Monday, February 25, 2002
The make-or-buy decision is a fundamental business school concept. Does it make
more sense to make a particular item yourself or to just buy it? With entry-level PCs
selling for well under $1000 and fully-equipped mainstream PCs for $1500, you
might wonder why anyone would bother to build a PC. After all, you can't save any
money building one, can you? Well, yes you can. Quite a bit of money, in fact. But
that's not the only reason to build a PC. Here arc good reasons to do so:
When you buy a PC, you get a cookie-cutter computer. You may be able to
choose such options as a larger hard drive, more memory, or a better
monitor, but basically you get what the vendor decides to give you. And what
you get is a matter of chance. High-volume direct vendors like Gateway and
Dell often uses multiple sources for components. Two supposedly identical
systems ordered the same day may contain significantly different compo-
nents, including such Important differences as different motherboards or
monitors with the same model number but made by different manufacturers.
When you build a PC, you decide exactly what goes into it.
Many computer vendors save money by using OEM versions of popular
components. These may be identical to the retail version of that component,
differing only in packaging. But OEM versions have several drawbacks. Many
component vendors do not support OEM versions directly, instead referring
you to the computer vendor. And OEM versions often differ significantly from
the retail-boxed version. For example, Micron used the popular Intel SE440BX
Seattle in many of its systems, but modified the Intel-supplied BIOS, which
means that you cannot update your BIOS with a later version from the Intel
web site. Instead, you must depend on Micron to provide an updated BIOS
for your PC. Del] and other major makers sometimes use downgraded
versions of popular products, for example, a big-name video card that runs at
a lower clock rate than the retail version. This allows them to pay less for
components and still gain the cachet from using the name-brand product.
PC manufacturers aren't in business for charitable reasons. They need to make
a profit, and that means they need to sell computers for more than what they
pay for the components and the labor to assemble them. Significantly more,
in fact, because they also need to support such expensive operations as
research and development departments, toll-free support numbers, and so on.
But PC manufacturers get huge price breaks because they buy in very large
volumes, right? Not always. The market for PC components is extremely effi-
cient, with razor-thin margins throughout. A PC manufacturer may get the
hard drive that costs you $150 for only $145, but they're not going to get it for
$100. They may even have to pay $155, because PC manufacturers often have
long-term contracts with suppliers. That can work either to the benefit or
detriment of the PC maker. When the price of memory is plummeting, for
example, a PC maker may have to pay twice as much as you do for memory.
Conversely, when the price of memory skyrockets, you'll pay the spot price,
while the PC maker may pay only half what you do because their memory
suppliers are selling on a long-term contract price. Our rule of thumb is that,
on average and all other things equal, you can probably build a mid-range PC
yourself for about 75% of what a major manufacturer charges.
Most purchased PCs include Microsoft Windows 98, Microsoft Office, or other
bundled software. If you don't need or want this software, building a PC
allows you to avoid paying for it. You might think that the software has some
value anyway, for example that you might be able to use it on one of your
other systems or sell it to a friend. That turns out not to be the case. Under
most license agreements, notably Microsoft's, you cannot legally transfer soft-
ware from a newly purchased PC to another PC. That software is legally
usable only on the PC that it was sold with. Note that, although OEM versions
of Windows and Microsoft applications are often labeled "For sale only with a
new PC," Microsoft takes a liberal view of what constitutes a new PC. Buying
a hard drive or a motherboard may entitle you to buy an OEM version of the
software you need at a greatly discounted price, less In fact than you'd pay
for a retail upgrade version.
OEM software is one of the best-kept secrets of the direct sales chan-
nel. It isn't advertised, and no one tells you about It unless you ask. If
you buy a motherboald or hard disk and need this software, ask the
vendor if he can supply it. "The deals are often striking. For example,
when we bought a motherboard for a new system m early 1999, we
were offered a "Windows 98 Super Bundle" that included OEM copies
of Windows 98 (full version, not upgrade), MS Works 98, Encarta 98,
and Money 98. Total price? $49. As of June 2000, an OEM lull version
of Windows NT WorkstaHon 4.0 with CD and manual sells for about
$40. OEM lull versions of Office 97 SBE sell for less than $100, and
Office 2000 SBE for less than $150.
The retail-boxed oomponents you'll typically use in building your own PC
include full manufacturer warranties which may run from two to five years or-
more, depending on the component. PC makers use OEM components that
often include no manufacturer warranty to the end user. If something breaks,
you're at the mercy of the PC maker to repair or replace it. We've heard tom
readers who bought PCs from makers who went out of business shortly there-
after. When a hard drive or video card failed six months later, they contacted
the maker of the item, only to find that they had OEM components that were
not under manufacturer warranty.
If you buy a computer, your experience with It consists of taking it out of the
box and connecting the cables. If you build the computer, yon know exactly
what went into it, and you're in a much better position to resolve any prob-
lems that may occur.
Although there are many advantages to building a PC, there are some offsetting
advantages to buying one instead, including:
Building a PC takes time, not just the time actually needed K) build It, but the
time required to choose and order the components. If you're building your
first PC, expect to spend at least a day selecting and ordering components
and a weekend actually building it. Note that we maintain a frequently
updated web site, http://www.HardwareGuys.com, that list our picks for the
best components for various types of systems, from budget to high-end.
When you build a PC, you are responsible for making sure all components
are compatible, locating and installing the necessary drivers, and so on. But
(his isn't as onerous as it may at first appear. With very few exceptions, PC
components simply plug together and work, just as any VCR works with any
television.
If you absolutely need to have the latest, greatest CPU or whatever, you may
have no choice but to buy a PC that includes It. like any other business,
component makers favor their major customers, who happen to be the large
PC makers. When the AMD Athlon processor first shipped, for example, you
couldn't buy a retail-boxed Athlon for love or money. If you wanted an
Athlon, your only option was to buy a PC with an Athlon In it, because essen-
tially 100% of Athlon production was going to the PC makers. If
you're
considering buying a PC for this reason, we suggest you think again. It's
almost never worthwhile paying a significant premium for the latest and
greatest, let alone buying an entire PC to get it.
If you build a PC, you become Support Central for that PC. There's no single
manufacturer to call, and it's up to you to figure out where the problem lies.
If you Isolate the problem to, say, the motherboard, you'll have to talk to the
motherboard maker directly, assuming that they'll talk to you. Some will not
notably including Intel. You also may have to deal with multiple vendors all
claiming that it must be the other guy's fault. Of course, just because you
bought a packaged PC doesn't guarantee that the maker provides good tech
support. Some makers, notably Dell. are famous for consistently excellent
support. Others, like Gateway, are more variable in our experience, some-
times providing top-notch support and other times not. Some makers provide
better support for corporate users than for individual buyers. Still other
makers provide infamously bad support to all comers.
If you don't need bundled software, there's no sense In paying for it. But if
you do want the software bundled with new PCs-typically Windows 98 and
Microsoft Office 2000-you'll be hard pressed to find a full retail version for
anything near as little as it actually costs you as part of a new PC purchase.
On the other hand, as noted above, OEM versions of the software are often
available at very low prices when you buy a disk drive or motherboard.
All quoted from PC Hardware in a Nutshell by Robert Bruce Thompson,
and Barbera Fritchman Thompson.October 2000. First Edition.
Publisher: O'Reilly ; ISBN: 1-56592-599-8
The Cheap Computer Parts Handbook
Build or Buy a Computer [ Hal PC page ]
AxionTech.com. Upgrades/builds
Cheap Computer Parts at TigerDirect.com
Cheap Computer Parts at Surplus Computers
Cheap Computer Parts at ComputerGeeks.com
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Created on ... , 2003
Last Modified Sunday, 11-Dec-2005 19:56:34 CST