Industry Information:
Computer Submarket of the Electronics Devices Market
A growing World Wide Electronics Industry is not expected to slow down.
"Now that the market is open to international competition, a pent-up demand has Brazilians buying computers in record-breaking numbers. The vigorous market place - the installed base of PCs was put at 2.8 million units in 1995 - demands everything from a simple hard-disk upgrade to entire multimedia systems; from home printers to high-end printing systems; and from multibranch banking automation systems to wide-area networks". (Canadian distribution channels Journal: Evans Report Vol: 24 Iss: 6 p. 1-15 1996 Canada)
Distributors of computers and related products generated $3.9 billion in Canada in 1995. This year revenues will increase 12% to $4.4 billion. While peripherals represented the largest product category in terms of total sales, growth will be the least impressive among the five major categories over the next several years. From a customer standpoint, mass merchandisers are a mixed blessing. Fast becoming a major customer, mass outlets also buy from vendors, bypassing distribution.
Business and government use of computers has grown every year since 1985 (US Survey, 1990, on time spent using a computer at work by US Health and Safety in the Workplace Commission) such that it is now impossible to imagine anyone running an office or any form of business without computer assistance. With the computer has come a number of electronic peripherals, all of which are equally expensive to replace and necessary for work. As an example: Safeware Insurance reported 265,000 laptops ( value of $804M ) stolen in 1996. This was an increase by 27% from 1995. In 1996, 146,000 desktop computers (value of $66M) were stolen compared to the 134,000 of 1995.
- The current computer theft problem costs more than $1.5 billion per year (Source: Safeware)
- 90% of stolen computer equipment is never recovered.( Source: FBI)
As the number of computer and peripherals thefts has grown, various deterrents have been tried. Here follows a fairly common example of how a distribution company attempted to deal with repeated thefts: The distribution facility controlled all inventory and sales with a network of PCs which, right after an upgrade in hardware and software, were removed via the loading bay on Sunday night. The next step was to replace the equipment and lost data and cable the machines to the desks using a steel cable. The following month, all the computers and peripherals were again stolen, though it probably took an extra 15 minutes per machine. At this point the insurance policy no longer covered the losses. The next attempt at security was to hire a guard who dutifully patrolled the facilities. One evening, while he was at one end of the complex, all the computers were removed from the facility through the other end. The company had spent close to $150,000 in three months and has since returned to steel cables with video monitoring services.
The cost components of stolen computers and hardware have nine aspects:- The price of the replacement hardware.
- The price of replacing software.
- The cost of recreating data (if it is possible at all. And, who ever keeps perfect backups?).
- The cost of lost production time or instruction time.
- The loss of customer good will (lost faxes, delayed correspondence or billings, problems answering questions and accessing data).
- The cost of reporting and investigating theft, filing police reports and insurance claims.
- The cost of increased insurance.
- The cost of processing and order for replacements, cutting a check, etc.
- If a thief is ever caught (!), the cost of time involved in prosecution.
Many organisations effectively self-insure for common equipment losses, so a theft may mean not being able to replace equipment at all, at least without effecting department or program budgets.
Security solutions to the loss due to theft are progressively more expensive and as much as a sixth of the growth in the [$xx] billion computing industry may be attributed to replacement of the stolen and damaged equipment.