TechWeb

IT Buyers Gain PC Pricing Tool

Jul 27, 2006 (11:07 AM EDT)

Read the Original Article at http://www.informationweek.com/news/showArticle.jhtml?articleID=191504208


Research firm iSuppli Corp. on Thursday launched a Web-based tool that lets buyers determine the best price on PCs before they sign the deal with suppliers.

The Compute Systems Cost Analyzer (CSCA) tool provides cost estimates for PCs and the components inside, and forecasts pricing changes for up to two years. The tool pulls pricing and statistical information from iSuppli's database, which analysts will update quarterly.

The tool aims to put buyers in a better position to negotiate pricing with suppliers by allowing IT procurement specialists to configure specifications of notebooks or desktop PCs in advance, choosing specific processors, memory, optical drive, screen size and more.

"Most IT buyers don't have the time to analyze the PC market before they buy like we do," said Matthew Wilkins, senior analyst for compute platforms research at iSuppli. "Data for microprocessors, storage and DRAM come directly from analysts covering the market segment, for example."

iSuppli analysts feed a central database with information, such as raw materials and manufacturing costs, for semiconductors, capacitors, microprocessors and other parts used to build computers. The database calculates pricing and the best time for the buyer to negotiate the bid based on the analysts' analysis.

The tool can provide IT buyers insight into pricing when Intel Corp. launches a new processor or chipset, or when the industry moves to a high-capability disc drive or makes a full transition to widescreen computer monitors, Wilkins said.

The Internet promised to make markets more efficient. "Costing tools provide transparency in pricing," said Frank Robertazzi, vice present of worldwide sales and business development at CML-Innovative Technologies Inc. (Chicago Miniature Lamp). "Vendors can no longer hide behind inefficiencies in the market place, such as regional price differences like for computers in New York might be different than in Asia or California."

IT procurement departments face uncertainties as they try to negotiate with PC suppliers for the best price and contract terms. Change in product roadmap, technology and disconnects between price and actual PC cost for parts can distort pricing.

The CSCA tool can help IT buyers determine if the price paid for PCs correlates with component cost trends. A badly timed and poorly executed IT procurement deal can mean paying too much for hardware. It also could prevent a company from getting price cuts during the term of the contract, or failure to take advantage of technology as it changes.

Fully aware of hidden challenges buyers face, at least one buyer remains a skeptic. "The industry moves so rapidly that I think it's difficult to find a tool like this that actually works," said Daniel Peloquin, who purchased integrated circuits (ICs) for Cray Inc. prior to retirement. "It would make more sense to use a tool like this if you were making deals to buy a commodity in large quantities, but when you're dealing with front-end technology the prices move too fast."