Question about building Custom Laptops

I think that I've found an opportunity in my area. I live in Ohio and my area is saturated with small towns and each small town has it's own University. I used to run a business repairing and customizing Xbox 360 consoles. The bottom has fallen out of that type of business and it's no longer profitable. So I've been looking for something to replace it.

I've been playing with the idea of doing a laptop business. To start out I am planning on making it a combination of laptop resells and I'd like to add a small line of Custom Laptops. I've been researching different Whitebox/Barebones laptops and I'm still trying to find a good nitch. I've realized that I will never be able to be competitive with the budget laptops that you can buy at an established retailer. Many of them sell their laptops below cost and there is really no profit to be made by doing one in that range.

So I'm open to ideas and suggestions and hopefully some new resources for parts/kits. The best resources that I've found so far for laptop kits is directron.com, but their systems are pretty pricy. I know that they are a reseller, so I am hoping to find a source to get some of these barebones laptops from.

Just to lay out my ideas:

1. Plan to do business primarily locally due to the demand/opportunity of all the colleges.
2. I've already spoken to several of the Universities and they are interested in working out an intern program (basically I can get free labor in exchange for providing the students with real-world experience).
3. I plan on doing the standard thing of buying laptops cheap from Ebay/Craigslist and then turning them over to make a small profit.
4. I would like to build the business to the point of offering custom laptops to fit the needs of the buyer (let the buyer pick out the CPU, Graphics Card, Amount of RAM, Hard Drive, etc).

So that's my basic idea. Can anyone provide any insight or ideas? If you know of any good resources to get parts (CPU, Hard Drive, Barebone Kit, Graphic Cards) I would be VERY interested. I appreciate any advice!

 

The hardest part is keeping costs down. Generally with barebones/whitebox systems by the time you have them configured you're looking at selling for $1200+.

From my standpoint, as a person who works for a large, locally owned non-big box computer store, we barely ever are able to sell laptops over even $1000. We pretty much have no competition in the area (at least price wise) for gaming/enthusiast laptops and yet we still barely sell them.

Generally, the barebones/whitebox systems are catered towards gamers and its a very tough market to get into as most gamers tend to purchase their parts/systems online.

We sell probably 75 $500 systems for every 1 system we sell over a grand. Also, customers are generally concerned with getting a brand name system. We miss out on a lot of sales because we can't carry Dells (none of our suppliers sell them) and my boss is anti-HP due to a warranty issue he had with them several years ago.

That being said, if you can create a good brand in your area then you could have some success. If anyone is going to be interested in purchasing frequent $1000+ systems it'll probably be college students. Also, if you have them working for you then they will be more willing to purchase from you and tell their friends to do the same.

Another issue to think about is warranties. How do you plan to handle that? At least 1 year is pretty much mandatory.

As far as parts are concerned, you'll need to setup with a good distributor. There are distributors and then there are business accounts through Newegg and Tiger Direct. Newegg carries a lot of mobile processors but I don't know of anyone who sells mobile video cards (these usually come with barebones systems anyways).

 

Thanks for the information. I had same thoughts about systems that cost more than $1,000. I know that I could build an i7 system and keep it a few hundred less than retail, but as you said, it wouldn't be a name brand.

As far as warranties, I found a few companies that will warranty the product for an extra $30 per sale (for 3 years top-to-bottom). It's either that or I just pass the factory warranty for the parts on to the customer. Most of the parts themselves will have at least a 3-year warranty, but the barebones case is only 1-year.

I think the biggest hang-up that I'm running into is getting the parts that I would need without paying an arm for them. That directron has a decent number of parts, but they are super expensive. Their cheapest i7 kit is $740. With that said, I can get an i5 kit for about $350, but it will have integrated Intel Graphics. I can get an i5 with a dedicated card for about $550. I can find entry level i7 processors on Ebay for about $150-$200 and I can get decent i5 processors for less than $100. I haven't found any sources for Phenom II Quad Core processors though. I'd like the option of going with an AMD processor because they are typically much cheaper and Gamers like them.

Do you know of any distributers that you could pass on? I think that the key is getting the barebones systems a little cheaper than what I've found so far.

 

I'll PM you a couple of distributors we use. In addition you should talk to Tiger Direct and Newegg as I mentioned above. There prices on their business sites are generally the same, but the benefit you get is some level of credit so you don't have to have your customers pay up front before you can order parts.

Laptop parts are still pretty hard to get your hands on and I'm definitely not sure how to do that as an OEM instead of as a consumer. Maybe someone else on this forum will know.

 

I really appreciate that information. That will definitely help as far as getting some stuff. If anyone else knows of any laptop part specific distributers, please let me know!

I really appreciate all the insight!

 

my 2 cents,
It's gonna be tough, in this day and economy also with netbooks for $200.
I'm not tryin to be negative as I'm in the same boat and trying to do the same thing, but seems like at the end of the day, all the time and effort equals to a very low dollar/work ratio.
Most people only really wanna go on the internet and with the netbook being so cheap most think that is the best solution and most don't care about processor or ram etc, you talk with them and laptop/notebook/netbook it's all the same.
It's tough to sell the same $500 laptop that Dell would sell because people's mindset is just order from them, it's an extra step out to go to someone directly and they'll always try to lowball or want the end of the world service which they could never get anywhere period. You can try to do it and that may be the big difference, however, getting people to recognize that will be a different story.
hardware customizing is pretty difficult in laptops and there's a lot of liabilities too as sometimes it seems like maybe just the cpu is dead or ram but becomes a much bigger problem and it's a new motherboard, been there done that and profits are right out the door at that point as most laptop motherboards range at $250+ (that's with decent base pricing, not to mention a minimum order).
Also with hardware it's very limited customizing, CPU, Video card etc as most are onboard and soldered on, again most people don't care, like 'ASTROGIBLET' says you'll sell 75+ $500 systems before sellling 1 over a grand and that's very true, and it's the 1K over guys that are really specific...

IMO customizing is great and if you can't beat em, join em phrase is so true to that, maybe try cosmetic changes, I've noticed lot's really like the new colors or backlit keyboards or lights/leds.
I'd pay more attention to a leather backlit keyboard laptop than a $3000 powerhouse as it's custom and suits my lifestyle, and that's exactly what I've done. ie. SPGcraft leather top for my LCD lid then I put really thin leather on palmpad area, just these little changes makes my laptop look really expensive and totally 1 off, I love it.
You could probably take it further by offering airbrushing or decal designs that students bring into your place and have them painted, stickers made or even go as far as laser etching if you had equipment.
IMO the custom cosmetic guys more than triple the powerhouse mongers when it comes to laptops.

So that's my take on it, hope it inspires!

 

One idea might be to work together with similar small businesses so that you can place a large order (from someone like clevo/msi) and then each business would take it's share of it.

Not sure if that's feasible though.

 

You have to know your market....

There is no point in doing this if absolutely no one wants something for gaming. Keep in mind they probably don't need something very new or high end. Of course, none of us really need the high end systems we have and somehow we were successfully marketed.
There isn't a lot of point in being a real reseller unless you provide warranty support.
Along those lines you might as well sell rebuilt or upgraded used laptops with warranty or some kind of discounted flat rate repair system.

I believe there could be a sweet spot for affordable laptops that have some gaming capability.
Heres something I've done.... take this:
ACER ASPIRE 5315 SERIES ICL50 FOR PARTS - eBay (item 230578210407 end time Feb-01-11 11:34:31 PST)
this:
ACER Aspire 5720 5720G MB.AHH02.002 laptop MOTHERBOARD - eBay (item 140498253010 end time Feb-06-11 08:43:56 PST)
And this:
Nvidia Geforce 9600M GT 512MB DDR3 MXM II G96-630-A1 - eBay (item 230570911272 end time Feb-05-11 11:01:04 PST)

And you have quite a high performing laptop, by many peoples standards.
Sellable at a much higher profit margin too, I'd say 600$ or so.

The more of their models you learn about, the better chance you have of finding parts or broken laptops for cheap and being able to upgrade the motherboards & graphics. 7720, 5720, 5320, 7520, 5520 and more will all fit the same motherboards.

 

Don't do it. Commodity biz, mail order competition, non-cheap start up costs.

Customers will go elsewhere to save $10. You do, don't you?

Sales tax alone will kill your profit margin, not to mention higher-than-other-sellers Visa/MC rates.

While I could be wrong on all of the above, I can't think of a single item/thing that'll net you out a decent profit margin.

Michael Dell made it work, but that was 20+ years ago, in a much different time. Saw him once in a TV interview where he was asked about competition back then: "We had 500 competitors and nobody knew who was gonna last and who was goin' out of business. However, we knew there wouldn't be 500 manufacturers when the dust settled."

Maybe you could take a stab at a repair/upgrade biz; no inventory issues, easy to figure biz plan, based upon whatever hourly $$ rate you can make work. Become the goto guy for all of the college types.

 

Sorry, AMATX, I don't think your comments are needed, discouragement is not informative.

 

To me, it looks like constructive criticism based on sound logic, with the offer of an alternative suggestion.

Discouragement can be justified in the case of what look like bad ideas; much better that the OP has the info in case he hasn't considered it, rather than finding it out the hard way.

 

@Jbbrack03,

I was in the same boat just a few months ago. Many advised me against this "crazy idea" but I decided that in this life one should at least give it a shot, the very best shot. Think fast, don't research for too long, time is precious. You always start from a bottom and have worse conditions than your competitors. But that's not what's important, the key is persistence and awareness. Create a flexible profile for your start-up, every day you can edit it, adding new products/services to your portfolio. You have a certain passion and would like to create a niche someday? Great! Keep it inside and proceed. As time passes by, you'll find good partners/distributors and will get better deals on merchant services. Opportunities are out there all the time, we just have to be open minded and nimble enough to grab them

Good Luck!

Just 2 cents here.

 

A dose of reality. Fine if the OP wants to start up a biz; more power to him. However, he needs to consider the overall situation and run a biz plan.

Just cuz you might wanna open a Pizza Parlor doesn't mean you should, if there's already a half a dozen in your neighborhood.

Plenty of biz ideas/approaches out there for anyone to peruse. Better to put the odds in one's favor before committing money, time and effort.