Find out why the PC endures - and how you can capitalise on its continued dominance.
- See why thin clients, network computers and other contenders lost out to PCs.
- Learn how new devices such as PDAs make PCs more valuable.
- Understand how PCs can save you money in the long run.
THE PERSONAL COMPUTER IS A $1800 COMMODITY.
It has too much processing power, too much memory, absurd amounts of storage, an unhealthy dependence on Windows and a Web browser.
It is also the perfect desktop appliance for the future.
The PC, flawed and ever-evolving, won't be replaced by simpler devices, cheaper ones or the kind you talk to. Wireless widgets won't wither it. Centralised computing models don't threaten it. Peer-to-peer networking schemes in a post-Napster world can't kill it. It could be a docked laptop, a minitower monster or a flat-screen beauty. Taken as a species, the personal computer has fended off a torrent of alternatives in the young Internet era, and it will continue to do so.
So relax. Get used to it. Stand calmly on the shore with your PC and watch the white-capped river of network computers, thin clients, Internet appliances and wireless gizmos rush by. You might dip your toes in every now and then, test something new. But you and your PCs won't be swept away. Not for five years, maybe not for 10.
You want staying power? Think John Howard. Think Rolling Stones and Sir Cliff Richard. in IT terms. Think PC. An exit poll affirms this. A CIO (US) survey of 184 IT executives asking about their long-term desktop strategies shows that the PC carries a strong lead for the foreseeable future: Three-quarters said the PC will remain their main desktop for the next five years, and nearly half (45 per cent, to be exact) said they are espoused to the personal computer for the next decade.
A vote for the PC is not a vote for the status quo, however. IT managers made it clear that endorsing the PC architecture is not equivalent to endorsing the current PC architecture or any of its vendors. They want a better PC, one that ironically behaves more like its thin-client challengers. It's taking time, but CIOs are willing to stick with the incumbent while the platform improves.
We're ready to call the race. The PC won. Here are seven reasons why.
The PC's versatility reduces uncertainty.
Eventually in our conversation, Joe Crews covers all of the"alities" and"ilities"."The PC just gives me a broader range of functionality than anything else," he starts. Later he adds:"Affordability of PCs is fine." Finally, he says in support of the desktop:"Its reliability and stability. That's what I'm paying for, the flexibility and capability of the hardware." Crews, manager of network services for AAA Carolinas, the motorists' association in Charlotte, North Carolina, condenses many of the arguments for the PC into the above four sentences.
More than any reason, CIOs cite old, reliable"ality" and"ility" words to explain why they don't choose thin clients that promise lower total cost of ownership (TCO) and higher productivity from workers. AAA Carolinas should be a prime candidate for a centralised, network computer architecture. Crews runs 700 desktops at 25 satellite locations, all doing primarily the same automobile club-related tasks. But he's firmly against it."Even at a low cost, I would hesitate to go to a server-centric, thin-client environment," Crews says.
Crews is talking about flexibility, and it's a subtle point. It's not what the PC does for the average end user - which is far less than it's built for - but rather what it might have to do. PCs take some of the anticipation out of a CIO's planning."Appliances to me mean I have to make application decisions based on the capability of the hardware and the network," Crews says."I'm hesitant to tie people, departments and work areas to technology without flexibility or functionality. It's cheaper to keep the desktop at a higher level than trying to decide who needs an appliance and who needs a full PC."
As for workers who may occasionally use the PC's adaptability to dabble with instant messaging or applications such as Napster, Crews says you have to manage your people no matter what's on their desktops."You control those things by managing your business, not by buying equipment that stops it."
Thin clients, the PC alternative, aren't so thin.
On the desktop it's always been one or the other. PCs versus NCs. The Bill Gates camp versus the Larry Ellison camp. Fat desktops versus thin clients. But these are battles many figure are over.
There's evidence of it. Consider that IDC is phasing out its thin-client research. Listen to Jeff McNaught, vice president of market strategy at leading terminal vendor Wyse Technology, when he says he'd be thrilled if just 10 per cent of desktops were thin clients - in five years.
But there's a more startling development. The network computer (or thin client, or Internet appliance) is alive, and it's becoming a personal computer.
"We have a lot of users who want to add hard disks, and we support it," says Gina Smith, president and CEO of the New Internet Computer (NIC) Company in San Francisco. It's a shocking admission after an hour of her stumping over the thin-computing vision of"Larry" - who is, of course, Oracle CEO Lawrence J Ellison and her main source of funding. Smith pauses during the interview, realising she's basically admitted that many people turn NIC's appliances into low-end personal computers."We don't run around publicising it," she adds."But you can do it."
What's more, Smith says NIC is bandying about an idea to build a new device,"the big NIC". It would be an appliance that"makes sense in the enterprise. This one would handle all the big software a Fortune 1000 needs," she says.
Wyse also makes a thin client that accepts floppy drives, and last year it debuted a terminal that runs some applications locally and some centrally, as most PCs do. Between 1999 and 2000, that product line, the Winterm 8000 Series, went from zero to 40 per cent of Wyse's thin-client revenues.
Supposedly, 2001 was the year when thin clients turned the corner. Neil MacDonald at Gartner (US) predicted in 1997 that 20 per cent of the desktop market would be thin by the end of this year. Wyse's McNaught thinks it's more like 1 per cent. Instead, appliance vendors have abandoned revolution for evolution. Their devices, in an effort to appeal to customers' needs, are morphing into something more like what everyone already has - a PC.
The spin from these vendors is that they can offer the best elements of the PC while retaining the server-based computing model for a majority of applications. The devices remain less expensive than PCs, though NIC's Smith acknowledges she would have to bend her hard-and-fast rule of keeping devices under $US200 for the big NIC."I think we could do it for $US300," she says.
In the end, though, Darwinism seems to have won the debate. The devices are gaining weight because that's the only way CIOs will consider using them.
"With PCs, I can safely assume [they] will meet my needs at a reasonable cost," says John Gunkle, IT manager for the City of Raleigh."But with Internet clients, no one is sure where they fit, if they'll really meet our needs. We have vendors coming to us with network devices that weren't self-supporting. One just had flash memory to boot. Another just a CD drive. If these are going to work they'll need to be more like PCs."
PCs may have girth, but they are losing weight. While thin clients are trying to be more like PCs, PCs are turning into desktop appliances. Randel Sykes likes this trend. He thinks PCs make better network computers than network computers themselves. As IT director at Wisconsin-based Auto Glass Specialists, Sykes bought into the thin-client model three years ago. Then late last year, he ripped them out and put in 220 brand-new PCs in 65 satellite offices, with plans for more.
"Putting in thin clients at this point would be a bad decision, even if it wasn't three years ago," Sykes says."Our business was perfect for terminals with all the offices and everyone using the same data. But the applications grew - we use high-graphic maps now - and started chewing up bandwidth. The thing about terminals is if your needs change, they don't."
While Sykes ran his thin-client shop, PCs quietly but dramatically transformed into appliances. What used to be a peripheral is now built-in. Universal serial bus ports make connecting devices easier. At the same time, he says Windows 2000, the server operating system which debuted on February 2000, has put PC management on a par with thin clients. And then there's cost. Terminals cost him $US800 per unit. New PCs: $US830.
Sykes says his PC choice was easy."I asked myself if I wanted a Toyota Land Cruiser, because I can get it at the same price I paid for a VW bus."
The evolution continues. While NCs add hard drives and run applications locally, major PC vendors are sealing off some models from many peripheral devices, making them truly appliancelike. And IT departments are finding a graceful compromise between the two.
"For a lot of our applications, the centralised server model is the best - but with PCs as the client, not network devices," says Marshall Pimenta, technology vice president at Walker Interactive Systems in San Francisco."I'm telling you. I have to do this pitch all the time. The bosses always push back on cost of ownership. But with the way PCs are today, I can get them a better TCO with the Web in a PC environment."
TCO should stand for"Thin-client Costs are Oversimplified". There's a colourful saying that goes, Trying to define history is like trying to nail Jell-O to the wall. Not only is it hard, but what's the point? The same could be said about figuring out the TCO of your desktops.
The statistics hit the fan in 1996 when a succession of analysts published PC cost-of-ownership figures. Zona Research preached that 15 PCs on the network cost almost $US218,000 for five years, while 15 NCs would cost around $US94,000. Gartner was also aggressive, reporting that one networked PC costs about $US10,000 annually, and thin clients could save up to 39 per cent on that. The maths were too overwhelming to ignore. So the analysts logically concluded that IT would start buying thin.
But that's not the way it turned out. In interviews and in our survey, CIOs and other IT executives say they have given up measuring TCO simply as PC versus network appliance. In fact, many IT executives said they associate a higher TCO with a mixed PC and NC environment.
"Some of these [PC] costs are disposable. They shouldn't even go into the TCO," says Keith Podgorny, director of production services at ClientLogic, a Tennessee-based CRM services company."The cost of thin clients is not so low that it's worth re-engineering, retraining and running a mixed environment. There's a cost associated with mixing."
It appears by the low investment in thin clients that the TCO was never as low as promised; stealth costs existed unless you intended to replace every PC with a NC.
And even if you flipped all your desktops, a herd of network appliances drags complex storage systems and higher-end servers into the enterprise. And if an application runs in only one place, that one place better always be up and running.
Centralised computing also taxes network costs. For all the technical improvements, a performance bias is still out there."No one can convince me you can run Office effectively on a thin client," says Walker Interactive's Pimenta.
And Sykes, the IT director at Auto Glass Specialists, says that when performance is an issue,"We can just buy PCs, or we can spend twice as much on the communications network in order to keep the client thin. Even though we ran terminals, I've always had a certain amount of respect for the PC as a way to give you access to power you never had before."
PCs are so robust that frequent upgrades are moot. A 1996 Business Week special report on"The Information Appliance" asked:"Why, then, do you have to spend $US2000 for a PC to surf the Web? Answer: You don't. At least not for long."
In a sense, the report was right. Now you don't have to spend even $US1000 on a PC, and that low cost makes it hard for any device to penetrate the established PC desktop.
"If someone says they can get me [thin clients] at under a hundred bucks a user, fine, I'll invest; but that's not going to happen," says ClientLogic's Podgorny.
The dramatic drop in PC prices as performance unfailingly rises has made PCs the core desktop and helped cut CIOs' costs, but the PC vendors have had a tougher go."It's come to a point where the cost of the PC reinforces corporate conservatism," says Anne Bui, an analyst at IDC (US)."You're finally seeing that upgrade mentality going away. Intel came out with 1.5GHz processors, and it seemed like there wasn't that rush to the latest and greatest any more."
The moribund fortunes of PC vendors such as Compaq, Dell (until it revealed some better-than-projected results in April) and Gateway started in late 1999 and have continued into this year. PC sales growth has slowed to a trickle, and the vendors can't make money on the machines they do sell. The mistake some people make, though, is linking sluggish PC sales to the validity of the platform. In fact, PCs are as popular as ever, but life cycles are getting longer. More than 50 per cent of CIOs in our survey said their PC life cycle is 31 months or longer, and 54 per cent said the useful life cycle of the client has increased or stayed the same.
Jerry Spencer says the PC is not dying because vendors can't make numbers. He just doesn't need many new ones right now.
"I feel bad for the sales guy who's out here now," says Spencer, network infrastructure manager at Michigan-based hospital, Sparrow Health System."I get calls every day. They want me to get all these specials. All I can tell them is: Hey, I have what I need. If I need something, I'll call you'."
Nearly all the IT executives we spoke with had a similar story and say they spend more time than ever fending off upselling. Vendors are pushing extended warranties, tape backup drives, CD-Rewritable drives - anything to make a few more dollars on the sale. Earlier this year, the city of Raleigh bought 100 PCs and Gunkle's vendor told him each one would come with small-business planning software."I work for a city," Gunkle says wryly."I know what my business plan is: break even."
PDAs and other appliances enhance PC value. Thin-client proponents never sold IT on the kitchen appliance metaphor. It goes like this: your dishwasher, microwave oven, refrigerator - each has its own engine. There's no Windows-like engine tying all your kitchen apps together, so why should the IT kitchen have one engine driving everything?
Now, PC supporters are co-opting the metaphor. Network appliances, they say, may have a place in the IT kitchen, but they will only enhance the PC, not replace it.
Jim Cunningham is about to give many of his attorneys microwaves, in the form of standard issue PDAs. He feels that will make his end users' PCs more powerful."Any advantage you can give to the client is useful," says Cunningham, IT director for law firm Willkie, Farr & Gallagher in New York City."Users want and need access to e-mail and this is a way to get it to them. We're not building new applications around PDAs; we're saying, Wait, can't we extend PC apps to other devices?'" Network appliances, it seems, are turning into a new generation of PC peripherals, not PC killers. Wyse's McNaught recalls when his company debuted a mobile thin client in 1997."At the time it was very exciting. Everyone wanted to evaluate it, write about how it would start getting to the desktop. But it turns out, no one wanted to pay for it. They didn't replace PCs at all. We sold them to doctors who couldn't have easy access to a PC all day," he says.
The PC is good enough for what you need to do. You could show David McCauslin all the TCO charts you want. You could prove to him with statistics that he'd save thousands of dollars moving to a centralised computing model at the Cheboygan Area Schools in Michigan. But he's not buying it.
"Call me old-fashioned. You can just do so much more with a PC. When all the dust settles, the PC will do fine," he says.
McCauslin's exemplary of a growing group of IT directors and CIOs who have said, in essence, to hell with micromanaging client costs. They're practising what Bui of IDC calls"good enough computing". This says that the costs of buying a desktop are trivial, and its capabilities are good enough. The time spent eking out a few extra dollars of savings from the desktop is wasted, when it could have been used to think strategically. Why worry about picking at PC costs when you need to focus on the big customer relationship management project, the company's security and e-commerce programs, and revenue-generating plans?
So longer-term thinking is taking hold."We're figuring out ways to make sure we get the most out of the life cycle of a unit," says Cunningham."Are we maximising the process of getting PCs in? Do we have a consistent PC rollout process? Can we set standards here that say in the course of two years, here's how we'll manage the PC fleet?"
It's a rising movement, and those in the"good enough" school have slowed the upgrade cycle and found ways to keep older models in service. Podgorny needed some terminals and planned on running Terminal Server services to them. Instead of buying thin clients, he bought one server and repurposed 300 rusty tubs - old Pentium 75s and Pentium 100s he already had that were good enough for terminal services.
Toby Keeler, CIO of Osmonics, a fluid and filtering equipment manufacturer in Minneapolis, says that the PC is not all that strategic."I'm looking more at what are the applications, what are the B2B opportunities for our company? What do we do to get closer to our customer, and how will I play into that?" he says.
"Yes, there's cost associated with upgrading and maintaining the PC, but thin clients are too much of a departure from what has worked," Keeler says."Here in my environment, the PC really is the only viable tool looking forward." Good enough.
First Love,An Enduring Love
For some CIOS (and other end users) the old PC has emotional pull.
"I remember when the hottest machines had 2 megs of RAM, then it went to 8, then - whoa! - to 16, and that was a huge option."
"I remember buying my first 286 for 2000 bucks [US]. At the time, that was a great machine."
For all the sound reasons to stick with the PC platform, there is another, mushier argument that carries weight: people love their PCs, and it's hard to take them away.
"All of the rational arguments kind of go out the door when you're talking about the decision to purchase PCs," says IDC's Roger Kay."It's a love affair, and love affairs are often irrational."
It's a soft argument; there's little science here. But there is an analogy: car culture. Just as postwar men of the 1950s grew up worshipping their Holdens and Fords, today we love tinkering under the PC's hood and customising desktops.
University of Louisville Psychologist Jim Began specialises in the psychology of ownership, and he thinks there's something to this.
"I call it the mere ownership effect. Just because you own something is reason to like it more, especially when it comes to qualities that are hard to define, like the ability to tailor the device to yourself," Began says. Think racing stripes or flames painted up the side of that 1966 Valiant. Other psychological effects are at play here too, he adds. Territoriality and ownership of data go against the network computing model - it's splurging on that Porsche versus taking public transportation."And in some ways," Began notes,"information is even more personal than stuff, like cars."
"You have to take it seriously," says Jim Cunningham, IT director at Willkie, Farr & Gallagher, a New York City law firm."Managers pitching thin clients to their bosses with all the right statistics need to understand that love of the PC. Otherwise, they can get blindsided by that attitude."
Began warns only scientific studies would prove that the psychology of ownership contributes to PC dominance. The words of devoted users tell their own story.
"My first was an 8086, 250K of RAM and two five-and-a-quarter-inch floppy drives. Four grand."
Tales We've Heard (and Told)About the PC's Successors.
1996: The Next Big Thing.
Business Week published a special report on"The Information Appliance". Excerpt:"Why, then, do you have to spend $2000 [US] for a PC to surf the Web? Answer: You don't. At least not for long."
(The authors were right. Now we spend $US1000 for a PC to surf the Web.) In Forbes ASAP, Sun Microsystems CEO Scott McNealy (a strong network computer proponent) gave this forecast:"Soon, hotels will be putting low-cost network computers in your room . . . It's a new wave of network computing, based on the fat-server, big pipeline, thin-client model. It's applications written once to run anywhere, safely. It's Web-centric, Web-toned, and irresistibly open. But above all, it's your choice."
1997: Early Fatigue
From CIO (US) came"NC . . . The New Wild Frontier?" The article said:"In fact, the NC is at the peak of the emerging technology hype cycle', and the market won't settle down for another 12 to 18 months, according to The Enterprise Network Computer: Sorting Through the Stampede of Vendors,' a report from GartnerGroup (US). That means CIOs can expect vendor hype and glossy slides of non-existent or unavailable products and features' to dominate the market, says Dave Cappuccio, Gartner vice president and research area director. That certainly doesn't help CIOs looking for definitive answers."
From Computerworld (US):"Heading into 1998, network computers, NetPCs and Windows terminals are still struggling to get out of the starting gate, and analysts say a front-runner has yet to emerge . . . However, the market is an important one. Neil MacDonald, an analyst at GartnerGroup (US), predicts those devices will account for about 20 per cent of the desktop market by 2001."
(Note: Those devices now account for about 1 per cent of the desktop market, according to an executive at thin client maker Wyse.) 1998: Stop Making SenseCIO (US) asked the question"NC or NOT NC?" CIOs were not answering."Fence straddling is the strategy of choice when opinions are abundant and facts are few and far between."
In another CIO story from 1998 on rules for cutting TCO (total cost of ownership), Rule 5 was:"Consider replacing personal computers with thin clients like network computers". One user quoted said TCO regarding maintenance and support will be half of the PC's, adding:"There's no complicated operating system, no hard drive. Instead, it's a tiny little box, about the size of a laptop, and with fewer parts."
1999: Department of More of the Same
An Business Week story,"2000 Reasons Why the Web Will Rule" includes this prognostication:"[Giga Analyst Rob] Enderle sees small businesses adopting stripped down PCs called thin-clients'. These inexpensive machines will access software over a local network or the Internet. By 2003, he expects the PC to be largely solid state. You hit a button and it comes on as quickly as an appliance,' he says."
2000: Everything Old is New Again
Larry Ellison, Oracle's CEO, an NC booster from the start, continued his crusade. He said during a Fall Comdex keynote address, according to ZDNN:"The only things left on PCs are Office and games . . . " A CIO (US) piece on TCO called"Every Last Dime" reignited an old argument:"But even in a straight desktop environment, thin-client technology looks to be able to make significant inroads into a business's TCO because of its much greater inherent simplicity, irrespective of whether the definition of TCO is the narrow, technology-based one, or the broader people-based one."
From a Business Week report about wireless technology:"The do-it-all wireless handheld of your dreams? Close, but no cigar yet . . . At best, pocketing one of those connected gizmos, such as a Palm and its ilk, can be downright exhilarating. They free you from the excess tonnage of the laptops and attachments, diaries and Daytimers of today's over-equipped business traveller. At the same time, they open up a new anytime, anywhere world that puts all manner of information - stock charts, plane reservations, your boss's entreaties, you name it - at the tip of your stylus."
2001: The Return of Penmanship
Another entry, pen-based computing, could replace the traditional desktop. In"The Pen Gets Mightier" a review in Forbes, a new pen-based Sony Vaio notebook computer is called"an aha' product that points the way to simpler computing".