Refresh or Refurb?

According to Aberdeen Group, a Boston-based research firm, there are more than 50 million aging computers sitting on desks in offices around the world. These machines were built before the millennium — many were purchased between 1998 and 1999 in anticipation of Y2K problems. Smaller businesses often purchased consumer machines with Windows 98, while mid-sized businesses deployed Windows NT desktops.

Windows NT 4.X went by the wayside at the end of June and Windows 98/SE will do the same on January 16, 2004. Microsoft products that are past their prime no longer have support contracts, so there are no more patches for security flaws or fixes for new security threats. This leaves older desktops and PCs at risk and represents a vulnerability that no business can afford to ignore.

The question remains — what should you do to fix this business computing conundrum — refresh or refurbish?

Experts anticipate that the PC refresh cycle is starting to gain momentum as companies are examining their aging systems that were last upgraded for Y2K. One of the pressure points is that companies can no longer afford to hang on to old machines as increased computing power is required to support new operating systems and applications.

While much of the news today is about the forthcoming release of Microsoft’s Office 2003, Windows XP is actually gaining traction in the small business market. Windows XP was first introduced in October 2001.

A Refreshing Course of Action
Aberdeen analyst Peter S. Kastner said mid-year is an auspicious time for starting or accelerating a PC replacement cycle with Windows XP.

“Windows XP Pro Service Pack 1 is out in the field and working well indeed,” Kastner said. “No stability problems here. It’s a great client operating system on today’s more powerful desktops and laptops.”

According to Greg Sullivan, Microsoft’s lead product manager of the Windows division, there are several reasons why small businesses are migrating toward XP.

“XP is a way for small business to leverage current IT trends,” Sullivan said. “XP provides the mobility that small businesses want while allowing for the integration of the software with Web services, which ties all the most recent advances together.”

Prior to XP, small businesses that wanted to leverage new technologies had to hire a consultant to determine if deployment was feasible then buy the system from a reseller and work with an integrator to implement the new computing solution. This is typically a costly, time-consuming initiative. Sullivan said with XP, “average guys” can take advantage of today’s computing power right now.

“Small businesses can take an off-the-shelf software solution and implement it in their system themselves,” Sullivan said. “This used to be cost-prohibitive for many small businesses.”

Consequently, Windows XP is Microsoft’s fastest selling operating system in the history of the company. Sullivan said that 20 million licenses were sold during the first three months of this year and more nay 100 million licenses are currently in use — many in small- to medium-sized business offices.

Macro Hardware Trends
Matt Millen, Gateway’s SMB vice president, said a retired operating system is just one element driving the move to refresh aging computers. Gateway’s job is to migrate small business customers to the right technology, which currently includes Windows XP.

“What’s really driving change in the small business market is technology,” Millen said. “Even the smallest businesses often are forced to upgrade technology by affiliation in order to continue to do business with larger companies.”

Miller concurs with Sullivan, that wireless mobility sits at the top of small business computing priorities.

“Clearly there is a macro level trend toward mobility for SMBs,” Millen said. “The cost of mobility is down, and power and convenience are up. We’re seen a 50 to 60 percent increase in our mobility products. Going wireless and adding a wireless local area network (WLAN) has even made our sales representatives more productive.”

Millen said that the lines of technology are blurring and Gateway is ready to provide small businesses with the hardware and computing power they need to bridge the gap between converging technologies.

“High-end desktops have blurred into workstation PCs. Back in the 90’s we had telephony value-added resellers for phone systems and IT providers for networking, then networks integrated into the same closet as the phone systems. VARs got into each other’s space and unrelated verticals came together — the network and the telephone,” Millen explained. “Consumer electronics and IT are the next convergence point. Bringing together AV and IT, along with commercial business applications for these products.”

One of Windows XP’s key benefits is its ability to adapt to different types of local- and wide-area networks, as well as wireless network connections.

Millen said that so far, there’s been very little PC buying for the sake of refreshing. And Gateway should know, as much as 20 percent of its Country Store sales originate from the small business market. Why the snails pace toward the beginning of the 3-year refresh cycle? Some small businesses are extending the life of the PCs they bought rather than buying new.

Refurb and Make-Do
Maxtor offers a full line of desktop hard drives — high-capacity and high-performance ATA drives. Because the company is a hard drive maker, it figured that upgrading their PC’s storage systems on a smaller scale would be relatively easy and cost-effective computing solution in addition to buying new desktops.

Maxtor has already begun its computer upgrade cycle and will replace somewhere between 1,000 and 2,000 PCs this year to meet new minimum OS and application requirements. In addition to purchasing new PCs, Maxtor also used a formula to determine what to do with the older equipment.

One part of the formula was the fact that Microsoft’s Web site set a bar on minimum CPU requirements to handle Windows 2000 — 133 MHz or faster Pentium-compatible CPU, 64 megabytes of RAM minimum, or more RAM to improve responsiveness setting a 4 gigabytes maximum. However, if a an employee wanted to handle a couple of windows with applications open and get some concept of responsiveness, the PC would have to be above the stated minimum. Some companies, like Maxtor, have decided that the cutoff point would be a 300 MHz system running Windows 98.

To do so, Maxtor purchased 7200RPM, 8 MB buffer hard drives with a storage capacity of 160GB. This provided users with increased hard drive performance — and still left some capacity for growth. Small businesses have a couple of storage-extending options — adding an internal hard drive or an add-on USB/Firewire external hard drive.

Windows XP recommends using a PC with 300 megahertz or higher processor clock speed recommended, Intel’s Celeron or AMD’s Athlon processor, 128 MB of RAM and 1.5 GB of available hard disk space. Although hard drive upgrades can help aging computers handle Windows XP, buying new is recommended.

The Bottom Line
Last year Aberdeen was a company filled with old PCs still using Windows 98. Even though the research firm did not like the idea of spending cash in a down economy, Aberdeen analyzed the business situation and concluded that it could not afford not to refresh its PCs.

“We could not afford the aggravation and potential disruption to our knowledge-worker-driven business of not doing so,” Kastner said. “Tough medicine, we concluded, but common sense.”

Kastner advises those small businesses on the tipping point — especially those lacking full-time IT staff — that “it’s time to crank up the planning for the recession-disrupted PC replacement cycle and with the 21st century.” Windows XP ends up being a logical choice for now.

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