Hardware Services

Customer satisfaction has emerged as a key marketing

strategy. Vendors are competing in providing aftersales service and going out of their way

to make customers happy. The maintenance arm of the vendors has become stronger and the

maintenance industry blossomed. Last year, third-party maintenance (TPM) accounted for

5,53,979 units, a growth of 51%. This time round, the percentage growth was 28% due to a

wider base with 7,11,286 machines coming under TPM. In terms of revenue the growth is

17.7%. The number of machines under maintenance under hardware vendors has been declining

steadily as the home and SOHO sectors grow, TPM grows alongside. Assemblers and

GIDs, the

major sellers in this segment, rarely, if ever, provide aftersales service due to which

most users go for TPM. Many users have shifted from system vendors to TPM providers once

the warranty period provided by the vendors ends. The tendency is to get multi-vendor

maintenance to reduce dependence on a single source. The growing SME sector has also

contributed to TPM's growth since a typical SME unit purchases from the assemblers or

low-end brands without follow-up support.

The corporate sector remained dissatisfied as do single

users and SMEs. While in higher-end workstations and servers vendors rule the roost, for

PCs the tendency is to move to TPM once an annual maintenance contract (AMC) is over.

Major vendors fared poorly on various counts such as accessibility of support personnel,

response time and spare part availability.

Due to the continuing crunch in the market, TPM is growing

since users find it expensive to renew maintenance contracts. Hence, once the crunch

eases, TPM will also decline. However, in defence, one could say that in an age when more

and more vendors are trying to concentrate on their core competencies, diversifying into

maintenance, a different ball game altogether, is unlikely. Unless, like IBM, maintenance

has been a core competence for long.

Big boys make a splash



Last year too the big players retained their hold on the maintenance market. The
top slot went to Wipro Infotech, with a revenue figure of a whopping Rs 83

crore.

Following it in second and third places were majors CMC and Compaq. The major chunk of the

Wipro's revenue came from the company's maintenance of its own systems and TPM markets. In

the TPM market, CMC retained its hold as the top player, grossing Rs 58

crore. Wipro was a

distant second with Rs 37 crore, closely followed by CMS Computers.

Facilities management, which emerged as a potential growth

area in the previous year, made significant gains last year, grossing Rs 35

crore. The

leading player in the field was IBM Global Services, with a revenue of Rs 10 crore and

other major players were Wipro Infotech and CMC. Other rapidly emerging green pastures are

IT asset management, network management, site planning, environmental engineering and

structured cabling.

What is important for the users is the impact of

maintenance on the cost of ownership. If the average amount spent on maintenance is about

15% of the total money spent on hardware, peripherals and networking products, for the PC

user it is 8% and for high-end machine users it is 20%. On an average, the cost of vendor

maintenance came to Rs 10,234 per machine compared with last year's Rs 8,314. For machines

under TPM, the average cost per unit of hardware came to Rs 6,748, compared with Rs 7,575

last year. TPM is not only cheaper than vendor maintenance but the price difference is

increasing in TPM's favor.

The last word



Compared with international standards, maintenance costs much less in India, but
as customer audits show, the satisfaction levels are lower as well. However, maintenance

is likely to emerge as a significant sector as the installed base of systems grows in the

country. Also, quality of the product and maintenance quality are some of the issues which

are critical to productivity, and the Indian IT market is realizing this premise very

quickly.

Top 20 Hardware Service Vendors 1998-99

Revenue (Rs Lakh)

Trends in Hardware Services

DATAQUEST