Gadget boom boosts Service Plus' market base
- 04 June, 2008 22:00
Few people in the industry would regard the increased reliability of today’s technology products as anything but positive.
However, Sam Williams could be forgiven for being slightly less enthusiastic about more reliable IT products than most of us.
His company Auckland-based Service Plus depends on repairing faulty or damaged computer products, particularly laptops.
Nevertheless, company owner and director Williams believes better quality products are good for the industry as a whole. “Improved reliability has negatively affected us, but we have been one of the loudest voices pushing for higher reliability because it doesn’t actually help anybody if products are poor quality,” he says.
“Yes, we got more business out of it, but if you’re dealing with customers who’ve had their computer in four times for the same fault, that’s just unacceptable.”
Williams says for the first time since Service Plus opened in 1994, there are now very few major recurrent or known issues with computer products. “It is the first era where there haven’t been one or two brands or models that had a specific issue that has regularly recurred. In the past there have been very high failure rates on specific components.”
Improved reliability is not the only trend that has put pressure on the business. Although it sells no products, Service Plus has not been immune from the impact of falling hardware prices, which make certain products cheaper to replace than repair, says Williams.
“The last year has been very tough – things really came to a crunch for us last year. Our margins were decreasing substantially and that was mainly due to the flow-on effect of the reduced price of computers. When you can buy a new computer for $1000, you are not going to pay $1500 or even $800 to put a new screen in.”
But Williams sees the opportunities rather than the challenges in these trends.
“We see this as an opportunity rather than a negative. It is certainly putting pressure on us but we have no doubt that we will get through it.”
Service Plus was originally set up as the service division of laptop reseller Portables Plus, servicing mainly Toshiba notebooks.
Williams joined the fledgling unit as a technician and before long was running it. “I pretty much got swept up in running the operation – even though I just wanted to be a technician.”
The department was always run as its own profit centre, separate from Portables Plus. “That gave me the responsibility and also the freedom to focus on growing that side of things,” says Williams.
In 1998 the unit was spun off as a separate registered company, with Williams becoming a shareholder, although in effect it still operated as the service department of Portables Plus.
Williams eventually bought the company outright in 2004, from which point it no longer had any ties with Portables Plus. “That gave us the opportunity to identify ourselves as an independent service agent no longer tied-in exclusively with Portables Plus. That was critical for us at that stage and we put a lot of effort into building our business independently of Portables Plus.”
The company then focussed on attracting new reseller and retail customers and taking on new vendors to act as their service agent.
Today Service Plus holds a number of agencies including Toshiba, HP, Sony and Apple, and is actively looking to expand this tally. It no longer just services laptops, but also desktop PCs, including Apple Macs, as well as monitors, handheld devices and even iPods.
“The business is very focused on being a top quality, independent service agent for multiple brands. Our target market is resellers and retailers,” says Williams.
The same pressures that have impacted adversely on Service Plus are meanwhile helping it win more business, as resellers who traditionally had service departments are increasingly abandoning these operations, says Williams.
“Over the past year we’ve heard more from resellers who found they can’t justify the service departments anymore on a profit and loss basis. It is actually a drain on their finances and a distraction.”
Poorly performing service departments can also have a negative impact on sales efforts, adds Williams.
“Basically their service is letting down their sales. They’re missing out on opportunities because their service isn’t good enough. Our systems and customer service are excellent. We can enhance their business and cut their costs. They can vastly improve their service quality by dealing with us.”
The only way to operate a service business is to run it on a volume basis, as this is the only way to combat decreased margins, says Williams.
“This has become strikingly obvious to us – if you’re not doing volumes you can’t exist.”
To boost volumes, Service Plus plans to become the preferred service agent for more resellers and more retailers, says Williams.
“The biggest opportunity for growth for us is to get more of the market. And making sure they use us for the entire range of services we provide.”
Taking on new products in new industries such as home technology is another opportunity, says Williams.
“We certainly see home technology as relevant to us. It is becoming more IT-based – that means it is starting to come into our space.”
The company’s Apple agency meanwhile extends its reach into non-traditional, yet highly popular, computer products such as the iPod and potentially the iPhone.
“The idea of the computer is changing as well – an iPhone is a computer, an iPod is a computer. That is a growing market for us and we are looking forward to the introduction of the iPhone into New Zealand.”
Service Plus has 20 staff including two in Christchurch, with all its customer service and help desk operations centralised in Auckland. It plans to extend to other centres in the near future, says Williams.