The tail wags the dog as IT follows the money

Guy Matthews charts the rapid changes in the industry since the start of 2003, and finds a growing emphasis on peripherals.

Don't stand there for longer than necessary or you may find that your business is no longer what you thought it was.

This appears to be the message for 2003. Within a few weeks of the new year celebrations there have been several announcements that will shape the future of your business.

First, IBM agreed to outsource manufacture of servers to Samina-SCI, which already makes most of its PCs, continuing its policy of getting out of commodity manufacturing to concentrate on software and services.

This was confirmation, if it were needed, that even the server market is commoditised now. So, if there is no money to be made manufacturing PCs and low-end servers, how much margin can be made by selling them?

Still in hardware, Dell announced that it is going to sell 'retail system' cash registers to you and I. After its moves into the storage and printer markets last year, this begs the question of what future Dell sees in being the world's largest PC manufacturer.

All this has brought us to a stage where the tail is firmly wagging the dog. As recently as 2000, the IT market waited for new chips or low-end server operating systems with bated breadth. Each new iteration stimulated the PC/server market, sometimes to a frenzy.

But those days are gone, and they ain't coming back. The emphasis now is firmly on what we used to term peripherals. In other industries, if you were asked to deal with peripherals, that's exactly how you'd feel: peripheral, secondary, unimportant.

The dictionary definition even refers to the word as it pertains to IT: 'Used with a computer but not integral to it.' But this is no longer the case.

Storage, software, printers, consumables, even cables (OK, that might be pushing it) are all more important to manufacturers, distributors, resellers and customers than the Wintel box around which this stuff sits.

After all, if you follow the money, the things from which you make profit are more likely to be integral to your business than the things from which you don't.

So while everyone else is changing their focus (even Intel announced its Centrino-branded laptops recently), I propose that the word 'peripherals' be dropped from the IT lexicon and replaced with the word 'integrals'.

Today's model is that everyone tries to up-sell through bundles with monitors, printers, digital cameras, more memory and so on.

It can't be too long before someone decides to turn this model on its head, and starts bundling a free PC with the integral equipment that actually turns it into a useful business tool.