This report on what moves US corporate PC buyers is particularly relevant as direct suppliers like Dell and Gateway 2000 continue to grow their marketshare and other vendors like Compaq seek ways to competeMy brother-in-law works for a retail chain whose chaotic-looking stores are filled with clothes and household goods scavenged from other retailers' overstocks and closeouts. The corporate motto is simple: "Good stuff, cheap."
Funny, that's exactly what PC buyers in America want, too. And they say vendors aren't offering any.
US Computerworld's Customer Satisfaction Survey on PCs and notebook computers drew responses from 1651 US corporate sites, and the respondents spoke plainly. High prices stink. Performance, reliability, ease of configuration and quality all score fine (PCs keep users somewhat happier than notebooks in those areas), but the industry at large is charging too much - or at least offering too little for those prices.
One irony is that for the past two years vendors have been preaching about how they are reducing the total cost of ownership. That may have been just blather. Users often rated cost of ownership lower than service and support, which buyers historically have slammed in other US Computerworld surveys.
When we asked buyers what they most wanted from their vendors, the answer was clear: lower prices. Yet "cheap" isn't good enough. Buyers want "good stuff", too.
They're powerful, highly reliable (making vendor support more negligible), there are plenty of vendors to bid for business, and the cost - well, users can always beef about cost.
Frankly, cost is what users are focusing on these days. Users were asked to rate their satisfaction with their desktop systems and vendors in various categories pertaining to equipment quality, vendor image and cost issues.
Overall, users gave decent grades in most categories. For example, on a scale of one to five, where five is completely satisfied, users gave performance a mean score of 4.02 and reliability a mean score of 3.96.
That shows users are generally happy with today's PC quality. And with a few exceptions, users are comfortable doing business with their vendors.
But moods changed when users were asked about price. System prices and overall cost of ownership received the lowest overall satisfaction grades of 12 categories, and it would have been worse if not for the relatively high scores for direct vendors such as Dell, Gateway 2000 and Micron Electronics.
Value for money
But users did offer respectable grades on one money issue: value for the dollar. The industry as a whole scored a 3.74 rating, so users apparently don't feel they're getting ripped off. That may be because, given the performance of PCs, prices have never been lower, said analyst John Dunkle.
Still, it's clear that users feel that most vendors can do better on price. In a market where it's difficult to see the differences from box to box, price gets the attention. "And people don't feel they're getting anything extra by paying higher prices to non-direct vendors like IBM and Compaq," said analyst Laura McCabe. "System reliability is such that users don't see much value in paying premiums for superior support."
But whether they sell direct or through reseller channels, all vendors have managed to maintain pricing levels even though raw power keeps getting less expensive. And that is why users complain about PC prices, Dunkle said.
Price per Mips is dropping, but vendors consistently add to the systems' sub-component level to maintain a higher price value. "With more memory, more storage, better monitors, video RAM, etc, PCs won't get cheaper as long as vendors continue to build up their baseline systems," Dunkle said.
More PC for the same money doesn't necessarily seem bad, but consistently increasing the standard configuration is why desktops are fully amortised in just 2.2 years, according to Dunkle's research. "Users want protection from price erosion," he said.
One survey respondent, Bruce Broll, said that just buying the right system for the job is the best insulation he's found against depreciation. "We still have some 486s running all the software those people will ever need. Buying top of the line to prolong system life doesn't work for us since it means we're probably buying more system than we need, and time will eventually catch up," he said.
The most obvious strategy is to get the best price you can, which may mean buying direct. But if you're hesitant about moving away from vendors you've considered to be business partners, look at the overall satisfaction scores, and see which vendors best satisfy corporate users. They are Dell, Hewlett-Packard, Gateway and Micron. Three sell direct - HP doesn't - and can often bid at least 10 per cent below vendors such as IBM and Compaq.
Greg Martin, a director of IS, who once exclusively bought from Compaq because of its reputation for reliability, said he is less concerned with reliability than in the past. "We haven't seen much of a difference since we started experimenting with Dell and Acer. My focus now is which vendor can give me the best price break."
As for paying premium prices to get better service, Martin said it's not worth it for him. "We're using vendor service much less, given what reliability is today. That's why it's getting harder for Compaq and IBM to differentiate themselves to us," he said.
Support grades show that users don't necessarily sacrifice service by choosing direct-sales vendors. HP's grades are extremely strong, as their history shows, but the next best are Dell's and Gateway's. "This is probably the industry's best-kept secret," Dunkle said. "All our research said the abilities of their technicians to do remote diagnostics is outstanding." Because all vendors received higher user satisfaction grades for their own support compared with what is offered through the vendor's channels, users really aren't giving up much by going direct. "I don't need anyone to show up, just someone on the other end of the line that can take care of me. And that's what I have with Gateway," Broll said.
Probably the best evidence that price is fast becoming everything is a question in the survey that asked which vendor the user would prefer if price wasn't a factor. The top two in order: Compaq and IBM.
Although neither scored best in any category, they still would be the favourites if they didn't cost so much. "That makes total sense," Dunkle said. "There is a degree of safety when you buy from these vendors. Safety that comes at a price people like to complain about, but a level of safety people prefer."
PC vendors at a glance
Respondents to this US survey rated their satisfaction with various aspects of their desktop and notebook vendors on a scale of one to five, where one is "not at all satisfied", and five is "completely satisfied". Ratings reflect only the views of the survey respondents and can't be projected to the installed base at large.
Standard error of the means when it is factored in can affect the vendor order. Vendors are listed from highest to lowest customer satisfaction.
Hewlett-Packard - HP not only scored one of the highest grades for overall satisfaction, but it also scored highest in six out of 10 categories.
Dell - Tied HP for the top spot in overall satisfaction.
Micron - Very strong in performance and has a technical direction its users favour.
Gateway - Gateway ranks higher on price and value than other vendors such as Dell and Micron, which notoriously compete on value.
Compaq - Users are comfortable dealing with Compaq as a vendor but didn't gush with satisfaction when grading their systems.
Apple - Mostly mediocre grades, but it excels and scores the highest in ease of configuration and quality.
Digital - Received grades that were down the middle in nearly every category.
Acer - Very few Acer users responded to the survey and didn't award any grades to brag about, either.
IBM - Scored lowest for price and value and came close to having the worst overall satisfaction grade of the survey.
AST - The lowest overall satisfaction of the survey.
The rest of the field
By Kevin Burden
There is another group of PC vendors tiered differently in this survey because of their relatively low response bases. Some are on their way up in the market, such as Micron Electronics. Others may be on their way down or just floundering, such as AST and Acer. And still others survive through a loyal following, including Apple and Digital.
Apple was the only vendor in this second tier with more than 100 users responding to the survey.
Apple has always been a different breed; though it never seems to fit in a Windows-based PC comparison, the high satisfaction of its users can't be ignored. Apple actually scores among the highest grades of the survey in the technology categories, especially for ease of configuration and quality. But when it comes to cost, Apple users complain louder than other PC users.
Micron's reputation for driving performance at great prices built it a brand equity that people associated with superpower users, according to John Dunkle, an analyst at Workgroup Strategic Services. "Now that people understand Micron is available at a fair price, it's been doing very well," he said.
Micron's price scores are right in line with price-conscious Dell, but with an edge in performance.
Acer's overall satisfaction is below the survey mean. But even worse, there is a sizeable gap between its price satisfaction, which is among the highest, and its value-for-the-dollar score. "We call this 'after-sale satisfaction' and with Acer, it's not good," Dunkle said.
AST scored the lowest overall satisfaction of this small group of vendors and of the total survey.