Last Monday's announcement that computer companies Wang and Unisys will provide customer service to a third computer company, Dell, underlines the growing significance of the services market in the computer industry.
Services once formed a central part of computer companies in the large mainframe era, because corporate customers rarely had inhouse staff capable of setting up and troubleshooting their systems. Additionally, mainframes were often leased rather than owned, and leasing agreements included servicing contracts. But as PCs have become more powerful, taking on much of the workload of businesses, services were not seen as an essential. New companies like Compaq and Dell launched without service divisions.
However, the tide has turned once again. Software has become more complex and corporate operations have grown to depend heavily on larger servers and their networked PCs, turning services into a fast-growing market. According to industry analysts Forrester Research, the services sector will expand 144 per cent to a value of $303 billion (£214 billion) worldwide by 2002.
Growth between 1996 and 1997 was strenuous for some companies. Oracle Corporation boosted its services from 45.2 to 50 per cent of the business, while Netscape went from 15.9 to 28.1 per cent services, according to statistics from Wired magazine's May issue.
In the past nine months, Unisys, once primarily a hardware company, has moved to focus heavily on services, signing agreements with companies like Microsoft and Hewlett-Packard. The Dell arrangement will give Unisys additional reach into new levels of the corporate market beyond its focus for many years on the "enterprise", or very large corporation. For Dell, the agreement with the two service providers gives it a solid services footing which should prove attractive to the lucrative business market, particularly in the enterprise.
"As Dell has moved up and more aggressively into that [enterprise] space, it makes sense for us to partner for services," says Mr Martin Davies, Dell's customer services director for Britain and Ireland. "Dell doesn't want to be a services company." He says that services will be provided as a "shrink-wrapped" package product for the smaller business, and as a full range of pick-and-choose services for the large corporate customer.
"The customer doesn't just look for a good value box," he noted, but wants "full life-cycle management" of systems. Under the agreement, services will be provided by Unisys or Wang employees wearing Dell uniforms.
Previously, Digital Equipment Corporation had handled some of Dell customers' services needs, as a Dell-authorised warranty provider and because DEC provides multi-vendor services. Digital has maintained the strongest services division of any computer company for years it made up 44.8 per cent of overall Digital business in 1997. But the proposed merger between Digital and Dell's chief competitor in the build-to-order computer business, Compaq, made the DEC/Dell relationship less attractive.
But because Digital offers services across a wide range of hardware and software products, the company will continue to be the service provider of choice, argues Ms Orla Hogan, marketing manager of Digital services for Ireland.
Digital, with its long-time presence in the services market, will remain the bellwether of the services industry as the sector continues to grow more competitive.
