Life After the PC: Diverse Solutions are key
Pricing wars between large PC manufacturers and clones or alternative machines, along with a decrease in demand by consumers, has hit the industry right where it lives ... and derives most of its profits. So what will IBM, Compaq, Dell and Gateway do now that the luster of buying a PC has worn off?
Get into the service business, naturally. Although it deals in software and not hardware, Microsoft recognized the need to transition to services with its new .NET strategy, and now hardware vendors are having to address similar potential profit centers.
At a recent trade show, for example, Compaq began to show customer-oriented devices like an MP3 player and a pager. When investors questioned the thin margin derived from products like these, Compaq responded by saying that the devices integrate with company partner service offerings, thereby creating some kind of revenue stream along the way.
Gateway is an example of one PC manufacturer that began to figure out early-on that it needed to change the traditional revenue model. It began pushing leases rather than purchase plans, and in the second quarter of 2000 alone, realized a 23 percent increase in gross margins.
Voice of the Editor
Which isn’t completely true. I mean, occasionally I drop by when I manage to sneak out of the nonstop frat party over at Going Concern, but I’m mostly a wallflower over there. I’m happy to say that I’ve been given express permission (or explicit orders, if you like) to wander over here to AccountingWEB more often.
Why is that, you might ask? My job is to replace the irreplaceable Gail Perry as Editor-in-Chief. What does that mean? I don’t really know! I think it’ll be fun getting a feel for things, throwing in my own thoughts here and there, and listening to the discussions you’re having about the accounting profession.