Industry Overview: Computer Hardware

Posted by The Editors on December 3, 2012

Computer hardware, as we use the term, means central processing units (CPUs), including memory and storage-in other words, the machine on which you run an operating system and application software and to which you attach peripherals (keyboards, mice, printers, etc.). Also included in our definition are the servers, electronic security, and storage devices used in the data centers of many corporations.

Computer hardware and software are useless without each other. But working together they store, modify, and exchange data: words, pictures, and numbers-everything from correspondence to news photos, from drawings of jet aircraft to shipping manifests, from news releases to financial reports, from census statistics to stock quotes, from maps to email.

The competition among computer hardware companies is particularly intense. On the one hand, in the traditional PC market, companies' products have largely become commodified, with constant downward price pressure (and narrowing profit margins) being the result. On the other hand, there are markets for innovative new products, like tablet PCs and ultra-minimal desktops, that are not yet fully commodified. Here, the race is on to develop products at breakneck speed so you can be first to market. And if a company falters, it instantly becomes a target for larger companies looking to acquire new businesses. No doubt about it: Computer hardware is a cutthroat business.

There are definite geographic concentrations in the hardware industry despite its worldwide reach. It's often noted that high-tech companies are usually located near colleges and universities, and there's a good deal of truth to that, as many companies come out of research done at such institutions. Silicon Valley is near San Jose State, the University of California at Berkeley, and Stanford University. Route 128 is near the educational mecca of Cambridge, Massachusetts. Research Triangle in North Carolina and the area around Austin, Texas, are also good examples. Still, there are other places within North America where you'll find major hardware companies; for example, Gateway is in North Dakota.

Most major corporations in computer hardware reach across national borders. International sales normally account for a large percentage of most hardware companies' bottom lines, and India, Japan, China, and other Asian locations are hotbeds of hardware manufacture and design.

Smaller and Smaller
As advancing technology makes it cost-effective to make more complex chips in increasingly compact sizes, computer hardware makers can bring smaller and smaller devices to market. Think flat computer display screens. Think ever-thinner, ever-lighter laptop computers. And so on.

New Gaming Platforms
The big three in gaming hardware-Sony, Microsoft, and Nintendo-all either have recently launched their latest-generation gaming consoles or are planning their imminent release. This situation comes around every five years or so. The new consoles feature high-def graphics, speedy performance, and enhanced audio. Microsoft's Xbox 360, which was launched late in 2005, is at press time the most advanced console on the market. Sony's PS3 console, due out later in 2006 or early in 2007, is projected to be technically more advanced than the Xbox 360, but will cost significantly more. Nintendo's Wii console, also due out later in 2006, is so far taking a back seat to the Sony and Microsoft console offerings in terms of marketplace buzz.

Is it a DVD player? A stereo system? A photo scrapbook? A film editing station? A telephone? No, it's today's PC or laptop. These days, personal computers are able to do more and more different things. This means plenty of work for computer hardware professionals, as they make and market hardware products with new and varied capabilities. On the other hand, it also means new sources of competition-such as telecom companies making newfangled cell phones that allow users to watch videos and surf the Internet, and consumer electronics companies making personal entertainment systems and the likes.

In the hardware world as elsewhere in business, an increasing number of manufacturers are outsourcing product and component development and manufacturing overseas. Some companies are only doing top-level design in the United States, leaving production and more basic design tasks to cheaper labor in the Philippines, China, and elsewhere. What this means is that product managers and project heads may have to travel a lot more than in previous generations; it also means that many North America-based jobs are being lost. Increasingly, the task of American PC companies is to be expert in marketing and distribution while simply outsourcing manufacturing and portions of the design work. Still, observers point out that there should continue to be plenty of jobs in this sector in the U.S. for techies with top-notch skills.

Related to outsourcing and commodification, consolidation of the industry makes sense as computers become familiar products that require fewer very different design and manufacturing approaches. Let a few giant companies manufacture more units at lower cost while sharing marketing and distribution costs across a larger organization. Hewlett-Packard came home with Compaq for billions, and rumor has it that Gateway is a prime takeover target.

This cheap, open-source operating system software (read: Linux code is available for free on the Web) is moving into the mainstream. Pushed by the desire to lower costs, companies of many stripes have taken a new interest in Linux instead of more expensive operating systems such as Windows or Unix. At the same time, Intel has begun optimizing its chips for Linux in addition to Windows. The result: Hardware manufacturers such as IBM, Dell, and Hewlett-Packard have begun optimizing their PC and server products for Linux.

For job seekers, one way to segment the industry is by the type of computer hardware the company makes. Other differentiating factors include industry and application focus and sales-and-distribution methodology: mail order, Internet, or retail.

PCs (Desktop and Laptop)
The PC market is perhaps the most visible segment of the high-tech hardware market, with computers becoming more and more common at work, home, labs, and school. Established players here include Dell, Hewlett-Packard, and Apple, which make desktop and portable computers, many of which are powerful enough to replace high-end specialized workstations and to use for 3-D rendering, molecular modeling, computer-aided design (CAD), and video editing. Portable computers represent a growing overall share of the personal computer market.

A peripheral is usually understood to be an external product added to a computer, such as a new mouse, speakers, or memory stick (think manufacturers like Kensington, Logitech, and KeyTronic), all the way up to monitors, scanners, and printers. However, a peripheral can also be something added into a computer, such as a 3-D video card or an internal modem.

There are many types of servers-those big boxes that, among other things, are the glue that holds the Internet together. In addition to Web servers, which pass back and forth all of the HTML and image files that end up on your screen, there are local area network (LAN) servers, wide area network (WAN) servers, file servers, mail servers, database servers, and more. Every time two computers (termed "clients" in this context) connect over a network, a server is involved.

Opportunities in the computer hardware industry exist not only for engineers, computer scientists, and others with technical skills, but also for people with financial, marketing, sales, and product management backgrounds. Job seekers with technical expertise and a computer science degree attract the most opportunities and the sweetest compensation packages, whether they work as engineers, product managers, or in marketing. Opportunities in fields such as sales, customer support, and technical writing go to individuals with good people skills, a strong customer-service bias, and the ability to communicate complex ideas in plain English, respectively. If any of these sounds like you, give computer hardware a close look-but be prepared to get up to speed on the technical side.

The Bureau of Labor Statistics projects that the growth in the United States in jobs in this sector will drop between 2004 and 2014, compared to an increase in jobs overall of about 14 percent. You can thank the increasing automation of manufacturing processes, as well as the trend toward moving computer hardware-production jobs overseas, for the bleak outlook. Still, this is a big, growing industry, and there will always be business and techie jobs available in this sector for people at the top of their game.

A Worldwide Market
With technology reaching most of the way across the world, products are sold and talent is recruited from around the globe. As a result, a job in the software or hardware industry could include travel, either for months or for a day. And even if you don't go, you'll probably meet people who do and might invite you, if you're nice, for a visit.

The culture of the hardware industry tends to be more socially liberal than those of more traditional industries. That plus the above-mentioned worldwide market adds up to a workforce that is not only a good mix of male and female but is also composed of a wide variety of nationalities and colors.

Flex, Not Face, Time
The important thing is that the job gets done and done on time. When it gets worked on is not always management's top concern, so most high-tech companies offer options such as flex time, telecommuting, and the like.

Lost in the Shuffle
For many people, this will be their first serious job out of college or graduate school, and the switch from being a student to being just another worker in a corporation of hundreds of thousands may come as a shock. It's true that there may be more opportunities for both advancement and important work at a larger company, but along with that often comes the loss of a sense of place or perspective.

Taking Out a Contract
One way corporations are cutting their expenses is to move what used to be in-house jobs to contract positions-this means, on the one hand, that it might be easier to get into a desirable company as a contractor, but these positions often lack benefits and any sense of security. Also, the general trend means that companies are looking to get rid of people rather than hire.

Learning to Love CPU Cycles
Although we're going through an exciting time in terms of the way we use computers, the computer hardware industry is (and has always been) a highly quantitative field primarily concerned with an endless array of specifications. If you aren't fascinated with how these machines work, the work can seem rather dry-not just for technical staff, but also for marketing professionals, whose work partly involves translating specs and other technical data into more accessible language.

Junior Engineer
This entry-level position is the foot soldier of engineering. You're not so much coming up with ideas as implementing solutions developed by your superiors. Still, this is an important first rung to a more specialized, higher-paying engineering position. This job category can also include software programming, which involves writing the code built into the hardware system. Salary range: $40,000 to $55,000.

The middle ground between junior engineer and system architect, this position encompasses about 95 percent of the engineering workforce. Salary range: $55,000 to $85,000.

Systems Engineer
This position typically is filled by an engineer who combines technical expertise and strong people skills. A systems engineer, who must know the technology inside out, assists the sales staff in managing the relationship with the potential buyer. An SE is sometimes paired with an individual salesperson, sometimes with a team of salespeople. Salary range: $75,000 to $105,000.

Technical Support
The technical support staff fields the never-ending barrage of questions from businesses or consumers who recently purchased a product. With computer companies trying to use top-flight customer service to set themselves apart from the pack, tech-support positions are becoming increasingly important. A technical background helps in this position but is not a prerequisite for employment. Patience, and the ability to soothe the confused and frustrated, matter far more. Salary range: $25,000 to $65,000.

Technical Writer
This is an excellent way for those of you with non-tech backgrounds to break into the computer industry. A technical writer is responsible for translating technical concepts into readable prose for user manuals and other types of documentation. Salary range: $35,000 to $85,000.

Marketing Communications Associate
This position is suitable for those with strong writing, communication, and people skills. You'll help with events, public relations tasks, and press conferences and coordinate the publicity materials in various media including online and print. After gaining a few years' experience, you might move on to a sales or marketing associate position. Salary range: $30,000 to $65,000.

Product Manager
As a product manager, you're a key player in coming up with product ideas and working with engineers to make them a reality. This position requires some grasp of technical matters, the ability to build consensus and teamwork, and a knack for spotting-and anticipating-market trends. Most of these jobs require an MBA or comparable experience. Salary range: $80,000 to $130,000.

Financial Analyst
Financial analysis in computer hardware companies can take many forms: numerical analysis for production planning, industrial operations management, or general finance and accounting. In some cases, an analyst evaluates other companies as potential merger or acquisition targets. Depending on how the analyst position is defined, an MBA may be necessary. Salary range: $35,000 to $90,000.

The demands of this job vary widely depending on whether you sell PCs, large servers, or mainframes, and on which markets you're selling to. In some instances, significant travel is required; in others, comparatively little. You'll always have to learn, quickly and completely, your product's technical specifications, but training and support are usually provided. Salary range: $25,000 to $80,000 or more, depending on commissions.

Your job search in the computer hardware industry will vary widely depending on the type of technical expertise you have. There are basically two types of job seekers in high tech-technical people and everybody else (or, depending on whom you ask, marketing people and everybody else).

  • If you want to be a marketer, you'll have to present yourself as a quick thinker, a good communicator, and someone who has a true affinity for or interest in the technology world. An ability to translate technospeak into English may also be a real plus, depending on the position.
  • For technical people, employers want to see tangible related experience (or, for recent grads, a degree or relevant coursework in computer science or electrical engineering), strong analytical skills, and some affinity for the rigid structure of most computer companies.
  • Whatever avenue you take into the world of computer hardware, you'll do well to come across as someone who is excited and energized by change. Employers also look for self-starters with the ability to handle multiple tasks simultaneously. Despite the rigidity of computer hardware companies' management structures, you're not going to get a lot of handholding on the job. You'll need to impress upon your potential employer that you can take a project and run with it.