What they do is rather than have 200 different computers throughout their business they have maybe one, at most three different models in use at any time. These computers are essentially identical and they have – sitting on the IT guys desk – three exact clones. When new software arrives (say for example a Microsoft update) the software is thoroughly tested on the three clone computers to make sure it produces no glitches. If the software (or hardware upgrade for that matter) causes no problems they roll it out across the network with all the computers being changed when staff power them up in the morning. The system works because the IT specialist controls “what is in the box”. By controlling what is in the box (often restricting the right of staff to load their own software) they get Apple levels of reliability but the ability to buy Wintel priced hardware. They do however pay a price on hardware – which is that they often get tied to exact specifications for computers. If their business expands they can either (a) get a new computer specification in or (b) order more computers under the old specification. When they do the latter (which would be most the time) the hardware maker has leverage – and selling old computers to business at old prices can be surprisingly profitable. [After computers should fall in cost by about a percent per week – so selling an old computer at an old price is a massive winner for the vendor... and is an important part of Hewlett Packard’s business.] Big business – through standardization – are – in this view – trying to emulate the advantage of being Apple.
Bronte Capital
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