Last week someone I deal with in the supply chain of IT equipment was annoyed with me. I had spoken to some finance people and explained that using entry level MacBook Pros was cheaper than buying Windows 7 machines. This was the reasoning:
- In the REAL WORLD we are held to accounting standards and these standards require us to own equipment for a fix amount of time. In my case- 5 years.
- Every year we pay a fee for Windows and other Windows-based software that is about 90USD per device.
- So over 5 years that is 450 USD in fees per device.
- The price difference in the laptops we were comparing to the Macbook Pro was about 300 USD, so they are 150USD more over 5 years.
- If we buy 100 that means 15,000 more over 5 years or 3000 a year more.
So from a financial stand-point, I wanted to show that there should be no objection to the purchase. Everyone you have to convince sees things from a different angle, and it takes more time to sell an accountant on pedagogy than it does to sell them on total price. So I went with the later.
Back to the story- so the supplier got wind of this and challenged me. They said, and I quote, “I can find an equivalent laptop for $550 USD and at that price the Macbook Pro is not cheaper over 5 years.” Now, I conceded that at the $550 USD price point this is true.
However, this is also simply not possible and nor would it be a good idea to invest in such a machine, if it does exist. To prove my point I became my own enemy, and played budgetary chess against myself. When I was done with my research I found 1 machine sold only in the USA ( as far as I could tell) that was equal in everyway to a Macbook Pro and it was about 575-600USD. This was well within the price point. On the surface it looked like a winner. User reviews aside, it would be an equal. It even came with the correct version of Windows 7 (99% of the laptops at this price point did not come with the correct version of Windows 7 which most vendors often ignore in their quotes).
This laptop lacked one simple characteristic that is not on any spec sheet or industry review blog. Nor will you find this information on the manufacturers website. In fact recognizing this FLAW is where being an IT professional and/or having experience with equipment acquisition separates one from the speculators, uneducated sales people, and hobbyists. The Flaw ? The platform is not and was not ever going to be sustained. Allow me to explain, and get some coffee this is going to take sometime.
What are Sustainable Platforms?
A sustainable platform is one that is supported by a manufacturer over a long period of time. It is updated under the same brand and model on a regular basis, and has third party industry support for repairs and parts. It is not a niche product or a product sold in only one country. It is a cornerstone product that a company needs to survive in the market.
Here are some examples:
|Company||Model/Series||Initial Production Year|
If you are an Apple fan you will know that Apple made laptops as far back as 1989. However, the current Intel Line is the focus of my research and rant.
If you want to compare Apple to Apples, then you have to avoid simply looking at specifications. It is essential that you also look at platforms that will be supported and sustained over the life of the accounting cycle.
This narrows the field. In fact the laptop I found for 575-600USD was only made by HP for 1 year. It was a niche product designed and produced for a small consumer base. Had I decided to buy into that product I would have suffered after year 3. This is when things start to break. I would have to hope that HP would supply parts and service. Cost of parts aside, the fact is that this type of service would be so niche that the units would need to go to a central HP repair center outside of my region.
Any economist will tell you that if you look at cycles related to cost, you have to include the opportunity cost. It is not reasonable to avoid calculating loss due to downtime. All equipment breaks, repairing it quickly and affordably must be part of the equation.
Buying a Saab in Kentucky
I am not an expert on the modern Saab automobile, but growing-up in Somerset, Kentucky I always loved learning about European Cars. My family owned a garage so I always had conversations with people who knew everything about cars. Back then most local experts agree that Saabs were great machines. Yet even the affluent in my hometown never seemed to buy into the brand. The reason? Take a look at this map..
Notice the closest service center is 56 miles (90.1 KM) away. This 56 miles is as the crow flies. It is not straight nor high speed. It is 1.5 hours minimum one way. So every time a Saab owner needs service, they need to budget 3 hours for the drive and maybe 2-3 hours for the service. If the service is free that means they are wasting about 6 hours on the service, at least 4 times a year or a total of 24 hours.
Now, assume that Saab is expensive and the income level of a normal Saab owner is over 100,00 USD a year. This means in a year working an average of 40 hours a week the Saab owner is wasting about 1000 USD of time. In addition it also means they are missing 24 hours of networking time, family time, etc. Owning a Saab in Somerset, Kentucky is just not very convenient and it costs 1000USD more a year. That is why this same buyer, making 100,000K a year, would likely buy a Lexus, Infinity, or Lincoln. The reason being the service centers are local and owning the car does not mean sacrificing opportunities and adding opportunity cost.
Buying equipment is buying equipment. If you buy a single laptop and the manufacturer stops supporting it after three years, it simply does not matter. However, if you buy 100-1000 laptops for a group of people who are depending on them, then not factoring in all the variables is simply irresponsible. The eventual loss in time due to repairs and service will adversely affect the entire community.
Why Do People Want Oranges Instead of Apples?
There are few reasons people do not dig deep enough to find a truly competitive and comparable products. The first is the sticker price. People get lost in the price with a list of features surrounding it.
Secondly, is that when doing a true comparison you need more than just a 15 minute hands-on session. This means taking time to budget for some experimentation or requiring vendors to supply demo units for 2-3 weeks. Owning something and using it diligently creates the type of data needed for decision making. Most people do the test-drive and then they are sold.
Finally, people responsible for procurement get caught up in the DEAL. They start-off looking for a good value, and end-up feeding off the bidding process. This is a similar behavior found in the ONLINE AUCTION JUNKIE. They deal so far down that the equipment is barebones and missing all the small things needed for it to be useful to the end-user. It happens to everyone at some point, and I can admit it happens to me. This is why I never decide on the same day that the offer is made- no matter what.
The Moral of the Story
Owning anything means owning a process and not just an item. We buy. We customize. We distribute. We manage. We repair. We recycle.
This process starts with money, and then will require an infusion of funds to keep it alive until the accounting cycle tells us we can kill it and start anew. Although the amount of the future cash infusion cannot be known to the dollar, it can be predicted if the products we are investing in are those which can be termed as SUSTAINABLE.
Buying into niche products, experimental designs, or products with a limited supply chain is not a great way to supply a large number of end-users; but it is a great way to fill closest with equipment displaying post-it notes that read, “Broken, Unrepairable, For Recycling”.