OnForce Says New Equipment Service Work Orders On The Rise

"The big thing for me is Q3 was all about stabilization," Cannone said. "I think customers in the summer take down their networks to do that type of [network upgrade] work. It's nowhere near [the increase of] Q3 of 2008, but some companies had to do it. In the first three weeks of October, we're also seeing an uptick of project installation work. VARs are getting projects and doing technology refreshes. That's a good sign."

OnForce, an online marketplace where VARs can request and bid on services opportunities, tracks the market in its quarterly OnForce Services Marketplace Index (OSMI). New equipment installation work was up 4 percent in the quarter, according to OnForce.

In the third quarter, OnForce tracked a 2 percent decrease in break-fix work, possibly due to the bump in new equipment opportunities. Break/fix services opportunities had been a bright spot for VARs during the last few quarters after hardware sales declined due to the recession, Cannone said.

"A lot of VARs have struggled with no hardware business. If a VAR is not in the services business, he's struggling. Those in the warranty and break/fix [business] are doing OK. It keeps them entangled with their customer base."

Among the top categories tracked by OnForce, PC/desktop work accounted for 30 percent of work orders, down from 32 percent in the second quarter. TV/video installations accounted for 16 percent of opportunities, down from 19 percent in the second quarter. Networking work orders increased to 15 percent of the total from 13 percent. Printer services opportunities were flat at 9 percent of total services opportunities in OnForce's marketplace.

Average work order pricing has stabilized over the last two quarters, as the average work order in the third quarter was $115, roughly the same for the second quarter. In the first quarter, the average work order was about $120.

Wiring and cabling was the highest-priced work order in the third quarter at $229.52 per work order, while TV/video home theater work was the least expensive at $100.24 per work order.

South Dakota, North Dakota and Vermont remained the three most expensive states for work orders for the second straight quarter. West Virginia and Kentucky were the cheapest states, based on the price of the average work order.

Cannone was enthusiastic about the stabilization of the average work order cost.

"In Q1 and Q2 there was a lot of competition. VARs were competing for less work. Pricing was dropping down and service techs responded," he said.

But Cannone also believes current pricing levels will become the standard going forward, and that VARs aren't likely to see the rates they once enjoyed for some time.

"We've hit the bottom and stabilized, but new thresholds have been set. You have willing service techs to do the work at that [lower] price now. What heals everything is more demand. As installations and infrastructure work increases, pricing will be restored somewhat, but I don't think we'll see a major spike in pricing," he said.