Three-year-itch: Upgrade those PCs--or refurbish them as needed?

PC purveyors will tell you that desktops and laptops three years or older are a liability and in need of replacement, not refurbishment. The faster, smaller, cheaper, better argument is compelling--but only if it's not a luxury upgrade. The larger issue:
Written by Dan Farber, Inactive
According to industry estimates, more than 40 percent of PCs deployed in business are at least three years old. Top-ranked PC makers Hewlett-Packard and Dell, as well as the other PC and notebook purveyors, would have you believe that PCs and laptops three years or older are a liability and in need of replacement rather than as-needed refurbishment.

Are the PC manufacturers crying wolf in hopes of replacing a few hundred million PCs and notebooks just a little past their prime? Or, are the systems you've been squeezing more life out of during the economic downturn really better off in the recycle bin?

For IT organizations, the upgrade decision and test of the three-year lifecycle proposition should be simple-will new PCs deliver a better total cost of ownership and rapid return on investment than hanging on to existing systems?

Of course, the answer will depend on the type of usage and software the systems run. You can still find DOS applications cranking away for specialized, legacy applications, and many applications don't require more than year 2000 vintage horsepower.

On the other hand, a new system will give you a lot more for your dollar, euro or yen compared to older systems. Average prices have come down nearly 50 percent in four years while performance of newer PCs versus older PCs has increased five times in three years. The faster, smaller, cheaper, better argument is compelling, but only if it's not a kind of luxury upgrade, going from a system that gets the work done to one that looks good doing it.

But the larger issue is support and maintenance costs. "There is a 25/75 rule--25 percent of IT are acquisition costs and 75 percent are the cost of managing, deploying and running PCs," according to John Thompson, HP vice president and general manager of commercial product business management and operations in the Americas.

When system components begin to fail, the fix-and-maintain or upgrade-and-deploy conundrum favors new systems. But is it three years or four years of age when a PC's vital organs begin to malfunction? Is it when the warranty is up?

PC Replacement Checklist
  • Age of computer
  • Operating system
  • Processor speed
  • Memory installed
  • Disk size
  • Applications used
  • Security software
  • Patch history
  • Maintenance history
  • Downtime history
  • Warranty
The manufacturers would have you believe that the rise in failure rate begins during the fourth year of deployment. Components have reached what HP calls "the end of their design life or period that the manufacturer specifies that the component is designed to last."

"Beyond replacing a disk drive, it almost behooves you to upgrade an older system," Thompson told me.

You have to wonder why PCs supposedly fail at higher rates after three years. Is it planned obsolescence to keep the revenues flowing, or is just the normal wear and tear on components that weren’t manufactured or priced to last five or ten years? Disk drives components are manufactured to last far more than three years, for example. The truth is that while some small percentage of components will fail, the larger issue is that the software can make the hardware out of date or less capable of running some applications or improved features in operating environments.

He also cautioned that older systems are more of a security risk than newer systems. "Older operating systems, such as Windows 95 and 98, are no longer patched with the same level of upgrades," Thompson said. Extended support (which may include hot fixes, but no warranty or new features) for Windows NT Workstation ended in June 2003, Windows 98 support ends in January 2004, and Windows 2000 support is scheduled to terminate on March 31, 2007.

New systems running the latest operating systems are technically more secure, and work with the latest antivirus, firewall and intrusion detection products. However, as MSBlast worm and the Sobig.F virus made clear, upgrading PC with Windows XP Professional isn't going to deter virus and worm writers. MSBlast affects Windows 2000, XP, and NT, taking advantage of the Distributed Component Object Model (DCOM) Remote Procedure Call (RPC) interface. Sobig arrives by e-mail with an attached file and also spreads using shared network files on Windows systems.

Thompson rightly says that outfitting a PC with older operating systems with security protection wouldn't be cost effective given the lack of support for timely patches, new security hardware features, and compatibility with the latest security products. For example, HP's business PCs come with a chassis intrusion sensor, port security protector, and an embedded security chip, which can encrypt files locally. But there’s no reason you can’t install Windows XP on a Pentium II to take advantage of the new operating system’s features.

Michael Farello, Dell vice president of marketing for the Corporate Business Group, points to other factors involved in the notion of a three-year lifecycle. "At around three years, the economics don't work to extend the life further," Farello said. There are more than just hardware failures. Application conflicts, spare parts inventories and the complexities of compatibility testing on different configurations are factors. In addition, extending warranties beyond three years is cost prohibitive, and the power consumption of older machines in not as efficient as on new systems."

If you add up all those elements, you have a good case for replacing those aging systems, especially if you can document the maintenance history, downtime and the impact of supporting multiple Windows operating systems in various stages of their own lifecycles.

Dell customer Eastman Chemical recently "bulldozed" its three-year-old desktops and notebooks, spending $16 million to replace 14,000 systems across 30 countries. The cost works out to about $1,143 per machine for the latest OptiPlex desktops or Latitude D notebooks and migration and deployment services. Dell also offers trade-ins and recycling for older systems, which lowers the cost of replacement systems.

HP offers a PC Migration Service Bundle, which includes the PC as well as migration and deployment services for $909 (or $39 per month) or as low as $689 for customers who trade in their old systems. The bundle includes an HP Compaq Business Desktop d530 with a 2.6-gigahertz Pentium 4 processor, 256-megabytes of RAM, a 40-gigabyte hard drive, 48x CD-RW, and Microsoft Windows XP Pro. The company also will recycle the old PCs.

HP has come up with a metric to assess the value proposition of replacing older systems. According to HP's equation, a $100,000 employee (including benefits and other internal costs) working an incremental 5 minutes per day over a year of 200 work days would save, or gain, $800 in productivity in a year.

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Of course, you could gain even more productivity if employees spent less time shopping on line and surfing the Web. Those kind of time = productivity calculations are inherently fuzzy, and are partly designed to support the vendors' sales efforts. If someone in a call center has downtime, does that mean sales or customers are totally lost? Is the system failure compensated for by other employees or by spare systems?

Every company is going to have its own unique set of considerations in making a hold versus buy decision. More reliable, up-to-date systems can clearly lower support and maintenance costs, and increase employee productivity and morale by some elusive measure. But most companies will take a more staged approach than that taken by Eastman Chemical.

Whatever decision you make, you'll want to make sure you can quantify the benefits of expending the capital to acquire the new systems. Bottom line: buy PCs or notebooks at the higher and newer end of the spectrum to ensure you won't end up with underpowered systems in 18 months, and achieve a return on a $1,000 per seat investment in the first nine months to a year. Otherwise, stay the course. As long as Moore's Law is in effect, the grass is greener down the road.

Use TalkBack to let your fellow ZDNet readers know what you think. Or write to me at dan.farber@cnet.com. If you're looking for my commentaries on other IT topics, check the archives.

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