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Cutting edge, stable, reliable…all things that every user wants. But not all users want to pay for the latest and greatest, especially if it is not needed. An IT manager with, say, 400-500 users in a company will often find that most systems are not using anything more demanding than a word processor, occasional spreadsheets, and possibly a presentation program, so there is little incentive to purchase a real speed demon. More likely they will look for the lowest cost in processors, motherboards, and peripherals. Since manufacturers of these products know that most systems are sold into the corporate arena, virtually all of them offer this level of product, whether its slower CD-ROM drives, integrated motherboards, etc. These are the 'steak' products.
Even Intel, with the introduction of the 810 chipset, has this market in mind. Performance-wise, and with its limited upgrade capability, the 810 is certainly not going to win any Editors Choice awards…those are saved for the systems and products that pride themselves on expandability. The products that say, "Hey! We're the best now, and when things move on, we'll be the best then, too!'
So where does that leave the manufacturers? You need to make a middle of the road product to sell enough to stay in business, but nobody wants to read about that, so nobody wants to write about it either…and if that doesn't happen, nobody hears about you, so nobody buys anything from you. It's the ultimate catch 22. If you have the money, of course you can advertise voraciously, but since the margins aren't there anymore, neither are the marketing funds. A good case in point is the recent closing of Windows magazine. A 23% drop in revenue in less that six months played a big part in publisher CMP's decision to cut their losses and leave. The end result is the same. With manufacturers losing margin, everyone depending on their dollars is also going to feel the crunch. In fact, if you look at the computer magazine world, the number of publications that have been folded into others, or simply folded up, is staggering.
This is where the difficulty comes in. Since the corporate system integrators are where the profits are to be had, margins get hammered. If an integrator can save, say, three dollars on a case, and he's selling 5000 systems, that's a very real $15,000.00 in his pocket. It's margin he wants. In fact, since those 5000 systems will be sold to multiple purchasers, it less likely he will have to give up that margin to his customer. When was the last time you bought a $696.00 system instead of a $699.00 system, simply to save three bucks? Even if you are buying 50 systems, it's only $150.00. Its not until you reach the volume of the integrator that it makes sense. And in all fairness, even then, integrators themselves have to sell their customers on their value.
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