Notebooks may get built to order

Fujitsu PC may translate some of the build-to-order techniques used to cut desktop PC costs to its notebook production process.

Michael Kanellos
Michael Kanellos Staff Writer, CNET News.com
Michael Kanellos is editor at large at CNET News.com, where he covers hardware, research and development, start-ups and the tech industry overseas.
2 min read
Fujitsu PC may translate some of the build-to-order techniques used to cut desktop PC costs to its notebook production process.

Although these strategies--often referred to as "channel assembly"--could conceivably cut costs or increase profit margins on portables, they have yet to be tried.

While most of the PC makers are mulling this type of production strategy, Fujitsu may be one of the first to implement it, said George Everhart, Fujitsu's president.

Under a channel assembly plan, Fujitsu would ship notebook subsystems to a reseller and distributor, which would then assemble the final product upon customer order, Everhart said. Fujitsu personal computer offerings in the U.S. are now limited to notebooks.

"The strategy starts with the design of a core product--how do you make modules that you can mix and match," Everhart said. "We've got more work to do before we make a final decision on this, but I believe it will be the logical way to go."

Fujitsu, he added, is talking to MicroAge (MICA), a large distributor-integrator based in Tempe, Arizona, among others, about implementing a plan.

Channel assembly is one school of thought in the build-to-order revolution taking place in the PC manufacturing industry. In classic build-to-order strategy, the manufacturer itself assembles the computer upon receiving the order, which cuts costs by reducing inventory cycles. Dell Computer (DELL), for example, uses this strategy in assembling notebooks.

While effective, this process forces the computer maker to become a wholesaler of the third-party software and add-on devices that customers might want, Everhart said. This technique also pits the computer firm against distributors and dealers because it sells the product to customers directly.

As a result, companies with strong ties to dealers, such as IBM (IBM), lean toward channel assembly.

Still, a question exists whether the logistical knot can be untied.

"It's an interesting concept. Notebooks are much more integrated than desktops. It would be much tougher to do a notebook," said Twan Tran, product line manager at Hewlett-Packard (HPW).

To his knowledge, no manufacturer has rolled out a channel assembly plan for notebooks, Tran he said, "but we're looking at it as well."