Shop-built PCs tough to beat in getting value for money

After almost 18 years of being an Apple Macintosh user, I finally bought my first PC.

I still use my Macs for everyday work, but for games, music and, soon, audiovisual applications, the PC wins hands down. Going through the process of purchasing an Intel machine leads me to conclude that Apple, as well as Dell and Hewlett-Packard, will have a very hard time penetrating the strategic China market for one very important reason - value for yuan.

It was surprising to learn that for less than HK$6,000, I could purchase one of the most powerful PCs available in the market: 2 gigahertz Pentium 4 with 512 megabytes of DDR-Ram, a 64MB Nvidia Ge4 MMX graphics card, 60 gigabyte hard drive, Lan, USB and Firewire ports, Windows XP and a DVD drive. If you just want to run office applications and check your e-mail, a simpler system can be built for about HK$2,500. As much as I like Apple, a comparable Macintosh system would cost double or even triple the PC equivalent.

For Chinese consumers on a limited budget, purchasing a non-branded PC is the only way to meet their computer needs of communication, entertainment and education.

Buying a box with the Dell or HP logo means little to the user who can have a cheaper machine built to order at a local computer store. Even sophisticated users are attracted by generic PCs because the savings will allow them to buy the latest and most powerful cards and components for their dream machines. Aside from laptops, which retain brand power as their miniaturised assembly requires more than general screwdriver and wiring skills, the desktop PC has truly become a commodity.

That leaves just one segment to purchase branded PCs - the business user.

For corporate users, the most important consideration aside from value per unit is the service and maintenance package that branded machines usually provide. One can always get cheaper and more powerful machines but consistent service and support will sway most business users.

Computer retailers in China are effectively becoming service businesses that link Taiwan-(and mainland)-made components with local labour for assembly and support. China's PC leader, Legend, has already begun the transformation from manufacturer to technology service provider in order to stay competitive.

For foreign companies selling PCs to China, assembling and moving boxes will remain a low-margin business. Brand power has moved to component makers such as Nvidia, Intel, Microsoft, Samsung and Creative, which in some respects still maintain a near monopoly on their products.

These days, even mid-range PCs are powerful enough to run the latest applications. The bottlenecks now exist in bandwidth from the Internet to the computer and the graphics cards used in the latest games and video applications. Unless you need to run Doom 3 at 60 frames per second or render the next Toy Story, most users don't need all that computing power just yet.

Although my new PC box is great, the software interface and case design look terrible. If I ever get a virus or a crash, I will have no idea what to do to recover the system since the Bios (Basic Input Output System) is confusing. I'm even tempted to just hide the casing altogether since it's in boring beige rather than the stylish HK$1,400 aluminium shell I had my eye on. But China is a nation of value-demanding users, and these issues remain mere roadkill on the road to technology empowerment.

Frank Yu is the general manager for the Multimedia Innovation Centre at Hong Kong Polytechnic University (www.mic.polyu.edu.hk). He can be contacted at ([email protected]).