Custom Systems

After all, he used his retirement savings last year to buy a small system builder business, thrusting himself head-first into one of the most competitive technology markets around. But Lowe couldn't be happier.

Although margins were flat during his first couple of quarters, the president of TD Computer Technologies in Fort Myers, Fla., is not worried. Lowe is transitioning the company to build entire solutions around disaster recovery and security, with services wrapped around his hardware sales. In other words, he's finding new ways to be profitable within a traditional business model.

"Two years ago, with all the hurricanes we had, people were caught unaware. It took a hit on the business climate here. People now are recovering from that. There's a lot of services around disaster recovery, remote network monitoring," Lowe said. "I wouldn't have bought a system builder just to be a system builder."

It's a lesson other custom-system builders are learning, too: To increase profitability, you have to find a new way to create business.

For John Gouker, CEO of Workhorse PC, a McKinney, Texas-based system builder, the custom-system solution approach means bringing an ultrasmall-form-factor desktop to market. For Brian Piatt, manager of Startec Computer, Sterling Heights, Mich., it means finding more cost-effective components to sell into an economically depressed regional market.

According to the 2007 CRN Profitability Study, it should have been a tough year for system builders. The average increase in top-line sales of custom systems was 8.4 percent, the second lowest increase among the 13 technology solutions areas surveyed.

Next: Gauging the profitability numbers for custom systems