In the services business, it's starting to look like d¿j¿ vu all over again. Back when IBM ( IBM) and H-P ( HPQ) realized PCs were turning into so many commodity boxes, they seized on services as one of the next growth engines. Big Blue, an early evangelist, now pulls in more than half of its sales from the market; H-P, which lags behind, still drew a sizeable 17% of revenues from services in the April quarter. But now, with potential customers shrinking their IT budgets while competition heats up from Dell ( DELL) and upstart Indian players, the services business is falling prey to some of the same pricing pressures that have bedeviled hardware. "Markets for things like consulting and systems integration actually declined last year, for the first time in living memory," says Ben Pring, a research vice president at Gartner. "There's been a huge rush at tech companies to have some sort of services presence, which has created overcapacity," he explains. "The paradox is that services for a lot of companies have been seen as the future for their business. But the future is perhaps not quite as rosy as some people think it is who may be coming from another space, imagining this is the next green field." Last week H-P said operating profits in its services arm fell 1.6% from the prior quarter to 9.9%, partly due to pricing pressure in everything from low-end customer support services to IT outsourcing and consulting. "Pricing pressure is pervasive in the IT economy in general and in IT services, so we see it in all parts of the business," explains Mike Rigodanzo, a senior vice president of operations at H-P. H-P CFO Bob Wayman has said he'd like to see margins climb to around 13%.