Whether striding up to the microphone or sliding in by the side door, computer makers are busy recasting themselves as service organizations.
Whether striding up to the microphone or sliding in by the side door, computer makers are busy recasting themselves as service organizations. The reasoning behind this collective salute to service is not hard to understand. You can still make money selling service, but it gets harder and harder to make money selling boxes. When did you ever hear of a service price war breaking out? Or companies advertising their service prices as being substantially below their competitors? You get the idea.
Compaq is the latest company championing service. At its June 25 press conference announcing the end of the road for the Alpha chip, Compaq Chairman Michael Capellas said increasing service revenues for the company was a top priority.
IBM was probably the first computer vendor to push service, Dell is trying to figure out how to be both a direct vendor and a service provider, and Hewlett-Packard would dearly love to become a big service provider.
Of course, the best way a company can be a top service provider is to develop products that dont need service. The problem for the vendors is that you cannot charge for that service. So, setting that option aside for a moment, here are a few service suggestions for vendors:
Give your customers fair warning of when you are going to bail out of a product line or switch architectures. Id say Compaq did well on this score with the Alpha announcement. Compaq cant support Intel, Alpha and Mips (through the Tandem acquisition) chip architectures at the same time. The economy demands that organizations core down to their fundamental strengths. Two years seems an adequate time frame for a customer to transition. By making the announcement, Compaq opened the doors for Sun, IBM and others to chase those Alpha users, but it was the right thing to do for the customer.
Do the computer integration work for your customers. The more a vendor understands about its customers computer networks, the more it should be able to do the heavy lifting. If the customer is heading toward wireless, the vendor should integrate those components at the factory. Dell has been a leader in building to order. While the temptation for a service provider is often to perform the integration at the customer site, the proper place for most of that work is at the factory.
Dont try to make up on the service side for the price slashing on the manufacturing side. The price cutting going on among the computer vendors is as brutal as Ive ever seen. If you are selling your boxes for below cost, the temptation is going to be very strong to make it up on the other side. This is a short-term solution sure to anger the very people with whom you are trying to build a longtime service relationship. And dont think that you wont get caught. You will.