Intel Corp. is warning small businesses against putting off spending on new computers in the wake of a recession.
In a media Webcast it hosted, the chip-maker said even the smallest of businesses should plan for a hardware refresh cycle of about every three years and be wary of relying on “Frankenstein PCs.”
It cited statistics from its recent U.S. study comparing PCs that are older than three years to those that aren’t as old across several categories — power usage, performance and security risks.
The newer computers performed better in every scenario. So small businesses should probably get rid of their old PCs, says Scott Alee, small business marketing manager at Intel.
“We call them Frankenstein PCs when you start keep things patched up with duct tape and barbed wire,” he says. “Most small businesses will use a computer until it breaks, or they can’t stand it anymore.”
The study report indicated that computers older than three years were worse off in many ways — 4.5 times more likely to experience hard drive failure, draw about twice as much power on average, and cost 1.65 times more to repair compared to a newer PC. “Small businesses are having to re-evaluate their spending” in the wake of the recession, Allee says.
According to at least one Canadian analyst, however, a three-year refresh rate for PCs isn’t appropriate today when firms are in cost-cutting mode. “Five to six years is the new average,” says Robert Garmaise senior vice-president of research and strategy at London, Ont.-based Info-Tech Research Group.
But to make a longer refresh cycle work, the analyst urged IT departments to take steps to avoid machine degradation. “Re-image every year, as sometimes degradation has as much to do with software as hardware.”
He said the businesses should also look very carefully at the cost-to-serve involved in small hardware tweaks, such as RAM upgrades – and schedule these intelligently. Also determine your ability to purchase the machines off lease, he said. “At the end of three years, a nice migration path would be to buy a third of your equipment back.”
Garmaise said Info-Tech talks to hundreds of companies each month and finds that Canadian firms often over-specify their hardware. “For instance, most employees would not need to use many of the capabilities of a $1,200 desktop.”
He urged businesses to base their new PC purchases on tougher criteria regarding the capabilities employees really require. “All features and functions are generally not required for all users.”Some Info-Tech clients, he said, use a two-tier purchase method – where pricier, higher-quality, higher-capability PCs are bought for power users, and more basic machines for the rest. “Cascading is another technique. It involves buying the same type of PC for everyone, but offering power users the new stuff.”
There are some hard questions businesses should ask themselves when considering a hardware refresh, says another Canadian analyst.
They should ask if their current infrastructure adequately supports priority business processes, said Paul Edwards, director of SMB & Channel Strategies at IDC Canada. “If so, is there going to be an additional strain put on the system if you don’t refresh?”
Intel’s concerns about a dampened enthusiasm on computer spending due to the recession is borne out by some research done by IDC Canada.
Prior to the financial crisis, about four out of 10 small and midsized businesses (SMBs) were planning on spending more on IT purchases in 2009 compared to 2008, according to a survey conducted by the Toronto-based analyst firm. But after the economic storm hit, eight in 10 SMBs now plan to spend less on IT. Four in 10 also planned to cut PC purchases specifically.
“Clearly the economy affected small businesses in Canada as far as their investment in IT,” Edwards says.
But Intel notes that its new PCs also have new features that small businesses might want to spend money on.
Its anti-theft technology allows system administrators to send a poison pill to a stolen laptop to block access to it, Allee says. The new vPro technology ensures vital security software is running, and will isolate any system that becomes infected from the network.
David De Agoistino, vice-president of operations at Brite Computing, a Rochester, N.Y.-based IT services management firm that sells Intel hardware has some high words of praise for vPro technology.
Not only does it increase productivity from your workforce, he says, but it also offers energy cost savings. “So it almost pays for itself in a typical lifecycle.”
But many businesses will be able to get by with computers that are three years old, Edwards says. Especially those with just a handful of employees.
“Small businesses don’t have as high reliance on technology,” he says. “For the most part, they will go out to a retail store and pick up a PC when they need it.”
But many warranties expire after three years and SMBs may want to consider a hardware refresh instead of buying a new warranty for old hardware.
Only 26 per cent of businesses with between one and 19 employees do have warranties on PCs for longer than three years, according to Intel.
But Info-Tech’ Garmaise suggests that a warranty for a desktop PC isn’t absolutely necessary. In fact he says foregoing warranties could be yet another way to save big time on desktop costs. Typically, he said, standard warranties on new PCs range from 1 – 3 years, and represent a cost of $100 – $150 per unit.
“So say a new PC costs $750 of which the warranty cost is $150. By foregoing the warranty on seven machines you could buy an additional PC. For desktops this can be a big saving.”
But while this is a smart approach for desktops, Garmaise doesn’t recommend foregoing warranties on laptop purchases.
Businesses that do want to buy new computers but are worried about the capital expense should look at financing options available from vendors and partners, Edwards says.
Another smart buying strategy for smaller shops, according to Garmaise is, aligning with a regional or industry buying group, “You could realize huge savings by doing that,” the Info-Tech analyst said. “You could pull your purchases together to get better bargaining power.” Buying needed PC hardware in one go, rather than spreading it out also helps for the same reason. “But for this you need the ability to forecast annual need, as well as to ensure adequate storage space.”
Shop around – In the Canadian market, he said, HP, Dell, and Lenovo are strong players in the PC desktop space – and most Info-Tech clients buy from one of these three. Garmaise said it’s possible to drive a hard bargain by comparing, researching and even playing resellers off one another.
