Software Warehouse calls time on PC building unit

Software Warehouse has finally scrapped its PC building business, opting to sell branded hardware to rival the Tesco computer sales operation.

The retailer's dabble in PC production finally came to an end after a prolonged attempt to keep the Northwood PC operation going after suffering massive DOA problems (PC Dealer, 1 July).

The termination of Northwood PCs has resulted in redundancies for the production staff, including Timothy Lightfoot, production operations manager.

As a result of the collapse, Software Warehouse will resell PCs from Compaq, IBM, Fujitsu and Toshiba, using the Fujitsu kit to target the Tesco PC operation.

Steve Bennett, managing director of Software Warehouse, said: 'It's a significant change of direction. We got into the cloning business about two years too late. Dell has turned everything on its head - PCs from tier-one vendors are a lot cheaper now, so it doesn't pay to make kit yourself.'

He admitted that nothing of the operation could be salvaged, adding: 'We should have shelved the operation earlier. Pride is why I kept it going - I was sure I could get a profit. Eventually, I had to admit I'd got it wrong.'

Software Warehouse will open four retail outlets by the end of the year, bringing the total to 19, as part of an assault on the retail market, particularly targeting the Tesco PC operation.

Bennett said: 'We'll kill Tesco on price. The entry level will be a Celeron 300MHz-based machine for #595.'

Jeremy Davies, senior analyst at Context, commented: 'Software Warehouse's production operation lacked the economies of scale necessary to survive.

It's interesting that it sees itself in competition with Tesco - the supermarket is now a legitimate channel.'