SecProbe.io

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									October 19, 2005

Fax (614) 748-1209
Room 4561

Michael R. Sayre
Executive Vice President and
  Chief Financial Officer
Pinnacle Data Systems, Inc.
6600 Port Road
Groveport, OH 43125

      RE: 	Pinnacle Data Systems, Inc.
 		Form 10-KSB for Fiscal Year Ended December 31, 2004
		Form 10-QSB for Fiscal Quarters Ended March 31, 2005 and
		   June 30, 2005
 		File No. 001-16103

Dear Mr. Sayre:

      We have reviewed the above referenced filings and have the
following comments.  Please note that we have limited our review
to
the matters addressed in our comments below. We may ask you to
provide us with supplemental information so we may better
understand
your disclosure.  Please be as detailed as necessary in your
explanation.  After reviewing this information, we may raise
additional comments.

	Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or any other aspect
of
our review.  Feel free to call us at the telephone numbers listed
at
the end of this letter.

Form 10-KSB for the Year Ended December 31, 2004

Consolidated Financial Statements

Notes to Consolidated Financial Statements

Note 1. Summary of Significant Accounting Policies

D. Revenue Recognition, page 32

1. We note your response to our prior comment no. 2 where you
indicate that EITF 00-21 does not apply to your multiple element
arrangements since you bill each element separately.  Please be
advised that separate contracts that are entered into at or near
the
same time are presumed to be negotiated as package (see paragraph
2
of EITF 00-21).  In addition it is not evident from your response
or
disclosures what product and services you are providing that may
be
included in multiple element arrangements.  Considering this
clarify
for us the specific products or services included in multiple
element
arrangements (i.e. intelligent network services, supply chain
management, repair etc.), how you have established fair value for
those elements, how you have allocated  the arrangement fee to
each
element and your revenue recognition for each element.

2. We note your response to our prior comment no. 4 relating to
inventory management programs.  It is not evident from your
response
what services are performed/provided pursuant to your inventory
management programs.  Provide us a detailed description of these
programs. Tell us whether your inventory management programs
include
managing inventory sold to your customers.  If they do, tell us
your
revenue recognition policy for inventory that is sold but not
shipped
to customers and how it complies with each of the criteria in
paragraph A.3.a. of SAB Topic 13 relating to bill and hold
arrangement.

Form 10-QSB for the Six Months Ended June 30, 2005

Item 2. Managements Discussion and Analysis or Plan of Operations,
page 14

3. We note that your revenue decreased by 38% in the second
quarter
of 2005 due to slower than anticipated orders and longer closure
rates for new product programs.   Your discussion does not appear
to
clearly explain or quantify the factors that contributed to your
decline in revenue or operating expenses in the second quarter i.e
how much of the decrease in revenue relates to slower anticipated
orders and longer closure rates and what expenses contributed to
the
decrease in operating expenses and by how much.   Tell us how you
considered disclosing this information in your discussion of
operating results.  In addition tell us whether you expect the
trend
in decreased revenue to continue and how you considered discussing
the future trends of your business. We refer you to SEC Release
Nos.
33-8350 and 33-6835.

4. As it relates to the default by Silicon Graphics, a significant
customer, tell us whether you will continue to do business with
this
Company and if not, how you considered discussing the impact of
this
on your revenues and liquidity.  Also tell us how you considered
disclosing the significance of this customer.

* * * * *

       As appropriate, please amend your filing and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response.  Please submit all correspondence and
supplemental
materials on EDGAR as required by Rule 101 of Regulation S-T.  You
may wish to provide us with marked copies of any amendment to
expedite our review.  Please furnish a cover letter with any
amendment that keys your responses to our comments and provides
any
requested information.  Detailed cover letters greatly facilitate
our
review.  Please understand that we may have additional comments
after
reviewing any amendment and your responses to our comments.

	 We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information under the Exchange Act and that
they
have provided all information investors require for an informed
decision.  Since the company and its management are in possession
of
all facts relating to a company`s disclosure, they are responsible
for the accuracy and adequacy of the disclosures they have made.

	In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:

* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;

* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and

* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

	You may contact David Edgar, Staff Accountant, at (202)-551-
3459
or Thomas Ferraro, Senior Staff Accountant, at (202) 551-3225 if
you
have any questions regarding comments on the financial statements
and
related matters, or me at (202) 551-3730 with any other questions.

						Sincerely,

						Kathleen Collins
						Accounting Branch Chief

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Michael R. Sayre
Pinnacle Data Systems, Inc.
October 19, 2005
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