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PC warranties stymie lucrative support biz

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Standard three-year PC warranties are stifling the easy money market of third party support according to market analysts Dataquest.

It's conducted a survey that shows that only 28 per cent of installed PCs produce any revenue for external support providers, and sees this as a big fat opportunity: its report on the market is called: "Hardware Support Sales and Attachment Rates: Squeezing More Milk From the Cash Cow."

When companies buy higher-end kit, such as mainframes, midrange systems and PBXs, they stump up for post-warranty support sold at the time of initial purchase. But for PCs, which generally have a three-year warranty with an average next-business-day response coverage, this is fine. Dataquest found that almost 43 per cent of all PCs installed are covered only by the standard warranty period and coverage, with buyers opting for self support.

The simple way to get more money according to Dataquest, is for support providers to sell their little hearts out. Not so easy, say UK system builders and retailers. To a man they're not making money out of support and can't see how they can do it.

Tiny Computers said its 60p per minute tech support line paid for itself but it was "definitely not a profit centre".

"You want to retain your customers and you wouldn't do that if they thought you were making money out them in that way," said PR manager Alison Boswell.

The company has recently revamped its support products, and much like established international brands, buyers can purchase a one, three or five year support option (for £99, £299 and £499, respectively). Tiny encourages users towards the three and five-year options, giving them an average 25 per cent discount on a range of products, mostly peripheral items if they sign. Five-year plan customers who don't claim during the period will receive the full £499 back in the form of a discount against their next purchase.

Time Computers finds the idea of making money out of customer support laughable. But marketing manager Colin Middlemiss concedes that "as the market matures, there's an opportunity on support calls where we can sell items like printer cartridges and paper. We're now paying people on support a commission."

The company has added a trade-in scheme for its CoverGold warranty option to encourage repeat business from its customers. After three years of ownership, customers are eligible for a discount on their next Time PC purchase and CoverGold package. Along with the trade-in option, Time will throw in £300 of vouchers for consumables (cartridges, paper, etc.) and transferable cover if users want to flog their PCs off to someone else during the warranty period. It also has a reduced warranty price option for budget systems under £599. Time sells its CoverGold warranty scheme from £299 for three years coverage. It also has four and five-year options, which sell for £349 and £399, respectively.

Mesh recently announced that it is increasing its standard support for personal computers to three years onsite - parts and labour, and notebooks will continue to have a 24 month return to base warranty. Marketing manager John Hendrick said that support as a potential revenue earner "is not really a starting point for us".

Evesham.com's line on support is that "it's not an aggressive revenue earner - which in non-management speak means we're not grasping so and sos," says spokeswoman Carolyn Worth.

"Support is our biggest overhead, and we don't lose money on it," she said. There would be money in it if people would pay for it, which they won't. "People expect support so you build it into the cost of a PC," she added.

Evesham uses an automated tech support system from a company called BigFix and claims it's saved itself money on tech support calls.

MD Richard Austin says the company "implemented the BigFix system in less than a month and have been able to significantly reduce redundant customer inquiries to the call centre. The system has also allowed us to form closer ties with our customers by providing them with software updates and product information as quickly as they become available." ®

Related Stories

Evesham to slash support costs with Bigfix
Time beefs up warranty to snag repeat business
Tiny goes on customer service offensive

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