Is the brand of a PC as important as it used to be? Considering the health of the UK assembly game, then no. It obviously doesn't matter at all to the many companies that use smaller or unknown brands. While established manufacturers and suppliers claim to be unaffected by the less well-established brands trampling across their traditional trading ground, these companies also claim that business is booming.
But when demand flattens, someone will have to lose out, like it or not. All PC players are vulnerable to branding issues, the increasing technical knowledge of users, the whims of the consumer and the reliability concerns of businesses.
Education centres are increasingly turning out youngsters with good IT skills and this will have an effect across the board. At the top end, many outsourcing decisions are frequently influenced by the scarcity of IT personnel, so support service providers looking after large organisations could find their clients progressively able to cope with more tasks in-house.
SMEs could also become less reliant on contractors, as staff employed for totally unrelated tasks tackle some quite advanced repairs, upgrades and customisation, and even meet their employers' networking needs.
Ian Watson, a consultant in Glasgow, says when he needs another computer he will ask his 16-year-old son to build it. 'He's always able to sort out my problems and he has just upgraded a second-hand PC into a very powerful machine for his own use.'
Large business users are also developing life-cycle management strategies.
They are reluctant to continue upgrading, replacing and retraining when existing systems and software are sufficient. When they do need to replace a PC, it is increasingly via the internet.
Many consumers are wary of the Net but very aware of its potential to cause loss of business for catalogue-based mail-order companies. For those selling unknown brands and competing against top-tier vendors selling desktops in their thousands direct to the customer, the threat is a very real one.
Elsewhere, consultants could also find it harder to get work as buyers gain confidence. For instance, when the government-funded Art In Partnership project was set up in Edinburgh, a consultant recommended Gateway PCs via mail order. The project has been using seven Gateway machines for three years now without problems, and will probably return to Gateway for new equipment - without necessarily seeking the advice of a consultant.
High street and superstores will also need to face the fact that they are increasingly sharing their main market of first-time users with other types of outlet. Improved technical awareness and support from experienced users have combined with the high street's somewhat tarnished reputation for after-sales service to lead even those who have never used a PC before to shop more broadly. Some colleges even offer courses on how to build PCs from components bought at computer fairs.
One consumer, who bought his first machine from a large high street chain, told PC Dealer: 'When I had problems with my AST PC I was told to contact the manufacturer, so I might as well have bought by mail order at a much lower price. I'll certainly do so next time, particularly as I don't see the point of spending a lot of money for a very low level of after-sales support.'
Julian Greenwood, marketing manager at mail-order firm Evesham Micros, makes no bones about it: 'We can keep prices low because our machines are aimed at those who have gained sufficient know-how not to need constant attention.'
In the case of the sole trader who bought his first computer in the high street, it will also probably be a different approach the second time around. If their business has developed into a computer-dependent SME, the aim could be to find a local supplier providing ongoing on-site support and development services. Many providers build their own PCs because they are cheaper than buying branded products.
By then, the customer knows so much more about what to expect that they are able to help the supplier provide a specification that is far superior to the branded computer they bought on the high street three years previously.
A representative at Dixons' PC World claims the high street still has much to offer: 'We can provide second-time users with upgrades and other partial replacements, and we have specially trained business advisers.
People can sit and discuss their needs in confidence and try out hardware and software. Most business equipment suppliers only work business hours; we are open until 8pm and at weekends.'
She adds: 'I'm aware that we are sometimes accused of selling machines that are more sophisticated than people really need, but this is because manufacturers assume most customers will become increasingly ambitious, and won't thank us for selling them models that need upgrading within a few months.'
However, according to Andor Millsboard, marketing manager at Atlantic, most mail-order companies are not trying to snatch first-time buyers away from the high street. 'First-time buyers are a lot of trouble as they tend to do things like treat the mouse as though it were the foot pedal on a sewing machine,' he says.
'Our business and consumer customers are generally very aware of what they can achieve and what specifications they need. We build to order and build cheaper than the mass producers as our overheads are low - including not having to maintain large stocks of components.'
Millsboard is confident that suppliers which only sell their own-branded products will survive by building good reputations, to the point that their PCs will be classed as 'well-established'. 'Most customers are aware there are very few component manufacturers and that the components we put inside a PC are largely the same as those used by the majors. We can't buy software as cheaply as large mass producers, but find most customers are not interested in the massive bundles installed in these machines,' he says. 'Many buyers are fugitives from the high street. They found that when they suffered breakdowns, the stores were simply not interested.'
Ali Redford, marketing manager at Watford Electronics, feels that its mail-order Aries brand computer has a good chance of survival, even as the prices of better-known PCs continue to fall. Part of the attraction, she says, is that Watford offers a lengthy warranty. She admits this was only practical because its PCs do not have any potentially troublesome pre-loaded software.
A representative for IBM PCs, does not agree that components in unknown brands are of equal quality to the majors. 'As these companies do not hold stock, they have to buy whatever is available. If you open up five machines with the same badge, you'll probably find five different lots of components.
You might be lucky and get a good machine but there's no consistency. For anyone serious about continuity, these are not a good buy. We were worried at one time about all these newcomers, but not anymore.
Our more serious competition comes from other well-known makes.
'We have learnt from marketing tactics employed by companies such as Dell and Gateway that what customers want is a much closer relationship with their manufacturers through expanded customer services.'
He adds: 'Our resellers have lost some revenue due to customers buying off the internet, but at least they have mainly bought IBM machines. Resellers have been able to protect their profitability by expanding on the services side.
'Resellers and other service providers have also gained by the increase in the number of SMEs that are prepared to put their systems in the hands of experts so they can get on with their core businesses.
They want people with skills directly relevant to their business.'
He warns that as only PCs from the mass manufacturers have to pass health and safety tests, employers which buy custom-built PCs may be putting their employees at increased risk of computer-related health problems.
'Some components will meet the necessary criteria, but there is no guarantee as small builders do not have to submit their machines for assessment.' However, potential health problems are rarely high on the list of criteria when businesses buy PCs.
Phil Williams, marketing manager at Computacenter, agrees that continuity is an important element of reliability. 'Companies that keep changing their component suppliers to get the best prices are not helping their customers,' he says. 'I've never heard of an IT manager being tempted by an unknown brand, however cheap, although there is an increasing trend to make savings by buying off the internet.'
Asked if losing PC sales took the cream off providing network support services, Williams admits: 'We have to accept that our customers - mainly large corporate organisations and government bodies - have such strong buying power that they pay less for the big names than individuals pay for unknown brands. However, PCs do represent a relatively small percentage of the total cost of structuring and maintaining a large network.'
Many smaller service providers build to order instead of buying mass-produced brands. Dennis Mulliner, marketing manager at PCDi, explains: 'Our clients are not price sensitive, but neither do they care what badge is on the equipment.
'Our PCs are not actually cheaper than the majors as we use components of equal quality, but the higher profit margin we create by building our own does help us to provide very competitive ongoing support services, which is what customers really want.'
He disagrees with IBM's view that leading manufacturers have established stronger relationships with their customers. 'The problem when buying mass-produced brands is that manufacturers immediately sell their customers out to repair companies. They have no ongoing commitment.'
Contract caterer Eaton found its various unbranded PCs perfectly reliable but has, nevertheless, decided on Compaq alternatives to replace all the 60 installed at customer sites. Philip Tozer, IT manager at Eaton, says: 'We wanted to standardise and chose Compaq because I am very impressed by its insite terminal manager. Some other companies include this, but I felt Compaq's had the edge. Its PCs undertake continual self-diagnosis and alert users and IT personnel on screen, by mobile phone or pager to any pending problems.'
Asked if the Compaq PCs had cost a great deal more than the unknowns, he says: 'No, less actually. The accredited suppliers are very competitive - business users can obtain such good deals that they probably only pay about half the price of the high street.
'The big stores are charging a great deal of money for after-sales services and I think consumers are getting a raw deal. People would actually be a lot better off if they went to small, local systems builders, having established which components are the "best buys".
'Better still, if they build for themselves, they can make two for the price of one so they have, in effect, achieved the best sort of warranty by always having a standby.'
One of Eaton's two suppliers, GSA, confirms that competition among Compaq's resellers means companies can get discounts of up to 30 per cent. Jonathon Keighley, account manager at GSA, says this applies to most well-known brands of PCs and printers, and that resellers have to rely on service revenue for their profit.
'A bigger problem is that, as we need to stock the most popular makes of computers and associated products to gain contracts, we often have several of our 30 sales people and engineers attending manufacturers' accreditation courses at once,' he says.
Although GSA is mainly serving large companies, it would consider selling a Compaq to an individual. 'We would need to find out something about their background, as one of the reasons why larger buyers get such good prices is because they already have software licences, so are only interested in hardware.
'If a consumer bought a box then went out to buy all the software needed, it could end up costing him more than buying a complete package in the high street. Most PCs aimed at consumers come with large bundles of pre-installed software which don't cost OEMs much but are expensive over the counter.'
Dan Socci, director of sales and marketing at Compaq Services, says he is not aware of any Compaq reseller complaining about cut-throat competition, and points out: 'Compaq is the number one brand in terms of sales volume, so it is reasonable for people to have a choice of where to buy.' But he believes Compaq US' recent reduction of its number of distributors will lead to those few remaining distributors considering just how many resellers they are prepared to support.
Socci says it is unfair to compare prices between Compaq PCs sold by service providers and those in the high street as they are usually different products. Whereas consumer notebooks are a standard range with everything built in that a user might need, business versions are frequently constructed for single specific functions.
The undisputed market leader in the notebook field is Toshiba, having sold more than nine million units in the UK. Con Mallon, marketing manager at Toshiba, says: 'Our notebooks are the only notebooks actually manufactured totally by the name on the lid. Ironically, people who pay over the odds for any other brand are actually buying something that has been made by an unknown manufacturer.
'Notebooks are a stable business to be in as they are so much more difficult to build. It's not just a matter of buying in a load of components and putting them in a box. You have to cram in a lot of electronics running at very high frequencies, and you have to keep creating a result that is lighter and thinner. Miniaturisation is a complex technology.
'We also benefit from the fact that a high proportion of notebook buyers are serious users, which means they are very keen on reliability. Many also frequently travel overseas on business so they need to know they are never far from an accredited service provider.'
But a representative at AJP Notebooks maintains that the company's own-brand products are also mainly bought by business people and its prices are on a par with Toshiba's but with much higher specifications.
She says: 'Most of our customers at present are SMEs, but we aim to target large organisations as soon as we have found a services provider with a national network of reliable engineers to offer on-site attention. Then we will compete with Toshiba right across the market.'
While there's no doubt as to the continued existence of small-time rivals to the established brands, businesses like security and so usually play it safe. And that feeling of security is getting cheaper as the big players thrash it out in never-ending price wars. With big brands continually getting cheaper, small players may soon need to find a new angle to keep ahead of the game.
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