From...

April 2, 1999
Web posted at: 3:05 p.m. EST (2005 GMT)

by Dan Miller

(IDG) -- From the keyboard, touchpad, and curvy speaker enclosures up front to the ports in back and the motherboard inside, the Quantex T-1410 and Dell Inspiron 3500 appear to be identical. The similarity is no coincidence: Both notebooks are designed and manufactured by the same company, Compal Electronics of Taiwan.

Compal supplies the same bare-bones notebook to both vendors. Dell and Quantex then customize the machine for individual orders, installing the specific processors, RAM, hard drives, and (sometimes) screens that their customers want.

These aren't the only duplicate notes on the market, either. The Dell Inspiron 7000, Sceptre SoundX 6500, and ARM Armnote TS30i2, for example, are practically triplets.

What's going on here? It's the notebook industry's not-so-dirty little secret. Many of the biggest vendors in the U.S. market -- including Compaq, Dell, and Hewlett-Packard -- don't actually design their own portables. Instead, these vendors, along with many smaller companies, buy notebooks from so-called Original Design Manufacturers -- known in the industry as ODMs -- and then, in many cases, do little more than slap their own nameplate on the case.

This practice doesn't necessarily hurt consumers. Thanks to economies of scale, ODMs can design and build notebooks less expensively than individual vendors can -- and that translates into smaller price tags. But these digital doppelgängers raise a significant question for notebook buyers: If someone else designs and builds a notebook, what does the nameplate really mean?

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Portables for beginners

Until recently, most vendors designed their notebooks in-house. To turn those designs into products, they had two options: Build the notebooks themselves or hire another company to do it. In industry-speak, that outside company is called an Original Equipment Manufacturer.

Most notebook OEMs are based in Taiwan. Last year, Taiwanese manufacturers built some 6 million notebooks, or roughly 40 percent of the world supply. Compal is one of Taiwan's bigger notebook OEMs, but it's not the biggest. That honor goes to a company called Quanta Computer, which claims to be the world's third-largest notebook maker, behind Toshiba and IBM. Quanta's list of customers has featured such names as Apple, Dell, and Gateway. Other major notebook OEMs include Acer, Inventec, and Arima.

In the past, each vendor's notebooks were unique, no matter who actually assembled them, because each vendor handled its own design. "Four, five years ago, we did everything in-house," says Marc Jourlait, the director of worldwide market development for HP's Mobile Computer group. "It was all custom design, and the prices were custom prices."

But as profit margins have shrunk, vendors have found themselves under increasing pressure to cut costs. To do so, they are turning more and more to outsourcing the design, as well as the manufacturing, of their notebooks. And conveniently enough, the same folks who build notebooks can also design them. When that happens, the OEM switches hats and becomes an ODM. An ODM can sell a given design to as many clients as it wants -- which is why those two notebooks in the picture look so much alike.

Notebooks 'R' Us

For some vendors, particularly smaller ones like ARM, working with an ODM is like going down to Notebooks 'R' Us and buying a couple thousand laptops off the shelf. For others, particularly larger vendors such as Dell, Hewlett-Packard, and Quantex, the process is collaborative.

"We're involved in every stage of the design, from concept, defining the feature set, and prototyping," says Quantex product manager Herman Chan. "We have a really strong relationship with Compal, so they're hand-carrying prototypes on planes back and forth between us and Taiwan until we're satisfied."

The rather basic design that emerges from this process -- the layout of the motherboard, the basic chip sets (including graphics), what kind of ports will be included, the case, keyboard, and touchpad -- still has to be filled in by individual notebook vendors. When the laptops arrive from the ODM, those vendors add the CPU, RAM, hard drive, and, sometimes, the screen.

Who made it?

So how do you tell whether a given notebook is ODM'd and whether it has a twin elsewhere on the store shelves?

For starters, see "Notebook Name Game: A Guide to Who Builds What" (link below). If two vendors use the same company for both design and manufacturing, their notebooks may indeed be clones. But the only way to tell for certain is to get your hands on them. Beyond the obvious visual cues, check the sticker on the bottom. If the manufacturer's model number is the same on both machines -- as in the two photos -- then you've got a pair of clones.

Furthermore, those clones will likely be selling for roughly the same price. For example, at press time, a Sceptre SoundX 6500 and an ARM Armnote TS30i2 -- each with a Pentium II-333, an 8.1GB hard drive, and 64MB of RAM -- cost an identical $3299. The only major difference is the Armnote's 15.1-inch active-matrix LCD, compared to the Sceptre's 14.1-inch screen. A similarly configured Dell Inspiron 7000 (15.1-inch screen, but no modem) costs $3099.

Reliability and service

If these ODM'd clones have the same design and similar price tags, how can you pick one over another? ODM'd notebooks have a reputation for favoring reliability over cutting-edge features. And users seem to agree: In PC World's latest Reliability and Service survey (see "PC Reliability & Service: The Best Are a Phone Call Away," link below), Dell and Hewlett-Packard -- both of which sell ODM'd portables -- were rated first and second, respectively, for notebook reliability. (Because of their relatively small market shares, Quantex, Sceptre, and ARM didn't make the survey.)

That's not to say a given notebook clone will offer the same reliability no matter whose name is on the case. All vendors do quality testing after the finished products arrive from overseas -- but some may do more than others.

"We go way beyond what they do at the factory," says HP's Jourlait. "We'll shake and bake them, drop them, freeze them, bombard them with coffee and Coke."

Different vendors also offer different levels of service. For example, the Sceptre SoundX 6500 and ARM ArmNote TS30i2 missed our March Top 10 Notebooks because of their skimpy support policies (Sceptre limits free phone support to weekdays, and ARM does not guarantee a turnaround time on repairs). By contrast, a practically identical version of the Dell Inspiron 7000 has made the Top Ten, thanks in part to 24-hour support and a promise that most repairs will be turned around in a day.

That nameplate, it turns out, really does make a difference.

Photographs by Kevin Candland.