Compaq Shifts Focus

Matt Watson writes: "MSNBC is running this story on Compaq's shifting mainly to software and services. The article states that the sluggish PC market is partly to blame." More specifically, Compaq is talking about "industry-specific" packages. Niche marketing, basically, but with a very lage company that can concentrate on certain areas.

Comments

Hardware companies don't "shift to software" --

[Alex Belits]

they die.

Re:Hardware companies don't "shift to software" --

[PD]

Microsoft isn't a hardware company, except for their mice, joysticks, keyboards, and frisbees (but I'm still not certain why they keep putting them in CD jewel cases.)

OEMs becoming "service-oriented" companies

[Infonaut]

Where have we heard this before?

Dell is supposedly moving into the services business. H-P has (so far unsuccessfully) been attempting the same thing.

IBM has (successfully) moved into the services business, but only because they were already diversified enough to make the move.

The trend isn't new. As long ago as 1999, the writing was on the wall. The problem is, most of these hardware OEMs are going to have a difficult time making the transition. They're used to competing on price, not on service. The OEM business is brutally competitive in the price arena, but let's be honest, most PC clone makers are not really innovating. All they're doing is trying to squeeze inefficiency out of manufacturing and distribution, making money on very thin margins.

Entering services will be difficult for Compaq, just as it has been for Dell, H-P, and all the other OEMs that are jumping on the bandwagon. Compete on price alone at your own peril.