Margins to crash with next PC revolution

Margins to crash with next PC revolution

If you think margins on hardware are skinny now, you ain't seen nothing yet.

The next generation of PCs will be built on a single chip, which will result in computer prices falling through the floor, claimed John Gage, chief technology officer of Sun Microsystems.

Gage is a true technology visionary, responsible for new innovations in one of the world's most innovative computer companies. He believes that just as the evolution from multi-board computers to PCs based on a single motherboard dramatically slashed the price of computing, so too will capabilities consolidated onto a single chip.

"Trigem in Portugal have just announced a full-featured PC for $US499. The single chip PC is going to make that look like a very rich and expensive thing," Gage said.

Australian resellers and retailers, whose lifeblood are product margins, are "facing the crunch" not only because of these plummeting margins but because the Internet means "instant unbridled competition".

Integrators and resellers who add value, however, will be needed more than ever, as users try to match new technologies to the needs of their business.

Anticipate needs

"The ability to anticipate how this new technology fits the needs of the customer has to be done in a person-to-person, or very cultural, way. You really need to be in the business of the people you're selling to."

"If you're going to a dentist or a lawyer and if you're good enough to understand what their problems are and you can devise some combination of these technologies that fixes these problems, then you have found something that provides long-term value for which you'll get paid for. Because they don't have time to figure that out."

Gage is insistent that integrators need to focus on solving business problems, rather than relying on solving technology problems. He believes technologies like Sun's JINI will mean that in the future, components will plug together and actually work as they are meant to.

This means that the services an integrator provides its customer need to be proactive instead of reactive. Instead of servicing your customer by coming in and fixing the system every time it breaks, the integrator will come in before the implementation begins and work out what all the problems are and figure out a business fix.

"It means too, you'll be able to project the full cost so that you can give someone a complete bid."

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