Factors driving the corporate PC upgrade cycle

Factors driving the corporate PC upgrade cycle

Summary: It seems that a corporate PC upgrade cycle may be underway, and while uncertainties remain about how big of an upgrade cycle this will be and how long it will last, it's interesting to take a look at what's driving it.

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TOPICS: Microsoft, PCs
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It seems that a corporate PC upgrade cycle may be underway, and while uncertainties remain about how big of an upgrade cycle this will be and how long it will last, it's interesting to take a look at what's driving it.

The most obvious factor is Windows.

Windows XP is dead and Windows 9 is on the horizon, so companies are positioning themselves to stay relevant. The final demise of Windows XP after so many years is undoubtedly turning a massive number of working PCs into obsolete junk, which is in turn fueling the upgrade cycle. While the base hardware might be capable of running fresher version of Windows, drivers support and such would present a serious problem.

What is curious is how long-loved and entrenched Windows XP has been. It's clear that Windows is no longer the upgrade driver that it once was and that new versions of Windows don't attract corporate interest in the way they once did.

But Windows isn't the only thing getting old on PCs.

Along with the software, the PCs themselves are getting long in the tooth, and millions of corporate PCs are so old that they are being held together with little more than duct tape and chewing gum. In particular, hard drives and power supplies have a limited lifespan and replacement items are getting hard – and as such, expensive to find.

Hard drives are especially an issue. Not only are hard drive failures a major pain in the rear for IT admins, but many old PCs still need the old IDE hard drives as opposed to the newer SATA units.

Replacing old PCs is now cheaper than keeping the old PCs operational. But it's worth bearing in mind that many of these PC upgrades are based on necessity and not a desire to keep up with the times.

Another black mark against the old PCs is the technology. While the PCs themselves might be powerful enough to do what's asked of them, they are lacking modern technologies such as USB 3.0 and such. This places limitations on what the PCs are capable of, and at a time when BYOD means people are bringing devices that benefit from more modern connectivity. 

New PCs are light years ahead of the old PCs, and as such so are the productivity gains they bring. PCs used for data entry and such don't need much in the way of power, and these are likely to have a seriously long lifespan. Barring failures, it is conceivable that a PC bought today will have a much longer lifespan than one bought five years ago, which should give OEMs something to think about.

Then there are PCs that are bought for new applications rather than replacing old PCs. New form factors means that the PCs of 2014 are far more versatile than the beige boxes of 2005. Think signage, projectors, tablets, ultraportables and such. Over the past few years about the only new PCs that many corporations have been buying have been for new applications as opposed to replacing existing systems.

There's almost certainly another upgrade cycle at work for these devices too, but it is unclear yet how defined it is. For example, the tablet upgrade cycle is hazy indeed.

There little doubt that the corporate PC upgrade cycle has morphed from a two to three year cycle into a much longer one thanks to more powerful and more reliable PCs that have a longer lifespan. Companies are making everything – hardware and software – last longer. But the PC upgrade cycle still lives on, only weakened and less distinct, and PC OEMs who used to rely in this regular income stream are going to have to change the way they do business.

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Topics: Microsoft, PCs

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17 comments
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  • Death of iPad in corporate environment

    Many big companies realized that iPad, BYOD experiment etc. are a total waste of money... They are upgrading PCs and buying Windows tablets.
    Owl:Net
    • Unlikely

      Business deployment of iPad has been smart. No one is adding iPads to the fleet as desktop computing units - as they would be next to useless. They're being used in mobile scenarios where it is appropriate... inventory taking, inspections, logistics and shipping, medical professionals doing rounds, and as mobile POS systems.

      No full PC can perform these functions as well as an iPad, or similar low power, long battery life tablet (though the iPad has the largest pool of vertical business apps for this sort of thing.)

      PCs are being used where PCs make sense and where they've always been used - desktop data entry, content generation, design and graphics, and information processing. The PC upgrade cycle is merely a replenishment of computers in these existing functions.
      Mac_PC_FenceSitter
      • Duel Monitors

        For my many of my customers duel monitors are now a driving force. Monitors are cheap and duels add significantly to productivity. Older PCs cannot handle them. Adding a display card is not worth the cost and headaches. (Especially my headaches.) A few have gone for triples and one quad but duels are the really sweet spot now.
        MichaelInMA
        • My monitors do not fight each other

          They bump against each other occasionally during use, but that's part of the game.

          Company is upgrading from XP to Win7, and I've found that Win7 is somehow even less compatible with docking stations than XP. While I know that this is anecdotal, I am not impressed with Win7. Much like the last few iterations of Office, the only innovations that Microsoft has made are to rearrange the functions that you normally use and charge you for it.
          thenitewatch@...
    • Wanting something to be true (or being paid to write as if something were

      true) doesn't make it so. Tablets have their place in business, albeit not as much as tablet makers would hope. The same uninformed decision makers that wanted everyone to have an iPad are rolling back those plans to focus on where they can be productive, but they are not buying Windows tablets. The tablet market is pretty much closed now, and Windows was too late, first with a shoddy product. Now that they seem to getting close to something actually superior to the iPad, that angle will be closed off because people are just not buying tablets anymore. Had MS brought out the new surface 3 years ago, they would have cleaned up. Typical MS, late to the party with the best party dress.
      Don't eat the yellow snow
      • Reopened With Surface

        Several of my customers have gone for Surface's. They are all very happy with them. They have even gotten some for there employees via the hand-me down scheme. They really love the Surface 3. But then is the Surface a tablet or laptop. Several of them I think do not know you can remove the keyboard even though I have shown them several times.
        MichaelInMA
        • Well if your

          ..spelling is anything to go by your average customer isn't too bright
          Bladeforce
  • Hold on a little longer

    Waiting until this late in the day means a risk of making a fatal blunder. The market is moving, and moving away from Windows. If you must do this today look hard for systems with Windows 7.

    It would be sad to make a major investment in new desktops and laptops at a time when ChromeOS and Android are on the ascent. Windows is a flickering flame about to go out though.
    dilettante
    • ChromeOS and Android are toys.

      .
      Owl:Net
    • the home market =/= the corporate market

      businesses still use windows and will for a long time
      theoilman
      • Currently yes, future not so fast

        As many companies move to BYOD, Windows will start becoming less of a monopoly in businesses.
        thenitewatch@...
  • An alternative perspective

    The article states: "Windows XP is dead and Windows 9 is on the horizon, so companies are positioning themselves to stay relevant."

    It appears to me that something else is going on:

    (1) Lots of XP users would rather continue using XP than move to Windows 8. This describes about 1/4 of the installed computing base.

    (2) The vast majority of Windows 7 users would rather continue using Windows 7 than move to Windows 8. This describes about 1/2 of the installed computing base.

    (3) Enterprises getting new computers tend to choose deploying Windows 7.

    (4) Consumers are shunning PC and notebooks with Windows 8 on them. Many of them are choosing iPhone, iPads, and Android phones and tablets. They're also cold towards Windows 8 on tablets.

    (5) A large number of Enterprise computers running Windows 7 are relatively new. The migration to Windows 7 wasn't completed the day Windows 7 showed up. It came much later. In some cases, fairly recently. These folks are unlikely to want to make a shift again, this time to Windows 9. They just don't want that disruption and cost, especially so soon after moving to Windows 7.

    The common element here is that companies and people are tending to avoid Windows 8, in any form. This has nothing to do with "companies... positioning themselves to stay relevant." It has a lot to do with Windows 8's unpopular look and feel, steep learning curve, and for consumers, their historic experience with Windows in general, which is a tad shy of being reliable and problem-free for the average user.
    SteveMak
  • There's a reason why XP lasted so long

    It's because it worked, and worked well; and regular bug repairs kept it working well. You don't fix it if it isn't broke. You don't replace it if it still works economically; and business PCs running XP for five years paid for the cost in the first two, and earned dividends ever since.

    Costs are very tight for businesses in America and around the world. If they don't see a significant improvement in functionality (15% or more), then it doesn't make sense to upgrade until the hardware and other software applications don't work on it anymore.


    That lack of other software working is one major driver for upgrade. IE 7 worked fine, even with it's flaws, for many years; but increasingly I saw many sites that wouldn't function well, or at all, on it, requiring a more current version of the browser. When you get to the point where you can't upgrade your browser because the OS is too old, then you have a problem; especially when it's every browser your running, and not just IE.
    Dr_Zinj
  • XP Retirement? Seems a Tad Facile

    I thought that generally businesses, especially the larger they were, leased pcs on a two or three year basis rather than buy them.

    In any case, the great recession of 2008 meant there were pcs without workers to use them. (Disclaimer, I'm a USian, so this will be a bit cloistered in perspective.) Employment came back slowly. Now that simple statement has enough nuance to feed a whale. Some of that unemployment rate decrease can be attributed to people stopping their look for a job and thus not unemployed. Over the recent years, jobs in the private sector generally increased every month after the trough in 2009. Government jobs consistently declined. Now as the latter was in fulfillment of campaign promises, that would seem to be a positive outcome, i.e., "We meant to do that."

    Still, businesses and governments that leased probably returned the computers, businesses and governments that owned pcs had computers waiting for a worker to be hired to use it. I imagine some were sold as surplus but, I don't know if any one has researched this. Besides, computers are just one more thing, along with office supplies, gasoline, work comp insurance, blah, blah, blah, that faced declines in demand because of the recession and the quick loss and slow recovery of jobs.

    Sales consist of replacement machines plus first machines (new employees, new businesses, increases in the population that can afford a computer, developing markets.). Now, you cannot replace something that wasn't bought, so the number of replacement sales cannot exceed total prior first-sales. As first-pc sales grow, the number of replacement sales in later years should grow. But, if people hold onto their pcs longer — whether because they can or because they have to — or people stop using pcs as much, replacement sales numbers fall YOY and the sale of new systems has to exceed that drag for there to be positive growth.

    Now, because overcapacity meant computers were retired without replacement, we may be seeing the replacement sales that should have happened in prior years, such as 2010, happening now, and this may explain some of the increases.

    While the industry is pleased to sell a computer whether it's replacement or first, I think we all can see that the dream would be increasing replacement sales — as an echo of prior first-sales growth — and increasing first-sales to customers.

    My point being that employment cycles and the PC overcapacity of 2008 have finally worked through the system and an ascending curve is perhaps to be expected, and it takes a deeper analysis to understand whether the increase is an illusion of a recovered first world economy or evidence of an increase in pc demand. I note a 16% gain is short of the 25% gain needed to offset the 20% decline reported the year before.

    I also note that the best sign of increasing demand is increasing prices. Weren't we talking yesterday about Microsoft's (sic) Chromebook killers; another computer at rock-bottom prices? I suppose the counter-argument is that the pc manufacturing business consists of too many making few pcs than they wish, and so a real demand in increase could be absorbed without upward pressure on prices.

    Meanwhile, back at the point, while XP usage share has been declining, it is neither a monotonic nor steep decline.

    And that leads us to the hypothetical 2007 XP machine that was awaiting a new employee. At her hiring, the business may replace it with a new Win7 system because it's old, slow, dingy, unfashionable, etc., i.e., all sorts of reasons that would have been just as true had Microsoft not very sternly said "No XP for you."
    DannyO_0x98
  • Really?

    First ZD and commentors the Federal Government leads the way.
    Stop with the Corporate this Corporate.
    Most Government agency have migrate to windows 7, and it wasn't easy for some due to fact a lot of agency have legacy programs usually written in cobol.
    SHAMKEN@...
  • Article is way too pessimistic and too vague about older PCs

    Here! Let's make it easy! if you have a computer, laptop or desktop, that is dual-core at minimum, it is a candidate to be refurbed with Windows 7. Why? It does not use the older IDE drives. It supports at least 4GB of system memory, enough to run basic Windows 7 comfortably, but not with 37 apps running all at once.

    Otherwise, single core systems and those with IDE drives are due for recycling.

    That was easy, wasn't it? Now why all the sturm and drang of this article? Oh, I suppose the author has a word count quota to meet... Ben Myers
    ben_myers@...
  • The whole article could be summed up as

    A lot of companies are moving to eliminate XP. Windows 8? Nope. EVERYBODY hates it. You may argue that everybody is too extreme a term to use in the context. It's just that I have been unable to find a single carbon - based life form in business who does not say they HATE it. I can put up with it, but that is as far as I can go in friendly terms. As far as Windows 7, even, there are still plenty of specialized applications in engineering, control, industrial, aviation, sales, etc. which do not yet run on Win 7 or above. OR, if you want to upgrade, the cost to the new versions is breathtakingly un-affordable.

    As far as the next cycle... Windows 9 seems to be a complete non - factor. Windows 7 is still the preferred desktop for any change, and because this event is recent we should not expect any serious movement towards another desktop for the enterprise for at least five years.
    notme403@...