Business Applications Spur PC Upgrades

Monday Feb 9th 2004 by Robyn Greenspan
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Many desks will sport enhanced new computers as demanding applications and regular replacement cycles force upgrades. Small businesses indicate they will go with the flow, but it's not because they have refresh programs in place.

A Dell-sponsored ITtoolbox survey of more than 500 global business IT decision-makers during January 2004 revealed that nearly three-quarters plan to replace personal computers and nearly half plan to replace laptops over the coming year.

The survey, comprised mostly of U.S. (44.6 percent) IT managers or directors (16.7 percent) from companies that ranged in size from less than 100 to more than 1,000 employees, found that, overall, 72 percent planned to replace their PCs, however only a tiny 2.5 percent were going to switch all their old units for new ones. The bulk of the respondents (30.6 percent) were replacing 11 to 25 percent of their computers, while 21.8 percent planned on upgrading only 10 percent of their units.

Small businesses indicated they intend to go with the flow; 61.8 percent said they would replace desktop PCs this year and 37.8 percent said they would replace aging laptops.

Computer Replacements in 2004

The primary reasons respondents cited for computer replacement was that new applications required the upgrade (36 percent), followed by efforts to improve staff productivity (32.2 percent). Broken components accounted for another 12 percent of replacements; 11 percent hope to reduce service costs; and 2.9 percent found that their old units were susceptible to security threats or viruses.

Along with the computers, 70 percent of respondents reported that they would upgrade operating systems as well, and 58 percent planned on replacing peripherals. Printers were the least disposable item, with only 22.4 percent planning an upgrade.

"Many industry watchers look closely at this trend as companies typically upgrade other technology products during a replacement cycle. In the survey, 40 percent of the respondents indicated that they upgrade their Business Application software during a PC replacement. High demand for business PCs generally portends a pick up in investment by companies in other technology products," said George Krautzel, ITtoolbox co-founder and chief operating officer.

Roughly half of the planned replacements were due to a scheduled PC replacement cycle, most of which run 31 to 36 months, with large-sized companies the most likely to have such a program in place. Of the individual geographic markets ITtoolbox studied, Europe was most likely to have a scheduled replacement cycle. As a major business segment, small businesses are the least likely group to have a rigid PC replacment program in place.

PC Replacement Programs"The data in this survey supports the growing belief that a PC replacement cycle is underway," added Krautzel.

Frank Muehleman, senior vice president and general manager of Dell's small and medium business division, said small businesses are set to go through a major technology refresh in 2004.

"Today small businesses are in a position to take advantage of tomorrows technology," Muehleman said. "Systems purchased prior to Y2K are growing antiquated. Older PCs typically have higher support costs because they can't handle the demands of new applications. SMBs work out the economics and see they can actually decrease end use issues and power costs at the same time. PC replacement ensures that small businesses can run the latest applications to help increase productivity while reducing IT costs."

Charities and employees may become the beneficiaries of a mass PC upgrade among corporations in 2004, spurred by the increasing demands of new applications and implementations of regularly scheduled replacement cycles.

While the majority of organizations (41.6 percent) reported that old units will be redeployed for other purposes and 31.7 percent say that they are used for spare parts, some companies prefer to recycle the PCs more altruistically. One-third sell or give their employees the replaced PCs, while 30.7 percent donate the units to charity or non-profit groups. North American companies are the most generous of the analyzed markets, with 37.9 percent reportedly giving their older PCs to charity, while medium-sized companies led in throwing the replaced computers away at 22.6 percent.

The business software upgrades may help counterbalance a flagging retail software market, which The NPD Group said suffered the sharpest decline in four years during 2003. Overall PC software retail sales decreased 4 percent in 2003 to $3.68 billion — compared to $3.84 billion in 2002 — while unit sales fell 9.5 percent from 2002 to 102 million.

Adapted from CyberAtlas.com.

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