CompuCom's service business provides its customers with network integration services, consulting, asset tracking, system configuration, product procurement, help desk services, and software management. The company's ClientLink subsidiary provides information technology solutions and software application development services to large businesses. CompuCom is majority owned by NYSE listed Safeguard Scientifics. The company operates in a highly competitive business and must compete with other system integrators, direct marketers, and desktop computer companies themselves for business. Increased competition in the industry led to a wave of consolidation as companies tried to increase their market share.
Pricing is a key area of competition in the industry.
CompuCom, a corporate reseller, must compete with direct marketers who are often able to provide their customers with more favorable rates. Pricing pressure, and increased competitiveness, led to a decline in profit margins for CMPC and for the industry as a whole in 1998. The sharp fall in the average price of computers during 1998 hurt CompuCom as it had to struggle to increase units shipped to make up for the lower prices. The company attributed the lower prices to heightened competition and expects the downward pricing pressure to continue, although at a slower pace. Operating expenses increased as a result of the company hiring more sales personnel.