Flogging hardware by subscription is a marketing lie

Computacenter CEO Mike Norris (pictured) has told the cameras at the Canalys Forum 2020 virtual conference that subscription based hardware sales were a marketing lie.

“If I was a vendor, I would want a consumption model. I see absolute logic in why I would want to sell as-a-service and not sell capital goods. Vendors have to be careful because I don’t think customers want to buy that way if they can avoid it.”

Norris claimed some vendors were “fixated” on consumption models.

He said that Computacenter has spent £1.25 million on solar panels that cover the roof of its Hatfield distribution centre, generating £250,000 worth of electricity every year.

“If you look at the multiples of that business, that is super sensible. That is using my capex to improve my opex… any chief executive, any finance director, would use its capital to improve its opex because that’s what improves the share price. That’s what takes the business forward.”

However the rest of the industry wants to reduce its capex and  turn it into opex because the tech industry has grown inordinately more powerful “and the marketing machine is so good” that the message about shifting to consumption-based models is ubiquitous.

“So we’re out there, punting, you know, ‘capex to opex, capex to opex, capex to opex’. It is a lie, it is a fallacy, it is just not what people really want.”

He added: “The marketing budgets, the marketing machines of our vendors that want to sell consumer models are brainwashing the industry and brainwashing their sales forces.”