Rick Rant

Views and opinions on the latest news and hot topics for computer business owners and other IT service professionals.

Netbooks are destroying Microsoft? I don’t think so

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Last week I read a post by Computerworld blogger Preston Gralla that made me stop and go “huh”?  Gralla says Linux on Netbooks are killing Microsoft. According to Preston, Netbook sales are driving Microsoft to layoff employees because Microsoft is losing margin.

While there may be some truth to the fact that Linux is gaining an edge in the Netbook market, it is hardly killing Microsoft, whose revenue is not driven by the operating system alone. In additon, while Microsoft is losing margin, it can hardly claim that the company is tanking because of the netbook market alone.

Where did Gralla get the data to base these assumptions on? From hard numbers? from industry analysts? No. He based a lot of it on conjecture, mostly from those who commented on a previous blog post on a related topic and he admitted as much in his post. He reasoned it out himself, saying such things as  “Microsoft most likely gets less for each copy of Windows sold on a netbook than it does on a desktop machine”, “Microsoft probably gets less for XP than it does for Vista” and “Microsoft will likely continue to be paid less for Windows 7 on a netbook than on a more powerful PC”.

Most likely? Probably? Will Likely? Seriously, Preston, did you research any of this before you posted?

First, let’s look at the facts.

“Microsoft most likely gets less for each copy of Windows sold on a netbook than it does on a desktop machine.”

That is purely a guess on your part, and while there is some truth to the conjecture, it doesn’t mean Microsoft is losing money. Here’s why:

1. Fact – Although Microsoft lists pricing of OEM licenses for system builders, Redmond does not advertise or discuss pricing for Tier 1 royalty OEMs. It is generally private between Microsoft and that royalty OEM account. Netbook manufacturers are royalty OEMs, not lower tier system builders, so they do get a big break on the price while the system builder pays whatever price is set for those licenses through the channel.

However, although the royalty licensing is considerably less, its still not free, so those OEMs do indeed pay for those licenses and Microsoft does indeed make their money.

2. Fact – Microsoft is a business, not a charity. They give breaks to their Tier 1 OEMs, but they do not operate at a loss. They still build their margin into it. They are still making money.

Bottom line: Yes, this is a true statement. However it insinuates that Microsoft is LOSING money selling Windows on netbooks and making it on desktops, which is totally untrue. The Netbooks licenses still sold at nice markup and a fair profit. They just make a much larger markup on the desktops and, as some system builders may confide, more than fair.

“Microsoft probably gets less for XP than it does for Vista”?

This one made me laugh.

3. Fact – Windows XP is currently being installed or rolled back onto PCs at an estimated rate of 3 to 1. Bad for Vista? Yes, it is. Bad for Microsoft? Yes and No. Yes in terms of Microsoft’s ROI in Vista, no in terms of Microsoft’s ROI in XP.

4. Fact – Windows Vista cost a lot more to develop than XP. Redmond spent over $1B developing and marketing Vista. It spent a lot less than that developing XP. Vista has been available for two years. XP has been around for about nine. In fact, it is still selling strong, in spite of the company’s attempts to take it off the market.

5. Fact – As mentioned earlier, an estimated two thirds of Vista users use their downgrade rights to migrate to XP. They are no longer running Vista, yet Microsoft still counts it as a Vista sale and not XP, since the Vista license was initially purchased.

6. Fact – Vista is priced higher than XP, which means that when a user downgrades from Vista to XP, they are actually paying MORE for XP than they would had they purchased a PC with XP instead of Vista.

Bottom line: Has Vista returned on its investment? No. Has XP? You bet, and more. Microsoft made that back years ago. given the facts, Microsoft lost money on its investment in Vista, but made its money back on XP years ago. This means that the actual cost of producing XP and bringing it to market is so minimal the margin on an XP sale is way beyond reasonable. So, while Vista could be considered a write-off in many respects, XP is like selling bottled tap water and is basically a cash cow for Microsoft.

“Microsoft will likely continue to be paid less for Windows 7 on a netbook than on a more powerful PC”?

7. Fact – A royalty OEM license, or any system builder license for a particular product or version on a netbook is the same license as the one on a laptop. Vista Whatever is Vista Whatever, Office Whatever is Office Whatever. It is the same license and basically costs the OEM the same whether it is attached to a netbook, laptop, desktop or tablet PC. It’s not the device itself that determines the price, but what the software the license is for.

Now, could Microsoft make an exception for a netbook? Of course. But in such a scenario Fact 1 applies.

8. We don’t know the pricing for Windows 7 yet, so we really can’t draw conclusions. However, Microsoft has said that Windows 7 would have at least as many versions as Windows Vista and would have similar price points.

Bottom line: With the facts given above, does it matter?

“There’s very little margin on a machine selling for $200 or $300, and so Microsoft simply can’t charge full freight for Windows on one.

Now, this one just floors me. Preston, the MSRP of a netbook has little to do with what Microsoft decides to charge for its software.

8. Fact – Microsoft doesn’t care what we sell the computer for, they aren’t selling the computer, they are selling the software that is bundled with it.

9. Fact – Microsoft may negotiate with the royalty OEMs, but at the end of the day they charge what they want and the OEM decides how low they can sell the netbook with the license installed and still make a dollar.

10. Fact – System builders generally pay in advance for licenses or blocks of them, whether they use them or not. If I buy 30 copies of Vista put ten licenses on ten PCs and installed Linux on the rest of them, Microsoft got their money. I’m just stuck with 20 licenses in inventory.

Bottom line: whether the manufacturer sells a netbook for $1 or $100, Microsoft still charges the system builder what they charge according to the OEM license agreement. Whether the vendor makes money on the resale is the vendor’s problem, not Microsoft’s.

Winner of Technibble Contest announced

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During the last six weeks had a contest on The Force Field podcast. The prize was a copy of The Computer Business Kit from Technibble , a collection of sample business forms and documents that are needed in the computer business. It contains maintenance contract samples, work order samples, engagement forms and more.

 The rules were simple.  All you had to do was send an e-mail with the number and the name of The Force Field episode which featured Bryce Whitty and Technibble on the show to  comments@theforcefield.net by January 30, 2009. All correct entries were entered in a drawing held today.

The answer was Episode 20 – Technibble .

The winner of the Technibble contest is Michael Murray of Bartow Onsite Computer Solutions . Congratulations, Michael!

For those who didn’t win, don’t despair.  I am planning more contests for the coming year with more chances to win great prizes. Listen to The Force Field podcast for  more information and your chance to win.

If you would like a copy of The Computer Business Kit, it can be purchased directly at www.technibble.com for $49.

Thanks to everyone who participated!

Does Obama really have a Blackberry? Does it really matter?

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For months I’ve noticed headlines about President Obama and his use of a mobile phone. At first I sort of just shrugged it off as it was just somewhat of a novelty, at least to some, that a president would carry around and use one. Millions of Americans have and use cell phones every day and it seems only natural that an American leader would do so as well. Even if past presidents never carried or used one, it was only a matter of time before one of them did. So what’s the big deal?

Apparently the media thinks it is one. In fact, they seem to be somewhat fixated on exactly what device Obama uses and worry over whether or not he plans to keep it.  If it was one article for filler or diversion that would be fine, but they’ve been harping on it for months now and it’s getting a little ridiculous.

Computerworld published an article yesterday over an argument as to whether or not Obama’s phone is actually a Blackberry and, if not, what it possibly could be. It’s not the first one they’ve published, either. There seems to be some real concern at Computerworld as to whether or not the President gets to keep his Blackberry, if it is indeed one.

It’s not just Computerworld. CNN, Wired, Gizmodo and other media outlets, both old and new, are hung up over Obama’s phone. They’re not playing around, either. They are making a serious issue out of it, or at least they are trying to.

Seriously, with all the real and important issues to cover, who cares what mobile device he uses? Apart from the obvious promotional aspects of the this trivia for the manufacturer of the device, whatever it really is, why is this worth anyone’s time or effort to worry about or even discuss?

Yes, I know and understand what the real concern is about. It isn’t all about fashion. It’s about security. There is some real concern about just how safe it is for a U.S. President to be using any old mobile phone to discuss things that could affect our national security. It is a real issue and I certainly understand that. But, let’s be real here. 

First, just how secure can you make any mobile device? If they can be secured they can also be hacked. As far as I know there is no wireless device that is completely secure and unhackable. If the communications are that classified and sensitive, the bottom line is that he really shouldn’t be using a commercially available, personal, consumer grade mobile device for those communications at all.

Then again, he is the President. If he wants to use a Blackberry, the NSA should find a way to make it happen so that he can.

Which brings us back to the celebrity aspect of it all.

This isn’t one article on the President and his phone. This speculative drivel has been going on for quite awhile now. It seems every day Computerworld or some other media outlet has published or recycled one more article attempting to spark some sort of debate over the president and his mobile communications device. That’s fine for a little diversion but to make it into some sort of major story or debacle is utterly ridiculous and a waste of web space on an otherwise informative site.

Are we all that shallow and hung up on the details of a popular figure, whether it be a corporate executive, pop star, sports icon, politician or some other celebrity that we expend our time and energy worrying about what mobile device he or she uses instead of what he or she may do with their status or, in the case of the President, what policies he may enact that could affect our world in the years to come?

Let the man carry a Blackberry, iPhone, Google Android phone, Samsung, Motorola or whatever device he wants to use. As long as they can secure it to NSA standards and make it work, frankly, I don’t care what brand it is and his personal preference of a phone is none of my business anyway. What I want to know is what he is doing while he is in office and how it will affect my family, my business and my life in the next four years. Cover those stories instead. That is what is really important. The rest of it is utter nonsense.

Vinyl record sales up, CD sales down and here’s why

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Computerworld reported today that vinyl record sales doubled in 2008 , setting a record for records that hasn’t been broken since the turn of the century. In contrast, CD sales are down. Way down. According to the article, the primary reasons for this are two-fold: vinyl records have better sound and the album art is in great demand.

This article went on for three pages quoting “industry observers” about how music enthusiasts are rediscovering vinyl records as a source of warmer sounds and cover art that “you can hold in your hands”. They tout how a new generation is discovering vinyl for the first time for the same reasons.

Sure, there is some validity to the two reasons given. The music does sound warmer, fuller, and richer, an argument many purists have given to justify their resistance to the more sterile sound of a digital recording on CD. This is also why a few recording studios still use older equipment to capture the sound.

No doubt album cover art is just that – art. I will admit I purchased an album or two in my day more for the cover than the music enclosed within.

However, nowhere in this article does anyone mention the most obvious reason for the uptick in sales of analog recordings.

Oh, come on now, seriously. I think everyone knows the REAL reason vinyl is making a comeback. It’s DRM free.

You can say what you will about the reasons CD sales are down and the big labels can believe what they want, but the primary reason CD music sales are dying is because of DRM. People pay through the nose for music these days and for all the money they pay they want to feel as though they really own them, not like they are standing at a Jukebox every time they want to hear their favorite tunes.

Which MP3 tunes sell better, those with DRM or those without? Apple knows this. Independent artists know this. The RIAA still doesn’t get it. They think everyone is a criminal. In reality it is the recording industry cartel who are the criminals, because they are trying to squeeze every penny they can from music fans in the name of the copyright and in so doing are choking themselves.

Until the recording industry figures out a way to lock down music on vinyl records sales will continue to rise.

If that does happen, don’t be surprised if the 8-track makes a comeback.

 

 

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A New Year’s Resolution: Diversify

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I was reading a post in the computerbusiness group on Yahoo! this morning by Brad at Aspen Computer Services called The Economy and Elephants. He was discussing Steve Kaplan’s book Bag the Elephant!: How to Win and Keep Big Customers. The “elephant” in this respect is the large client. The concept is that obtaining a couple of these big spending accounts will provide a steady revenue stream for your business, allowing you spend less on administrative overhead such as marketing to new clients, invoicing and collections.

In the past this was every small computer consultant’s dream: land a couple of big ones and your business is set. But times have changed.

The current situation with the economy has created uncertainty in the marketplace; even the largest elephants are no longer immune to its effects. Layoffs are occurring everywhere within large corporations and many companies in the enterprise are scaling back or cutting tech spending in 2009. If you rely on two or three large companies to keep yours profitable and you lose revenue from one, how would that impact your business? Unless you have alternate streams of revenue, it could be a serious blow to your bottom line.

This is where the old adage of “putting all of your eggs in one basket” rings true. While ‘bagging the elephant’ is always a great boost to your business, to rely solely on the elephants to make your hunt a success is risky business.

This is how a lot of investors lost their life savings. They relied solely on the stock market, their 401(k) or their pensions for their retirement nest egg instead of diversifying their savings in a number of different venues. When the stock market took a nosedive and the banking industry began to meltdown, many of them lost it all. Those who diversified were hurt as well, but they were able to take the blow.

In these uncertain economic times, we need to be ready for anything. Bagging the elephant won’t necessarily help much anymore. If the elephant is becoming lean it could be more trouble than its worth and if it is sick, lame or even dying, instead of an asset, it could even become a liability.

In his post, Brad considered this himself and suggested that diversification may be a better alternative. I agree.

We are currently running a four part episode of The Force Field podcast on The State of the IT Industry. While the discussion primarily centers on how the current economic situation is affecting IT service providers and how they think it will impact their businesses in the coming year, we do talk about how to deal with the prospect of a downturn in business.

In Episode 29 Patrick Palmer told us what he was doing to market his services to a broader client base. In Episode 30 Kris Crispell stressed the importance of keeping up with the latest technology with continuing education in IT. The guests made suggestions in each interview that I think are good ideas to consider, but the one thing they all mention is the possibility of diversifying.

There are many new and emerging technologies entering the marketplace and  this translates into new opportunities for staking a niche in the delivery and support of new products and services, and possibly creating a niche in new areas of IT.

Even if you are not particularly interested in entering these new arenas, it is still advisable to check them out for possibilities. The truth is that in this day and age, under current circumstances, sticking to business as usual may not carry you through the rough spots to come. Sure, the more clients you do have for a specific product or service the better, but as the economic climate changes and consumers react to it, their needs and priorities may change as well. If you are not prepared to meet them, they will find someone who can.

 

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The Force Field Premium Edition now available

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Ever since the first episode was released in the summer of 1996, the Force Field has been a labor of love for me. A lot of time and effort goes into the production of each show and almost as much time and effort goes into the promotion and distribution of it. Although it has been over two years since the initial launch of the show, the topics discussed in the early episodes are still discussed among IT service providers in forums and news groups today and are still relevant to current issues and trends in the industry. Even the very first shows are still downloaded and listened to frequently.

Of course, all of this costs money. I have been producing the show on an advertising model and although it does help, it really isn’t enough to justify the long hours that take me away from my family and provide for them. Realizing this, I decided to do two things.

 First, I am going to revise the format and distribution method of the show. Second, I am going to re-release the older shows to follow this new format.

Beginning February 2009 the show will be released in two versions. The first version will be as you know it now, with news, views, reviews and interviews in the same format as before. It will also remain FREE, supported by advertising.

The second version will be a premium edition with added content, longer segments and NO commercial advertising. It will be available in MP3 and higher quality audio formats for download at .99 cents per episode.

During the last two months I have been working on a project that launches today. Two months of  planning and six weeks in production and deployment have culminated in the release of The Force Field Podcast Premium Edition Volume 1 , a collection of the first six episodes of The Force Field podcast.

This premium edition includes:

 

  • Original archived News and Comment segment

 

  • three to six minutes of additional content in each episode

 

  • A brand new segment produced specifically for each episode

 

  • Remastered audio

 

  • No ads

 

The Premium Edition is available in mp3, Ogg Vorbis and WMA formats your listening pleasure. This episode is also available for purchase on CD mastered from the original show master (not compiled from mp3 release recordings).

There were some recorded phone calls and interviews in these first episodes that were not the best quality due to poor connections and limited resources for recording some telephony transmissions. However, the audio on these recordings were edited and remastered for acceptable quality under the circumstances.

One particular remastering that worked out well was with Episode 3 in which I talked with Dave in Alaska. I had a lot of trouble with the interview in post production due to the poor connection and when the show was originally released had to be pulled and re-released again because the  audio levels were so weak listeners simply couldn’t hear Dave. Even after several reworks it was still very weak. This always bothered me.

I now have tools to “fix it in the mix” somewhat and when I was working on the Premium Edition used the technology now at my disposal to give it another try. You can only do so much with bad audio but the call is much more audible and cleaner than it was before. You can now hear Dave without fiddling with the volume throughout the show. I was impressed with results.

To launch and distribute the new compilation we also launched The Force Field e-Store . The e-store was part of the original concept for the portal and a very basic version of the store was tied to CafePress for The Force Field Official T-Shirt, mugs and other gear but the full shop was never actually implemented. While it is still in beta and isn’t fully branded (I simply haven’t had the time) it is functional. I will tweak it in time.

The Force Field Premium Edition Volume 1 is now available. individual episode tracks can be purchased for .99 each per format and the complete six episode volume in mp3 format should be available within the next day or so for $4.99. You buy five and get one free in that deal.

The CDs should be available shortly and will be sold both individually and as a full 3 CD set. Each CD contains two episodes. The CDs are $4.99 each and the complete volume is only $9.95 plus $2 shipping within the continental US.

While the Premium Edition is not free, it will have value added content that is not present in the free, ad supported version. The Premium Edition is also commercial free. Did I remember to say that The Force Field Premium Edition has no ads? Yes, I did. So before I get lynched by my listeners let me tell everyone that The Force Field podcast is still free and it will be free. All I am doing is offering another version with extra toppings for just a little extra. Ninety nine cents isn’t much but it could help keep the lights on.

You can visit The Force Field Official e-Store here .

IT Marketing icon finally discovers Twitter

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Yesterday I received an e-mail from Robin Robins with some exciting news. She just discovered a new form of marketing in the world of web 2.0 that is surely to become big. Really big. So big, in fact, it could be THE next big thing in internet marketing.

Robin Robins discovered Twitter.

Now, if you don’t know who Robin Robins is, she is what some VARs and others in the IT Managed Services and consulting business would call “an IT marketing guru”. Robin is president of Technology Marketing Toolkit, Inc., which sells, of all things, The Technology Marketing Toolkit , a nicely structured and pricey system to help IT service providers market their IT businesses.

In the world of marketing for IT, Robin Robins has become a familiar name. Google her name up and you’ll find links for Robin and her company all over the page. Mention her name in a professional IT forum or newsgroup and most respondents will at least have heard the name, which is a good thing, since it proves she does know something about marketing. After all, if you can’t market yourself successfully with your own system, how can you sell it to anyone else?

Okay, now, that just made me go “hmm”.

I met Robin at an ASCII conference a few years ago. The day long event was an introduction to Managed Services and Robin conducted a seminar on, of course, marketing Managed Services. After the seminar I spoke to her about marketing for IT service providers and invited her on The Force Field to discuss the topic with listeners. (It was just after I launched the show and I wanted to expand on the topic covered in Episode 5 – Marketing Your Business ). She was very gracious but I never heard back from her after that so it is likely she probably forgot all about me and The Force Field as soon as we finished talking at the ASCII event.

She and her staff do bombard me with e-mails about her latest seminars and other events. I have responded to these e-mails on occasion at what is supposed to be the official e-mail address for responses, but they are never acknowledged. She may be a guru at marketing but she needs to work on those responses if she wants to market with Twitter.

I am not dissing Robin at all. There is value to what she has to offer, although what she charges for it is way out of my budget. She also recognizes the marketing potential of something when she sees it, as she said in her e-mail to me below:

 

“Hey Rick,

Have you heard of Twitter?

This is going to be BIG in the online web 2.0 marketing world. If you want to see what this is all about, check out my “tweet”:

http://twitter.com/home

To find me, type in my name…

“robinrobins”

While you’re there, set up a free account and join me!

Robin”

 

Now that Robin  has discovered this new form of communication and its potential as a marketing tool, Twitter has officially arrived.

Okay, I’m kidding.The truth is, it’s been here for awhile. A lot of companies use it already.   Small businesses like mine know it. Even a few large corporations that are normally slow on the uptake know it. The odd thing is that some of the marketing experts whose services people pay a lot of money for and who are supposed to stay on top of all this stuff are just now starting to figure it out. For a marketing guru that’s not good karma. 

Robin, where have you been? “This is going to be BIG”? It’s already big. I’ve considered you a bit of an IT marketing guru but as far as recognizing Twitter as a tool to market your business and network with clients, you’re late to the party.

Poor Microsoft, no soup for you

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I have to stop reading ComputerWorld. I used to get some relevant information from the articles. Sometimes they still make me go Hmm. But more and more they just make me frustrated with the whole business and, particularly, some of the players in it.

Take Microsoft, for instance. Please.

I ran across Shane O’Neill’s article tonight entitled Microsoft to handle managing three operating systems in ’09 . While he was essentially discussing the challenges Redmond faces in the next year trying to recoup market share with Windows 7 that was lost due to the problems with Windows Vista while at the same time trying to sweep Vista under the rug, Launch Vista and phase out Windows XP, all he really did was annoy me. Perhaps I took it the wrong way. It just came across as an attempt to make me feel sorry for Microsoft.

The title sounds like “managing” three operating systems is some big deal for Microsoft. Are we supposed to feel sympathy towards Microsoft here or something? So what? They “managed” multiple operating systems at one time before. Remember Win 95, Win 98 and NT4? 98, 2000 and XP? Hey, they just released 2008 Server. This is their business model. This is what they do. Where’s the beef?

It’s really only two operating systems anyway, if you want be technical. XP and Vista/Windows 7. Let’s cut the hype and be honest, Windows 7 IS Vista. You think Mojave was just an “experiment”? It was a marketing test.

If Microsoft can redress Vista and fool a survey group, then it shouldn’t be difficult to sell it to the public.

Windows 7 will be nothing more than Vista in a new outfit. Sure, they’ll tweak it a little here and there, but it will be just as bloated, just as clunky and just as expensive as Vista (and maybe more so). It may have a new face and new name but will still be Vista under the hood.

What Redmond really needs to do is completely rebuild Windows from the kernel up. They need to cut the fat, streamline processes and improve overall performance.

Just because computers today have the resources to run a huge piece of code doesn’t mean the resources should all be consumed by the operating system. On the contrary, the OS should have the smallest footprint possible in order to reserve those resources for all the applications and data.

Remember DOS? It was there because it had to be there to run the programs. It wasn’t THE reason for owning the computer. That was the first and only OS that Microsoft got right, because it was there to perform a function, not BE the whole show.

Years ago a computer purchase was made based on the customer’s requirements for applications needed to perform duties and the duties they needed to perform.

Today, forget the jobs and applications. Now we purchase a computer based on the needs of the operating system. There’s the problem.

So, if Microsoft is “managing” three operating systems in 2009, they get no sympathy from me. They’ve done it before, they can do it again. Poor Microsoft, no soup for you.

Is CE the way to go in 2009?

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Consumer Electronics, or CE, seems to be a hot area for field service technicians these days. The volume of warranty repair work for this niche, which includes the installation, maintenance and repair on items such as home theater, security systems and HDTV displays seems to be rising and, according to the OnForce Services MarketPlace Index for Q3 2008, released last month, this area pays some of the highest hourly rates in the industry.

This makes sense considering that the market for many CE products hasn’t peaked and is not likely to do so in the near term. Considering that new products in this category are constantly being introduced to the marketplace, that is no surprise. What is surprising is the fact that the service business in this area remains strong in spite of the downturn in the economy – at least for now.

Why? You would think that with the financial woes the consumer is facing such as bank failures, rising unemployment and tight credit that the little luxuries of life – the big flat screen TVs, wireless devices, security systems and the like – would be the first thing consumers would cut back on in favor of more basic necessities such as food, fuel, clothing and shelter.

Apparently, such is not the case. Why? Are we, as consumers, in a state of denial? Are we so addicted to technology that our priorities are misplaced? Or is it because we have become so dependent on technology that these products are no longer merely a luxury for diversion, but a necessity for daily living?

Perhaps the correct answer is D – all of the above.

The current recession is indeed somewhat depressing and no doubt there are many who try to ignore it to protect their interests and their sanity. Also, we have more than one generation that subscribes to the concept of materialism and craves the latest and greatest inventions on the market. Then there is the dependency factor. Some of it is sublimely market driven, but to some degree it can be forced upon us.

Take the HDTV displays, for instance. According to OnForce, service calls for HDTV LCD and plasma displays are up and are expected to remain steady through the next year. There are several reasons for this. First, these displays are now less expensive than they were even six months ago. As the prices drop, sales rise. Second, the market for these displays has not reached saturation. CRT displays are still being phased out and millions of households are yet to adopt flat panel displays.

Third, and most significant, is the government mandate that all TV broadcast signals go digital by February 17, 2009. After that, anyone who is still watching TV on an analog Cathode Ray Tube will be watching snow. We all know how much fun that is. So, if whether we want our MTV or to keep up with the local news and weather, we are basically being forced to upgrade. Isn’t government wonderful?

So, yes, there are a number of reasons why the consumer electronics market is still relatively stable and why CE installations, maintenance and repairs are hot. How long this will last is anybody’s guess. I would imagine the trend would continue at least until the current demand for items such as HDTV displays reach a tipping point.

Whatever the reasons, if you’re in the IT service business and things are a little slow, perhaps you should look into CE as another source of revenue, especially during these difficult economic times.

 

 

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Getting in the business? Gotta have a plan

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Last week we posted an announcement from Palo Alto software promoting a small business webinar. At the time I thought it something to pass along to anyone who would be interested. But a while ago I started thinking about it and it occurred to me that for some techs getting into the IT business, such a webinar, while promoting the company’s products, might actually be a good first step toward opening up shop.

The thought came as I glanced over my shoulder at the bookcase behind me in my office and my eyes fell on the retail box for Palo Alto’s Business Plan Pro 2005, which I purchased a few years ago to update the business plan for Savoia Computer. I had used an earlier version of Business Plan Pro and felt compelled to upgrade for some of the newer features. I had also prepared a business plan with BPP for a client as a paid consultant and wanted to be able to update his as well. I hadn’t used it for awhile and after I  built a new computer for myself last year I just never reinstalled it.

It isn’t that I didn’t want it on my system, it’s just that I had been thinking about getting out of the computer business to do something else and felt that I really didn’t need it anymore. But so far the other pursuits have not paid off as quickly and easily as I thought they would and I haven’t been as organized and focused as I should be in reaching those goals.

I watch a lot of techs get into the business without a business plan. When asked, they say that they know what they want to do and how they are going to get there. They say they aren’t planning to get a loan from a bank, so why go to the trouble of creating a business plan? Apparently they think that a business plan is something you create as a formality to impress a loan officer in order to convince them that your idea will work so they will lend you the money. It isn’t something you actually need to run a business.It is just part of the process of securing a loan.

Actually, that isn’t the purpose of a business plan at all. Sure, it’s needed for a loan and required reading for potential investors, but it isn’t something created solely for that purpose. It is a document bankers and investers refer to that is supposed to already be there – a living, working roadmap for building your business.

The business plan isn’t a marketing piece for investors, although it can be one. It is a blueprint for starting and managing your business. It is a tangible layout of your idea, a method of putting your ideas on paper to flesh them out and ensure that you have a clear vision of how you will proceed in your venture and what turns you expect it to take. It is a timetable for your business project and a roadmap of your goals for success. It isn’t something to doodle up on a restaurant napkin and toss out with the dinner tray, it is something to write down, reference and follow. It is your plan of action for success.

My client is a perfect example of someone who did not understand the purpose of having a business plan. I spent a considerable amount of time and effort preparing a business plan for the client only to have it come to naught. Sure, he paid me for doing it, but his sole purpose for the plan was to obtain a business loan. Yes, he got the loan and as soon as he did, the business plan was put away and forgotten.

If there was anyone who needed a business plan to follow, it was this guy. He is the type who tends to come up with an inspirational idea one day, implement it on day two, then decide it isn’t really what he wants to do on day three and by the end of the week has changed his mind completely, abandons it and comes up with something else.

He had some good ideas, some of them had great potential, but he wouldn’t really see them through.  He would start projects before he really thought them through and drop them before they had a chance to really develop. Needless to say his business isn’t doing very well at all. In fact, he still owes me money for another venture.

This is not to say that a business plan has to be followed to the letter. On the contrary, you need to be flexible and change your plan as you go along. As I said earlier, it is intended as a living, breathing document that changes and grows according to the needs of your business.

However, without a solid plan, you risk becoming like my client, forever struggling because you have no real sense of direction.

So, while attending a webinar on business planning isn’t mandatory, I highly recommend it.