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[OT] IBM exiting the PC hardware business

Interesting article and sign of the times as PC's move to commodity status.

http://www.nytimes.com/2004/12/03/technology/03ibm.html?ex=1259816400&en=c60a66b7afa86173&ei=5090&partner=rssuserland

-- 
Phil McGuinness - Sherlock Software


0
Phil
12/4/2004 1:09:00 AM
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Phil,

But who is only just coming to understand this? The NY Times reporter or 
IBM? The rest of us have known this for a decade now. We got out of 
hardware supply precisely because there is no margin to be had. Dell and 
others now offer a 3Ghz P4 PC with 17" LCD monitor for US 680 delivered 
and with XP Pro. Work that out! Now that 17" LCD monitors can be bought 
in Aust for AUD 380 or better, who's going to wait to set up dual 
monitor workstations?

The only margin is with software and the more vertical you are, the more 
margin you make. And platforms are all about volume and high volume, low 
margin reduces the number of players.

That is a truism that has been going on for ages.

Geoff


"Phil McGuinness" <heyphil@sherlock.com.au> wrote in message 
news:heyphil@sherlock.com.au:
> Interesting article and sign of the times as PC's move to commodity
> status.
>
>
> http://www.nytimes.com/2004/12/03/technology/03ibm.html?ex=1259816400&en=c60
> a66b7afa86173&ei=5090&partner=rssuserland
>
> --
> Phil McGuinness - Sherlock Software

0
Geoff
12/4/2004 2:24:45 AM
Geoff,

snip[ The rest of us have known this for a decade now ]

It is definitely not a decade.... but the last 3 years has seen an
accellaration which is not over yet.
Partly world trade, standardisation.. impact of China and other Asian
countries for manufacture.
Prices in AUS will still drop another 30% in hardware over the next 2 years.

snip[ The only margin is with software and the more vertical you are ]

You mean like layoff the drinking and keep upright. <G>

There is a great deal of truth in this... but it is not that simple.
It is distribution, perception, quality, availability, support, peer
pressure, time to market and all the normal stuff every market is subject
to.
This why a number of models will still work.  I see Open Source fill huge
gaps in the lost of Hardware and the high cost of software.

One thing is for sure for the time being anyway, is the cost of hardware is
heading down, down, dhiwn and software will be heading that way over time.
You need to cover your distribution model well and keep the ratio of
overheads low.

Phil McGuinness - Sherlock Software
==


0
Phil
12/4/2004 2:53:51 AM
Yeah - this has been going on for a few years now.

As we supply both hardware and software we have seen the writing on the wall 
as regards to hardware alone. Hardware is not a lucrative market to be in. 
There will always be another supplier down the road who will do the deal a 
dollar cheaper. The customer thinks that he has done a great deal - but the 
truth is 12 months down the road when the customer needs help - the business 
he bought the hardware from - is no longer in business!

There is another side to this as well - and that is the retail chain stores. 
They sell thousands of pcs to consumers but do not set them up. I get so 
frustrated in doing quotes for customers that include full set up and 
configuration and then find that they buy them retail from Harvey Norman or 
somewhere else because they saved a dollar. That's not really the 
frustrating part though - rather the part that they then call us up to 
network all the pcs they bought!

More and more this is happening - only last month, I refused to send out a 
tech on site to set up a 10 user network to a client who did just that to 
us. It just didn't seem right. Our original quote was $20,000 but the client 
was able to get a similar deal for $18,000. We let them go.

Well what do you know - they rang us on Friday asking us for help. They have 
spent an extra $5,000 and the network still does not work. I declined again 
on principle.

Sooner or later customers will wake up that savings in the cost of hardware 
alone is not the big thing - but rather the total package with the knowlege 
in how to setup and configure - especially where servers are concerned.

Craig Dawson
---------------


"Phil McGuinness" <heyphil@sherlock.com.au> wrote in message 
news:31cguaF39panfU1@individual.net...
> Interesting article and sign of the times as PC's move to commodity 
> status.
>
> http://www.nytimes.com/2004/12/03/technology/03ibm.html?ex=1259816400&en=c60a66b7afa86173&ei=5090&partner=rssuserland
>
> -- 
> Phil McGuinness - Sherlock Software
>
> 


0
Craig
12/4/2004 10:01:30 AM
Craig;

Why not give them a price that would double your normal hardware profit and
network setup?  That would be better than selling the hardware.

Regards;

Don Bjortomt
"Craig Dawson" <craig@control.nospam.net.au> wrote in message
news:41b18af1$0$59194$c30e37c6@ken-reader.news.telstra.net...
> Yeah - this has been going on for a few years now.
>
> As we supply both hardware and software we have seen the writing on the
wall
> as regards to hardware alone. Hardware is not a lucrative market to be in.
> There will always be another supplier down the road who will do the deal a
> dollar cheaper. The customer thinks that he has done a great deal - but
the
> truth is 12 months down the road when the customer needs help - the
business
> he bought the hardware from - is no longer in business!
>
> There is another side to this as well - and that is the retail chain
stores.
> They sell thousands of pcs to consumers but do not set them up. I get so
> frustrated in doing quotes for customers that include full set up and
> configuration and then find that they buy them retail from Harvey Norman
or
> somewhere else because they saved a dollar. That's not really the
> frustrating part though - rather the part that they then call us up to
> network all the pcs they bought!
>
> More and more this is happening - only last month, I refused to send out a
> tech on site to set up a 10 user network to a client who did just that to
> us. It just didn't seem right. Our original quote was $20,000 but the
client
> was able to get a similar deal for $18,000. We let them go.
>
> Well what do you know - they rang us on Friday asking us for help. They
have
> spent an extra $5,000 and the network still does not work. I declined
again
> on principle.
>
> Sooner or later customers will wake up that savings in the cost of
hardware
> alone is not the big thing - but rather the total package with the
knowlege
> in how to setup and configure - especially where servers are concerned.
>
> Craig Dawson
> ---------------
>
>
> "Phil McGuinness" <heyphil@sherlock.com.au> wrote in message
> news:31cguaF39panfU1@individual.net...
> > Interesting article and sign of the times as PC's move to commodity
> > status.
> >
> >
http://www.nytimes.com/2004/12/03/technology/03ibm.html?ex=1259816400&en=c60a66b7afa86173&ei=5090&partner=rssuserland
> >
> > -- 
> > Phil McGuinness - Sherlock Software
> >
> >
>
>


0
Don
12/4/2004 12:45:19 PM
Craig,


Craig Dawson wrote:
> 
> Well what do you know - they rang us on Friday asking us for help. They have 
> spent an extra $5,000 and the network still does not work. I declined again 
> on principle.
> 
> Sooner or later customers will wake up that savings in the cost of hardware 
> alone is not the big thing - but rather the total package with the knowlege 
> in how to setup and configure - especially where servers are concerned.

In Australia?

Not any time soon, I'm afraid.

0
Gary
12/4/2004 9:59:00 PM
snip[ Sooner or later customers will wake up that savings in the cost of
hardware alone is not the big thing ]

Essentially I find the IT / Network companies that do not supply the
hardware make more money as they can say " not my fault" and provide a
solution.  The problem is the IT/Network people add too much margin and get
done on the hardware again hardware only companies.

You are better off dropping the price of the Hardware and uping the price of
the Networking and you get the whole deal.

My brother works for a company that works on 4% margin on hardware but there
technicians cost a packet,
Their reasoning is they only by equipment occassionally but they need tech
services constantly.

Phil McGuinness - Sherlock Software
---


0
Phil
12/5/2004 2:39:32 AM
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