HP and Dell Computer is taking steps to reduce notebook R&D expenditure for 2009.

Notebook R&D personnel working at Dell and HP are assigned mainly to test the performance and reliability of new parts and components. This work overlaps that performed by R&D staff at ODM makers and so is an area vendors can afford to cut back on without impacting new product development, the sources noted.

The cuts in R&D expenditure would allow Dell and HP to reduce operating costs while boosting earnings, the sources added.

With the planned cuts, Dell and HP will no longer overwhelmingly control the procurement of parts and components needed for the production of their notebooks and instead will delegate purchasing power to ODM makers, allowing the contract makers to purchase needed parts from the suppliers they chose.

As of 2008, the portion of parts and components purchased directly by ODM notebook makers stands at only around 10%. ODM makers hope to increase the ratio to 20% in 2009, said the sources.

By: DocMemory
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