There are 300 million PCs on planet Earth today - compared to a worldwide population of five billion, so the ratio is not too good if you are an IT vendor. But if you believe research firm Gartner Group?s total cost of ownership (TCO) figures, a PC actually costs $30,000 over its effective life - which amounts to $9,000,000,000,000 (nine billion billion dollars) for the worldwide PC installed base.
That would bust most developed countries in the First World - meaning that the figures, as PC maker Fujitsu-ICL pointed out, are meaningless to real businesses. Even if you admit that some of those 300 million PCs have already been amortised, several of the most developed countries in the world would still be dwarfed by a more conservative estimate.
Charles Bows, marketing manager of Fujitsu-ICL,said: ?All research organisations say the initial purchase accounts for 14 per cent of the total cost, so it?s in every company?s interest to look at TCO. But there?s a lot of crap being talked about this, so it is worth looking at all the elements involved and what your company?s strategy is.?
Many of the figures bandied around only confuse users and distract them from the real solutions - not one platform or another, but efficient system management, user management and so on.
Two weeks ago, the Gartner Group produced yet another presentation on TCO at its conference in Orlando,Florida. The company?s new figures do not differ dramatically from those that prompted every IT vendor to issue a flood of hype - mainly surrounding new 'low TCO' approaches, which of course require the purchase of brand new kit - into the market over the past year.
But the opening slides in its presentation make a significant shift from its previous position, with its analysts saying that understanding the costs when companies are moving from ?highly mature legacy systems? to ?immature emerging systems? are poorly understood.
Best case savings now, says Gartner, can range from 20 to 30 per cent of the total costs. A so-called typical 2,500-PC installation in a distributed environment could save $4.5 million this year and $16 million in 2001 with greater efficiency of buying and maintenance. But that depends, the Gartner analysts say.
The factors that IT buyers will have to think about include efficient PC and networking deployment strategies, improved coordination for end user support, increased standardisation of computing platforms and implementation of automated asset and systems management tools. Gartner now recommends 'best of breed' electronic software distribution tools and system management tools.
Enter Microsoft. It has claimed it can consistently offer system management tools, and all the other solutions that Gartner proffers.
Jeremy Gittins, Windows marketing manager at Microsoft UK, said: ?Some people believe that if you change the desktop you will reduce the total cost of ownership. This is a zero sum. If you move it off the desktop, you?ve got to put it somewhere. We?re looking at thousands of customers worlwide and trying to understand the bigger picture."
While Fujitsu-ICL, Tulip, Compaq and now Dell have launched their Net PCs largely on the basis of the total cost of ownership argument, Microsoft?s part is to supply the Zero Administration for Windows (ZAW) tools, which is essential to make the PC suppliers' TCO arguments a reality.
But Gittins admitted that a full implementation of ZAW will not come until Windows NT 5.0 and most vendors report that is now delayed until 1999.
Said Gittins: ?We?ve launched ZAW to automate and deploy applications. Our vision is no-touch client/server systems.? Its now patented Intellimirror technology, he said, will allow it to transfer bits from the client - whether it?s a Net PC or an ordinary PC - to the server so that people can rove from location to location and still have their preferred settingsd. Its licensing policy will carry on, regardless, he said. ?I don?t think our licensing will be any different but the third element of ZAW is it will give control.?
He said, significantly: ?We don?t care how thick or thin our clients are or whether they?re a Net PC, a PC or a Windows terminal.?
That will open the way to Java everywhere, provided, that is, that Microsoft can settle its differences with Sun Microsystems. It?s known that Citrix, whose technology Compaq licensed last week, is designing Java versions of its Winframe software and that Microsoft was forced to license its Hydra multiuser technology earlier this year. That will let vendors off the Intel-Microsoft Net PC hook too.
Gartner is still being ambivalent about whether network computers or PCs will win the game. Its Orlando presentation says that, in some situations, NCs can save money. The potential savings for a Win 95 desktop ranges between 26 per cent for a Net PC to 30-40 percent for an NC. The hardware for either will fall in the same ball park but software is a different matter. On 3 November, IBM-Lotus will release Kona, its Smartsuite Java application components for the NC platform. That could change all Gartner?s predictions and plunge end users into even more uncertainty and hype.
The Gartner Group now concludes that NCs should not be deployed as general purpose PC replacements but in specific environments where reduced function desktops are needed. Intriguingly, that is where Microsoft is positioning the Net PC and it has sold many of its units to Interflora recently.
But Fujitsu-ICL still has several tricks up its sleeves. It says it is about to sell Net PCs to a corporation with 12,000 desktops and 1,000 servers but Bows refuses to say who they are.
What is certain is that the whole situation is in flux, TCO figures have been greatly inflated and used for marketing ends, and that there is more than one solution to bringing down costs. Any company worth its salt will investigate its future IT based on its own ideas, research and requirements, rather than swallowing the claims of the vendors or going religious for a single platform.
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