System builder Stone Group is diversifying its services business in recognition of the fact the desktop PC may not be around forever.
The Staffordshire-based outfit, which builds 130,000 PCs a year – most of which are desktops – is one of the last men standing in a local assembly scene that has come under ever more pressure from the likes of Dell and HP since its 1990s heyday.
Talking to CRN, chief executive Simon Harbridge said that although Stone has carved out a lucrative niche building hardware and supplying after-sales support, this model will not sustain it for for another 10 years.
"Stone is very strong at what it does and our core business will continue to be very cash generative and profitable," he said, highlighting the fact that Stone grew revenue in its most recent financial year.
"But we also need to evolve."
Harbridge said Stone is in the process of ramping up its recycling and repair activities and is also looking to expand the professional services business it launched last year.
This will see the private equity-backed firm offering clients professional advice upfront before designing, delivering and managing the solution, which could comprise VDI, servers, storage, networking and wireless devices, as well as client devices.
Harbridge said Stone's professional services team aims to turn over £4m to £5m this year, up from £700,000 to £800,000 last year.
"Our 4,500 to 5,000 customers already have a lot of these solution requirements," Harbridge said. "Previously they had perhaps come to us and it was not quite our bag of tricks. It was a shame that other people were coming into our customer base and providing these solutions to our customers."
Harbridge (pictured) acknowledged that the desktop may not be a fixture in the workplace in 10 years' time but believes tales of the desk-bound form factor's demise have been exaggerated.
"Firstly, there are some really nice small [desktop] form factors such as all-in-ones coming along," he said, predicting that Stone will sell 20,000 all-in-ones this year, compared with 8,000 last year.
"Storage and graphic requirements are currently much better in desktops and if you are looking at cost-effectiveness, they give very good value for money compared with performance," he added.
Although Harbridge seized the reins of Stone seven months ago following the departure of previous big cheese James Bird, its ownership has not fundamentally changed since private equity house RJD bought a 51 per cent stake in 2008.
"Clearly, as a VC-backed business, there will be a change of ownership at some stage but there are no plans for this time," he said. "RJD is a very supportive and patient investor and is very pleased with our progress. It is here to maximise its investment for the longer term."
One more headstone was added to the local assembler graveyard when high-end gaming specialist YOYOtech went under last month, although its brand has since been bought by Centerprise.
But Harbridge said the likes of Stone, Viglen and RM have survived by targeting niches that both the multinational A-brands and "Fred-in-a-shed" local providers cannot reach.
"If Birmingham City Council is buying 10,000 PCs, we are going to struggle as Dell and HP will buy the business. But if it's a school in Yorkshire that wants 100 PCs and want their own software, want the packaging taken away and want it delivered on a Thursday afternoon because they are opening the school especially in the holidays, that is an all-round service Dell or HP could not dream of doing.
"If there is an issue, our engineers are onsite the next day and we are currently running at 99 per cent onsite next-day fix – which is a market-leading statistic. That's our niche and it is difficult for other people to compete with us."
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