Buy or Build – That is the Question

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OEMs Rule

In North America, the do-it-yourself market is much smaller than in Europe and Asia. I don’t why this is, but it is the reason why OEMs such as Dell, Compaq, HP and others are such a huge force in the industry. Worldwide, probably 80% of all PCs owned were purchased from an OEM or White Box maker – but in North America, which has the largest yearly sales of PCs of any region, that number is probably closer to 90%.

This has to be a concern for AMD, because OEMs are the pillar of Intel’s strength. For this reason, you will see many AMD Enthusiasts rail against these OEMs for not carrying AMD products. The reason, of course, is pretty simple – economics. It is much cheaper to limit your product line to as few variations as possible, and changing a CPU today means also changing motherboards (and therefore chipsets). Due to compatibility issues, this may also means changing memory and video card options as well. Discounts on parts are based upon volume, and the more different parts, the lower the volume for an individual part. In addition, the time spend engineering and validating each system is significant, so more variations means higher cost – and therefore a lower profit. This is simply bad business, so the ‘big boys’ standardize on Intel, because that allows them to keep their costs under control.

I built my first PC in 1990 for my father, which was a 286 based system. I signed up for a local one-day college course where they charged $1200, and provided all of the components. It took me another 5 years to become experienced enough to really design a reasonable home-built system. Looking back, it turns out that I could have done much better myself – if I had known what I know today. The fact is, however, that I did not, so I ended up paying more for that system than I needed to – but I learned how to assemble one, didn’t have to deal with compatibility issues and had an experienced troubleshooter available to handle any problems. Many people try to learn this on their own, and when they realize that it wasn’t cheaper or was more difficult to troubleshoot than they realized, they become lifelong retail buyers.

AMD’s Dilemma

I’ve recently seen some rather volatile discussions on this subject, and some of them revolve around articles written that claim building an AMD based system is much more cost effective than buying a retail Intel system. Based upon the reasons given above, this is obviously not true for the vast majority of PC users – so what can AMD do about this?

Personally, I think there is only one thing AMD can reasonably do – sponsor local workshops by system builders, resellers and schools. Advertise these workshops on the AMD site giving dates, times and what will be accomplished. Offer incentives to vendors that ‘graduate’ the most number of students. Possibly provide a sample curriculum, including detailed information on how to select components, how to select an authorized reseller, and how to do basic troubleshooting. Perhaps even make a deal with a manufacturer of inexpensive POST cards and include a section on how to use it. All of this could be part of the fee where the user gets to build a system of their own design (within the constraints provided by the particular vendor or school, based upon parts availability).

There is much to understand about selecting a proper case, a proper motherboard, the correct memory, the right type of hard drive, the appropriate video card – not to mention cooling, and what additional peripherals are necessary. Selecting even one of these items incorrectly can render the system unstable, or possibly even unbootable. This can make building a system the first time (or even the second or third time – as the first time might have succeeded on pure luck) quite expensive compared to buying a retail system.

Web based articles and books just don’t cut it here. Just try to learn how to build a deck, a patio cover or even hang drywall this way. You can do it, but you will probably spend a great deal more time than a professional, will probably spend more than you really should and will probably end up having someone else do it if you don’t plan on doing it every six months so.

AMD already owns the DIY market, from what I can see, but it is relatively small. What they need to do now is grow it. In this way, they can chip away at the foundation of Intel’s market. It is obviously futile to try and break the hold Intel has on OEMs at this time – what they have to do is start to break the hold the OEMs have on the users. After all, price is what the PC market is all about. Don’t just tell the consumer that an AMD system is cheaper, show them.

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