it’s coming only three or so years after SATA 2 was introduced, so there isn’t nearly as much elbow room performance-wise.


Are you looking to adopt SATA 3 as soon as possible, or will you let it wait in the wings for another 6 months? Let us know what you think!

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Component shortages! Rising prices! And it’s all good news.

 

In a normal world parts shortages and price instability would raise havoc with systems builders during the fourth quarter. But in case you haven’t noticed, the world isn’t normal anymore. Systems builders tell me that there’s been an accelerating shortage of memory over the past six months with prices doubling. Now shortages and prices increases are cropping up in hard drives.

 

But instead of wringing their hands, systems builders are jumping with joy. What this signals is a surge in demand for custom systems, the likes of which systems builders haven’t seen for two years. Most solution providers see this as an indicator that perhaps the ugliest year in their history will soon be just a bad memory.

 

But before everyone gets his or her hopes up, let’s be a bit realistic. Federal stimulus money and the spend-it-or-lose-it tag that comes with it are driving much of the recovery. Just look at K-12 schools where systems builders say there is a sudden up tick in demand for technology. Public schools can’t pay teachers, can’t afford to fix leaking roofs but they’re flush with grant money earmarked for technology.  The federal government can’t continue to carry the load if we are to see a real recovery.

 

Still, component shortages are the canary in the coalmine, and this bird sings to a global market.  There’s no denying that global PC demand is looking up and custom systems builders will be at the vanguard in next year’s recovery.

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Ah, the Universal Serial Bus. Nearly 14 years after USB 1.0 hit the market, and over nine years since USB 2.0 brought about unprecedented transfer speeds, the standard is certainly…dated. But never fear, because SuperSpeed USB is here!...sort of.


When it comes to available hardware, SuperSpeed USB (the other name for 3.0), is starting to show signs of life. Of course, this means there needs to be USB 3.0-capable devices AND compliant ports on motherboards. Over the last few months, manufacturers have started hopping on the bandwagon.


For system builders, the motherboard or some appropriate add-in card are going to be the most important aspects of USB 3.0. Luckily, there are some boards on the market that can deliver. Two of Gigabyte’s P55 chipset-based boards, the UD4P and the UD6, come with two USB 3.0 ports baked right in with the I/O cluster. Intel might not support USB 3.0 right now, but an onboard uPD720200 host controller from NEC makes the 3.0 ports possible. Asus also has a USB 3.0-capable board in its P7P55D-E Pro.


If you want to add USB 3.0 to an existing system, then Asus has you covered with its U3S6 add-in card. At only $30, this PCI Express x4 card is a steal, and will add two USB 3.0 ports to virtually any system. And let’s not forget that the U3S6 also comes with two SATA 6Gbps ports, too. This is certainly a must-have card if you want to make your current system more future-friendly.


Now that your system is set up with USB 3.0, you'll need appropriate devices and peripherals to go with it, right? Unfortunately, there isn’t much in the way of tangible products to go with the new standard, but there are some on the horizon. Super Talent recently announced its new 320 MB/sec. RAIDDrive USB 3.0 flash drives, which will be available in December in 32, 64 and 128 GB sizes. Sure, one flash drive isn’t enough reason to upgrade, but with CES 2010 less than two months away, you can bet there will be a slew of new devices hitting the market come spring time.

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The Xbox is a cheaper gaming system than a custom built PC. In the fourth quarter of a year that’s marked the worst recession since the Great Depression, those economics may hold some weight. But not much.

 

That’s because Xbox versus a gaming PC is rarely an either or decision. Gaming enthusiasts crave the horsepower, enhanced graphics and the ability of custom systems builders to quickly incorporate the newest and best components into their systems. In short, all the advantages custom systems builders hold over major vendors in the commercial PC market hold true in gaming.

 

And try writing a term paper or searching the Web on an Xbox. The market is clearly moving toward a convergence and consolidation of devices. Take a look at Apple's iPhone sales or the surge in laptop purchases versus desktop PCs. To me it makes little economic sense to own a dedicated gaming system when a custom built computer gives you better gaming features and greater flexibility to upgrade your system as new components come onto the market in addition to everything else a PC can do.

 

Companies such as Zotac USA, the first components manufacturer to bring Nvidia Ion-based Mini ITX motherboards to the U. S. in 2008 struck gold precisely because they tapped into the channel for custom-built gaming PCs.

 

That’s not to say an Xbox 360 that can be had for under $200 isn’t going to be a big seller for Microsoft this holiday season. But when you ask custom systems builders what’s the biggest fourth quarter sales driver? The answer is gaming PCs.

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