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Tuesday, February 14, 2006

Systems Integrators News: Hardware Sales to Federal Agencies Lessen

For the first time in a decade, government spending on technology outside of that used for defense purposes dropped. Sources credit this decrease to the fact that many agencies are now leasing much of their hardware instead of buying it.

IT products such as laptops and servers sold to civilian federal offices dropped two percent in 2005 to $16.5 billion from $16.8 billion in 2004, according to INPUT, an organization that helps many businesses find U.S. government contracts. If the government continues this pattern of leasing, it could negatively affect hardware suppliers, since the U.S. government is one of the biggest buyers of IT products and services.

The downturn for the IT industry can be blamed completely on the drop in equipment spending. This means that hardware companies are losing a large amount of the business they used to get from service companies. This decrease affected a type of contract that is referred to as General Service Administration (GSA) Schedule 70.

The transformation of this part of the industry happens when hardware items are attached to services contracts. Equipment is leased from a specific services provider that maintains all computers and servers and replaces them with alternate equipment if any break down permanently. The idea behind this is that the market is changing in favor of those that provide the best and most affordable IT solutions, which causes price wars and other difficult situations for many companies.

Computer makers have seen this trend happening outside of government as well, and have agreed that they will just have to settle for the changes and do what they can to provide innovative solutions to help maintain their business and provide the best products and services to their customers.

Blogged By: Computer Consulting Kit