Monday, 3 October 2011

Changing World of Maintenance Services in the Cloud

'Own the desktop and you own the server,' is a mantra in third party service provision. It stands to reason as even if it costs a trivial amount to maintain a desktop there will be overwhelmingly more of them compared to servers owned by a large company and so the cost of maintaining desktops will be the major element in any contract so servers usually get maintained by the same company as part of the deal.

But the IT world is changing. In the last two quarters in Europe there have been dramatic shifts in the 'client' market with the PC market taking successive quarterly nosedives in numbers sold while certain categories like notebooks have collapsed catastrophically. In the meantime, there has been a surge in the number of tablets bought which is currently a market dominated by Apple.

So if tablets do really start to take a foothold in the Corporate marketplace and replace the falling number of PCs, what will it mean for third party services providers? And what happens as customers start to migrate to the Cloud? Do the services dynamics remain the same? I mean there are always client devices, aren't there?

'Follow the Data, my boy, and you will be a rich man.'

At the consumers and possibly small business level, buying something like a tablet is easy as you can do it over the web. There aren't endless permutations of configurations, the number of product variations is small and so choice is simple. One of the easiest choices when buying an iPad is to add AppleCare. At just £150 for 3 years from Amazon, it was less than 10% of the purchase value per year of the iPad and I get a replacement product if anything fails - even the battery. It's a no brainer - a 'You want fries with that moment'.

There will be more ways to capture me or similar users on that front. As we buy and use Apps why not make offers to sell AppleCare again? It should be simple. And nobody will want these products to be fixed - a replacement is fine as we are backing all the data into the Cloud and iTunes restores your applications. The Cloud refreshes any new device as if it was the old one.

Corporations can learn a lot here. As tablets take a hold and data is once again centralised, there is no reason why third party maintenance and services could not change as well. As more businesses adopt the Cloud, data gets managed centrally and there is less onus on getting a fix for tablets. Replacement is as simple and as cheap.

With all the data on the servers, the focus changes for services. No longer is it really necessary too have all the client devices on large contracts governing who maintains servers, these central engines can be managed under the co-hosting contracts taking the need for costly IT staff away but getting Tier 1 grade service provision and maintenance coverage as one contract.

The mantra of 'own the desktop, own the server' is changing as the Cloud increases its traction on businesses. Whoever is providing the managed service of the server farm is actually likely to get the contract to manage the viability of the server.

This means that the client end is going to get ugly in terms of competition. It is going to be very much insurance driven over time as, if replacement product over 'break fix' becomes the order of the day, then the whole dynamic of pricing and who sells what for how much commission will change dramatically. If you are today in the third party maintenance business, it's as well to spot the trend coming and make sure you have the right offerings in your portfolio as the world of how things are bought and what is important on the desktop is changing as we watch it.

For the client vendors and the App Stores, there is a massive opportunity to get this right. Make it simple and cheap to offer the replacement of the tablet over its lifetime and there will be a lucrative and profitable business. Keep it as per the status quo and insurance style maintainers will get a foothold.

The Cloud certainly is changing things.

A footnote on buying tablets via phone contracts. On the face of it this is attractive.  The tablet becomes cheap, if not free, just like a phone on an airtime contract. What could possibly go wrong?

The clue here is the airtime contract because that's what the consumer buys and contracts for. The phone or tablet featured in the 'sale' is deemed to be a 'gift' from the contractor even though it's cost is obviously amortised over the length of the contract. This has a big impact in terms of liability. 

The big example of this is that if you, as the consumer, believes that you have been given rubbish service relating to the phone or tablet. You cannot break your airtime contract as a remedial action. In other words, as a consumer your rights regarding the phone is limited only to the product's warranty and/or if you have bought some kind of insurance on the device. Your normal consumer rights are forfeit as you have not been deemed to have 'bought' the phone - it has been gifted to you by the airtime provider as a contract 'sweetener'.

In reality, this should not cause a problem. But if, as in my wife's case, the product could not charge due to a shorting in the copper connectors on the outside of the phone, then an airtime provider can declare water damage and therefore invalidate the warranty and the only option is to buy a new phone or tablet. It doesn't happen? It did to my wife - the fact the phone was repairable for just a few pounds was overlooked by the airtime provider and we could not break our airtime contract without paying the outstanding amount even though we were effectively being forced to buy a new phone for £300 due to a nice and lucrative scam being used by the airtime broker.

The company was Carphone Warehouse. It's the last time, after 12 years of contract, I will use them and I will advise any other consumer to avoid them while begging any business to avoid contracting with them.

My strongest advice on the tablet front is to take it on the chin and buy your product and then get an airtime contract if you need one. Avoid wrapping the tablet up in the airtime contract. Your rights in Consumer Law become limited.

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