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Home Stretch

Will PC-makers' move into home electronics leave thin support for your business PCs?

Quick--what do Apple Computer, Dell, Gateway, Hewlett-Packard, IBM and Sony have in common? They all sell business PCs, right? Well, yeah. But flagging sales and margins have them looking elsewhere for profit--namely, your home entertainment center.

"Margins are tightening, prices are coming down, and PCs are becoming more of a commodity than ever before," explains Find/SVP researcher Larry Fisher, "so PC companies are diversifying into consumer electronics." It turns out Apple sells more iPods than iMacs, Gateway and Sony have their eyes glued to flat-panel TVs, and without its digital imaging division, HP's financials might have no black ink at all. IBM, the only major player without an initiative in electronic gadgets, finally got tired of the color red and sold its PC-manufacturing operation to China's Lenovo Group. Dell insists it makes money selling PCs but, by the way, it sure would like to come over and set up your big-screen TV and home network--maybe even sell you a personal photo printer over a cup of coffee and some Entenmann's.

With computer upgrade cycles lengthening, manufacturers are hoping that home is where the profit is--something that remains to be seen, say analysts. But in the meantime, will vendors also have the resources to support your business PCs?

Not to worry, says Harry Harczak, executive vice president for CDW Inc., a leading distributor of all the brands mentioned above. Manufacturers have separate teams dedicated to creating, selling and building business products. No one will even notice when IBM ThinkPads and desktops start coming from China, predicts Harczak, because the design, labeling and support will still come from IBM.

In a way, PC-makers are victims of their own success. Hardware capabilities have so outstripped software demands that PC-users of every kind are holding onto their computers longer and longer, says Fisher. Likewise, the quality of hardware components is such that the usual year of free technical support should suffice: PCs that run without problems for the first 90 days rarely break down after that. These days, according to Dell, the principal cause of customer-support calls is spyware and other external intrusions coming down from the internet to clog or hijack customer PCs.

Prevention--in the form of frequent data backups and Windows updates, as well as the deployment of updated anti-virus, firewall and other security software--is the only cure for those problems, says Harczak.

After that, he says, "It should be business as usual."

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This article was originally published in the May 2005 print edition of Entrepreneur with the headline: Home Stretch.

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