Hardware sales slump as services boom

Hardware sales are still disappointing while the services market is growing faster, according to two reports from researcher IDC.

Hardware sales are still disappointing while the services market is growing faster, according to two reports from researcher IDC.

Worldwide PC shipments slipped below previous IDC forecasts, which predicted growth of 15 per cent. Another researcher, Dataquest, had been even more optimistic about the market.

If events in the US reflect future trends in the UK, the omens are not good for hardware resellers. Demand in the US for PCs lagged behind growth in the rest of the world, with IDC estimating the figure at 7.2 per cent.

Analysts blamed the slowdown on several factors. Dataquest pointed to chip shortages and unusually high demand for free or cheap PCs in the previous year.

However, one end-user, an IT manager contacted by Computer Reseller News, said the slump in demand has more to do with a change in attitude brought about by the millennium issue.

"It taught us that we do not need to spend so much money on upgrading kit. So now our policy is to use hardware for longer before we replace it," he said.

The services boom may have contributed to the hardware sales slump, according to IDC. Services in western Europe will generate £184bn in turnover by 2004, according to Nelly Sam, European services analyst at IDC. Ebusiness, the skills shortage and hardware commoditisation are all factors, said Sam.

Jamie Snowden, research manager at IDC, said: "There is no perceived value in hardware; it's in services, the glue that holds it together. Thanks to the skills gap that makes staff so expensive, IT departments are being scaled down. Staff are migrating to vendors, and vendors are offering services."

First published in Computer Reseller News