Prentice underlined the growing interdependence of technology, business and society and stressed that it is the collective impact of the eight trends that will further amplify their individual effects.  One of the eight trends is "Commoditization and Consumerization" where the increasing integration of technology into every day life, made possible by the proliferation of the PC and the Internet, lies at the heart of this trend.

Other trends include Tera-Architectures and Virtualization; New Development and Acquisition and Delivery Models; and Community and Collaboration.

So does these trends apply in the Philippines?  If we are talking about affordable broadband access and pervasive wireless connectivity, low cost PCs, and content availability, then maybe Yes - the trend somehow applies here in the Philippines.

But a recent development just last month about a computer shop closing down got me a little worried.  If PC penetration were growing, then why would a computer shop close down?  I heard that this company has been in the business for more 10 years, so that means they more or less know the ins and outs of the I.T. business.  I also heard that the owner left unpaid debts of around Sixty (60) million pesos. 

A few months ago, another computer shop closed down leaving bigger unpaid debts - more than a hundred million pesos.

Now there are a lot of reasons why a business will seize its operations.  If the economy is doing fine, then "mismanagement" is the culprit.  Business mismanagement is a collective term covering acts of waste and abuse. Extravagant, careless, or needless expenditure of funds or the consumption or misuse of property or resources, resulting from deficient practices, systems, controls, or decisions.

Ten (10) years ago, computer business is a lucrative business.  The margins are OK.  But today, I heard computer shops are earning less than Four (4) percent of their total sales.  So if a computer set costs Twenty Thousand pesos, the company will earn something like Eight hundred pesos.  Add the 12% Tax into it.  Either the company absorbs the additional 2% or it will be passed on to the consumer.  Either way, no one will benefit from this - the company will have lesser profit or the consumer needs to pay more.  Oh I forgot, government would benefit from the additional 2% tax, provided that government spends it for what its intended for.

Let us now consider the operating expenses of each company - rent (shop and warehouse), electric bills, manpower, advertisement, support, transportation, representation, office equipment and resources, delivery and more.  Now how many PCs should a company sell to be able to cover all these operating expenses.  Huge I should say. 

You still have competition to consider.  Of course, to be competitive in this business, you have to be able to sell your products at an affordable price - which means lesser profit but still provide quality service.  I remember during the Vira-mall days - the competition is about quality service.  Now that Gilmore is considered the mecca of computer retail business, the focus is now on pricing rather than service.  A few years back, I asked a computer owner what's there business secret to become successful - the answer: "you just have to have a lot of money, there's no secret really".  That was 3 to 4 years ago, so I am not sure if the same thing can be said now.

So if the competition now is centered on price, that equates to lesser profit but the operating expenses remains the same - unless the company decides to cut its expenses, which sometimes equates to service quality deterioration.  And if this happens, consumers will take the impact of this adjustment.  Now that the two shops I just mentioned closed down, who will provide the services of their clients?  Naturally, they will look for another shop, which means additional cost for them.

As you can see, the connection of government, manufacturer, distributor, dealers, retail shops and consumers is very evident here.  One false move and everyone suffers.  If we want the Philippines to be an I.T. superpower in Asia, we should evaluate our strategy - from government guidelines, companies cost-profit-expenses analysis and consumer satisfaction.  We should strike a balance somewhere somehow. 

My advice to government - collecting more taxes does not necessarily mean good economy for the country, sometimes it may even hurt businesses like the I.T. industry.  To businesses - selling more does not necessarily mean good business for you.  You should be able to collect on time and should rethink your pricing and service strategy.  Do not bring down your prices too low just to sell, it may not be enough to sustain your business - which may lead to your closure.

And lastly, to the consumer - be a wise buyer.  The lowest cost is not always the best, most of the time it's the worst.  Always remember that quality comes with a price. 

The two incidents I just mentioned does not reflect the entire Philippine I.T. industry, but it goes to show that there are problems that needed to be solved.  Procedures, policies and business strategies that need to be changed.  It can come from the government and it also can come from the I.T. industry.  Life goes on for the I.T. industry.  We all just have to watch each others back or else we will all end up losers here. 

People who want to get rich fall into temptation and a trap and into many foolish and harmful desires that plunge men into ruin and destruction. For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs. But you, man of God, flee from all this, and pursue righteousness, godliness, faith, love, endurance and gentleness. (NIV, 1 Timothy 6:9-11)

Am logging off.  Stay cool and God Bless us all!

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