Two main types of companies operated in the computer
maintenance and repair industry: third-party maintenance
(TPM) companies, which performed service contracts
on equipment from various manufacturers; and original
equipment manufacturers (OEM), which both manufactured
and serviced computers and peripheral equipment.
This distinction was less pronounced in reality,
however, because OEMs often subcontracted their
service agreements to either affiliated or unaffiliated
TPM firms. The computer maintenance and repair
industry grew dramatically in the 1980s and 1990s
as computer sales skyrocketed. From total shipments
of less than 2,000 units and $600 million in 1960,
the computer industry topped 900,000 units and
$16 billion by 1980, and reached 7 million units
and $44 billion by 1990. By 2003, this number
was expected to double to more than 15 million
units annually. This rapid growth, along with
a shift from mainframes to PCs, introduced opportunities
for small, independent TPM companies to compete
against the large OEMs. Nonetheless, in the late
1990s, OEM companies were reported to hold as
much as 80 percent of the maintenance and repair
market in some categories, such as high-end system
and mainframe services. Leading OEM firms included
many of the nation's best-known technology companies,
such as IBM Corp., Sun Microsystems, Compaq, Electronic
Data Systems, and AT&T Corp. While the majority
of TPM firms were smaller local and regional providers,
several service firms operated on the national
level, including the Cerplex Group, ENTEX Information
Services Inc., and Inacom Corp.
The U.S. Census Bureau estimated
revenues specific to this industry at $15.4
billion by the late 1990s, up more than 50 percent
from $7 billion in 1990. The total U.S. market
for services performed by this industry was
estimated at much more—$62 billion for
1998. Less than one-quarter of this market,
however, was served by firms primarily engaged
in computer maintenance and repair. Instead,
the bulk of maintenance and repair revenues
were generated by larger, diversified companies
like IBM and AT&T that had a presence in
many industries. The New York Times reported
that the lucrative PC segment of the computer
repair market was worth $28 billion alone in
1995, based on a Dataquest study, and was expected
to grow at 14 percent annually in the late 1990s.
Within the PC segment, the home PC repair market
was considered an emerging—but largely
untapped, according to Dataquest—customer
base for this traditionally business-focused
service industry. As demand for computer maintenance
and repair surged in the 1980s and 1990s, TPM
companies developed new strategies to address
the lower cost and increased reliability of
computer hardware. First, TPM firms reduced
repair time by replacing components instead
of repairing them. Next, they developed remote
diagnostic software to minimize the need for
costly on-site service. Finally, they expanded
their services to include installation and software
maintenance, including virus protection, Internet
connectivity, and site-authoring services by
the late 1990s.
OEMs also changed their strategies
as computers became increasingly similar. They
began to differentiate their products by enhancing
their maintenance services. Many even started
supporting competitors' equipment. As the industry
entered the late 1990s, several discount or
"clone" manufacturers reduced their
support and forced customers to handle their
own maintenance. This provided a new opportunity
for TPM firms, which offered disaster-recovery
services and started supporting software and
multimedia to satisfy more demanding customers.
At the same time, corporate emphasis on outsourcing—the
practice of hiring external firms to perform
specialized functions formerly done in-house—translated
into new business for TPM providers. Cerplex,
for example, actively branded itself as an outsourcing
solution. "The increasing complexity of
software and interactive multimedia made hardware
troubleshooting a more complex task that required
a different kind of TPM," said David Glascock,
president of the North American Computer Service
Association (NACSA). As computer and communication
technologies merged in the late 1990s, Glascock
believed that TPM companies would expand their
services to include supporting high-definition
computer displays and wireless communication
devices.
Growth in the industry is often
dependent upon external trends and events, such
as new software releases and technological change.
The release of Microsoft's Windows 95 operating
system, for example, led to increased demand
for system maintenance—particularly upgrades—as
home and corporate users coped with new demands
on memory and other system resources. Similarly,
one-time events, such as converting older systems
to process calendar dates past the year 1999,
created new business for the short term.
Employees in the computer service
industry generally possessed a high school degree
and technical training in computer science,
electronics, and circuitry. Training programs
were offered by computer manufacturers, TPM
companies, and vocational/technical schools.
Some study programs took 3-6 months, but formal
programs required 1-2 years. Continuous education
was required to keep up with fast-paced technology
improvements. Job prospects for computer equipment
servicers were excellent. According to the Bureau
of Labor Statistics, in the late 1990s there
were more than 80,000 workers in this industry.
This number represented an increase of 67 percent
since 1995 and was projected to increase steadily.
Overall, the number of data-processing machine
repairers was anticipated to rise another 36
percent by 2006. In the late 1990s, the median
annual earnings for computer repairers was just
over $32,000. The highest earners made $50,000
or more a year.
In the opening years of the new
millennium, the mostly small firms in the computer
repair business may be facing competition from
a brand new quarter. Wal-Mart Stores, which
has given mom-and-pop retailers around the country
a real run for their money, in the fall of 1999,
launched a test to see whether it could interest
its customers in getting their computers repaired
at the same place they shop for clothing and
toiletries. The company contracted with Computer
Doctor to open computer repair shops inside
ten of the giant retailer's Midwest Supercenters.
Computer Doctor, headquartered in Aberdeen,
South Dakota, opened its first Wal-Mart repair
shop on Sept. 15, 1999, in Ankeny, Iowa. If
the experiment proves successful, Wal-Mart is
likely to expand the service to all of its Supercenters,
which numbered more than 600 in late 1999. Another
novel experiment in computer repair was launched
in the Cincinnati area in the latter half of
the 1990s. Entrepreneur Steve Pollak's mobile
computer repair service, PC On Call, started
with a single service van but by early 1999
had expanded to 16 vehicles and 30 employees.
PC On Call had also set up shop in Columbus,
Ohio, and had its sights on Dayton as well.
According to Paul Cashen, the company's chief
executive, PC On Call was planning to expand
into up to 10 new markets by the end of 2000
and hoped eventually to serve 40 cities nationwide.
Cashen said the company usually responds within
24 hours to service calls, of which it receives
between 100 and 150 daily.