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Technology Stocks : All About Sun Microsystems
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To: cfimx who wrote (62964)5/1/2005 12:36:24 PM
From: Charles Tutt  Read Replies (1) of 64865
 
I think the service business is much overrated. The amount of money a service business can make is ultimately limited by the amount of manpower one can muster and the hourly rates it can draw. Look at margins in the "service sector" for an idea where that eventually leads.

Generally the value of a service business is as an adjunct to a product business, except possibly in regulated situations where credentials are controlled.

IBM's success with "service business" is a result not of building such a business, but of converting in-house infrastructure (with associated unclear mission and hence apparent and sometimes real inefficiency) into something billable -- it's not certain that the client gets an overall improvement in many cases other than clarity/transparency of cost. If it were not for empire building in IT organizations, I doubt IBM would do as well with it.

JMHO.

Charles Tutt (SM)
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