Computer franchiser expands in shrinking economy Companies can rent rather than buy

September 14, 1991|By Leslie Cauley

These may be gloomy times for the computer industry, but not for Personal Computer Rentals Inc., a national franchiser that is making a name for itself by catering to trade shows, conventions and businesses in need of a short-term PC-fix.

While other retailers look for ways to curtail costs and ride out the recession, Cranbury, N.J.-based PCR is laying plans to expand its national operation over the next three years -- at a rate of one new franchise a month.

At that rate, the company will have 95 outlets open in major markets nationwide by 1994, said Martin Alderoty, PCR TTC treasurer. The firm currently has 63 stores, including one in downtown Baltimore, making it the largest computer rental franchiser in the nation.

PCR allows one store per market, Mr. Alderoty said, a strategy aimed at making sure stores don't cannibalize each other's profits, which are shared with the Cranbury corporate home office.

The formula seems to be working.

PCR, which had a net loss of $125,312 on revenues of $1.7 million in 1989, earned $105,000 on revenues of $2.8 million in 1990. Projected income in 1991 is $400,000 on revenues of $3.9 million.

Mr. Alderoty reasons that companies are putting off major capital investments until sunnier financial times return, opting to rent, not buy, computer equipment to take care of short-term business needs. And he says economic tough times haven't hurt PCR's business from trade shows and conventions, the bread-and-butter of some PCR franchises.

"Renting computers for immediate needs is probably the key to the whole rental market," Mr. Alderoty said. "You get what you need when you need it for only the specific time that you need it. It's much more economically efficient than buying."

Helping PCR along is a change in attitude among the big computer makers.

International Business Machines Corp., for example, formerly looked down on the rental business. But given the dearth of computer sales these days, IBM and others are using any trick they can to get products into the hands of users, said Dan Ness, a researcher with Computer Intelligence, a La Jolla, Calif.-based research firm that tracks the computer market.

"When they knew they could stick you for the full price, the attitude was, 'Why rent?' " Mr. Ness said. "You still get pockets of people who still believe that, but there has been a lot of change in policy and attitude" among the big computer-makers.

PCR has a strategic alliance with IBM and is working on one with Apple, Mr. Alderoty said. A deal with Compaq is also said to be in the works.

Area computer consultants say they rarely recommend renting over buying for long-term computer needs. But they concede there are times when it makes more economical sense to rent than buy.

"You have to be in some special economic situation to rent," said Thomas Piwowar of Thomas J. Piwowar & Associates, a Washington-based computer consultancy. "I only recommend it as a last resort."

"Sometimes it's just cheaper to rent the high-powered equipment than it is to go out and buy," said David F. Murphy, president of Damar Group Ltd., a Baltimore-based computer consultancy.

Locally, PCR caters mostly to convention and trade show business, associations and companies in need of short-term rentals, said Randall Kiefer, co-owner of PCR Greater Baltimore on Maryland Avenue.

Like other PCR franchises, the Baltimore store rents by the day, week or month. Fees start at about $99 a month for a basic computer setup ($40 more for a printer), to $650 or more for a powerful desktop setup that uses the newest and fastest chip. A laser printer, of which several brands are available, can be rented for about $200 a month.

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