Those who think that IT support services are a cash cow for companies had better think again. Only 28 per cent of installed desktop PCs, or about one in three, generate any revenue for external support providers, according to a study published this week by Gartner Inc.
Most consumers who buy desktop PCs either attempt to fix any problems themselves or else rely on the standard three-year warranty that comes with most PCs, according to the study “Hardware Support Sales and Attachment Rates: Squeezing More Milk From the Cash Cow,” published Wednesday by the Gartner division, Dataquest Inc.
The survey found that if external support providers want to make money, contracts for additional IT support services must be sold alongside – or “attached” to – IT products at the point of sale, Garner said.
Currently, almost 43 per cent of all units installed are covered only by the standard warranty period and coverage, with consumers opting not to pay more for additional service agreements, Gartner said.
The study included the results of a manufacturers’ survey of support-sales experiences as well as a survey questioning end users about their overall coverage, Gartner said.
When it comes to spending additional money for IT support services, the study found that consumers are already willing to pay up front for external support providers if they believe that the product they are purchasing is critical to their business. For example, mainframe computers, midrange systems and PBX (private branch exchange) units are currently most likely to generate attached IT support-services contracts. On the other side, network hubs only generate additional support contracts 12.2 per cent of the time at the point of sale, Gartner said.
Gartner stressed that it is important for companies selling IT products to make clear to customers at the point of sale that it would be more cost-effective and efficient for them to have support delivered by an external organization.
Investment in sales programs that aim to increase “service attach rates” is the way to create “significant future sales opportunities for services and products,” Gartner said.
The study did not say if it is actually cost effective in the long run for consumers to buy IT products with additional service contracts attached.