Customers Get Results
By Stephanie Stahl, Informationweek
June 17, 1998

To understand just how much change customers have brought about in the PC industry in the last year, try to imagine what would happen if you walked into your neighborhood video store today and demanded to preview a copy of a hit movie currently showing in theaters. On top of that, you want copies of the tape delivered to your house, to your friend's house across town, and to your cousin in another city. Not only that, you want to pay 10% less for it than you paid for your last rental, and you want someone from the video store to pick up the tape when you're done with it. Oh yeah, and have them throw in some popcorn. The video store clerk would surely think you have a lot of gall and tell you to get lost.

But business customers are making demands of this magnitude to PC vendors-and the vendors are responding. This is bringing about dramatic changes not just in the vendor-customer relationship, but also in PC technology.

The results of these changes in the PC industry converge this week at PC Expo, so we've created a special midweek edition of InformationWeek to highlight those issues. At the show, you're seeing vendors touting new service and support programs, improved systems management capabilities, better price/performance, and more.

In our cover story, "Redefining The PC Relationship" (p. 22), senior editors Mary Hayes and Tom Davey explore the leverage influential PC buyers have today that's helping to turn wish lists into reality. For example, Sybase demanded recently that its vendor supply extra PCs-at no cost-in the event that any of its machines break down. The U.S. Department of Transportation convinced its vendor to let the DOT's own IT department perform warranty service-something PC vendors have usually handled themselves.

MCI wanted better service and faster delivery of PCs, so its suppliers have cut lead time from one month to about one week. "We drive-really drive-vendors hard in terms of service-level agreements," says Sudhir Ispahani, director of MCI's service direct program, which manages some 35,000 PCs.

Think about it. The sub-$1,000 PC did not materialize because vendors started getting lower-cost parts and magnanimously passed along the savings. If that were the case, PC prices would have come down long ago. It was when customers turned the tables on vendors and started demanding less frequent upgrades and lower prices that changes came about.

But have PC vendors become pushovers with all these changes? No, they've simply recognized that low prices are not the only thing that make them competitive. According to a survey of 250 IT managers by InformationWeek Research, customers strongly value service, support, availability, on-time delivery, positive past experiences, warranties, and manageability -all the kinds of things vendors are trying to improve.

For example, expect to see more big changes in how service is structured, delivered, and priced. IBM is already making an artificial intelligence-based support system available to users over the Web to supplement its call-center support team; Hewlett-Packard is developing Custom Care Web pages that will include more product information and software updates to customers. The goal is to "drive customer intimacy," says HP's Jim McDonnell, general manager of the company's commercial channels group.

According to our research, customers don't think they should pay more for a higher level of support. And now many customers expect certain traditional fee-based services to be standard PC offerings, including online support, phone support, and on-site service.

Getting closer to customers is critical as brand loyalty continues to dissolve for many PC buyers. It's simple: If a vendor can't keep its customers happy, those customers will take their business elsewhere. As Prak Bhagwanjee, director of IT architecture for Johnson Controls Inc., states: "Vendors realize they don't have 100% loyalty because I have more choices now."