Services Bigger Part of "Equipment" Business

In the consumer electronics, small business technology or telecom infrastructure markets, services are becoming a more important part of the "product" being sold.

A case in point: Service providers paid $70 billion in service revenues in 2007 to providers of infrastrucure systems and products, according to Technology Business Research. That's an increase of abouteight percent over services spending in 2006.

Simply put, technology is sufficiently more complicated, and service providers are sufficiently less endowed with internal staff, that deployment, maintenance, consulting, integration and management services are essential.

The other trend is that suppliers are increasing their focus on services businesses to help insulate against slowing demand for hardware. Talk to Cisco channel partners if you doubt the trend. With margins and gross revenues for hardware slowing, services revenue picks up the slack.

At the same time, more traditional infomation technology specialists are taking advantage of the more software-intensive nature of network operations.