OnForce: Businesses Fix Computers Instead of Buying New

By Jessica Davis  |  Print this article Print

With a glut of old computers at-the-ready for redeployment, their old users the victims of downsizing, businesses haven't been eager to invest in new computers or other IT infrastructure. Instead, many of the jobs available these days are in repairing the old technology. And those two trends have driven price down for IT service jobs.

Solution providers that have kept a foot in break/fix work may be enjoying a bit of a leg up on the competition during this recession. That’s because break/fix is where the jobs seem to be these days as businesses look to make their existing technology last longer and perform better.

So says online IT services marketplace OnForce, which recently released its second-quarter report on work orders and work order volumes for various kinds of jobs.

"There’s not a lot of new infrastructure or equipment being bought," OnForce CEO Peter Cannone tells Channel Insider. "In Q2 the U.S. shed 1.4 million jobs, and that’s created an oversupply of technology equipment in the marketplace. Companies now have extra desktops and notebooks available to them."    

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And while OnForce has seen a decline in work orders for new technology deployments, it’s seen a surge in demand for break/fix work. According to OnForce, 64 to 65 percent of the business is now break/fix, including in-warranty and out-of-warranty repair.

"We only see new technology on the business side when it’s absolutely necessary," says Cannone. He estimates that it will take another 12 to 18 months to run through the excess technology that businesses already have on hand.

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"When you go back to the year 2000 when the Internet bubble burst, there were a lot of technology companies that went under and a lot of excess capacity in desktops and servers. It took about a year to work through that," he says. But while the new deployment opportunity is not really there right now, there’s still work to be had.

There’s also good news for VARs in those employment numbers, however.

"As companies have shed a lot of their infrastructure personnel, they are turning to local resellers asking for help," says Cannone. For example, in last year’s second quarter, work orders to take down and do maintenance on a network made up 1 percent of total work orders. In this year’s Q2, that number has grown to 8 percent.

At the same time there may be more competition out there as well for break/fix work. That’s because in both Q1 and Q2 OnForce saw a surge in service professionals looking to sign up with the online IT services marketplace.

That may have pushed prices down for the average work order, says Cannone, along with the fact that maintenance jobs tend to pay less than installation jobs.

"Customers are testing pricing thresholds," he says. "What was a $100 repair job is now being put out there for $75. We think we are starting to see some leveling off at the end of Q2 and into Q3. But the type of work being done is just lower-value work."

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com