7 Reasons the PC Is Here to Stay

The personal computer is a $1,000 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. Centralized 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 Strom Thurmond. Think Rolling Stones and Dick Clark in IT terms. Think PC. An exit poll affirms this. A CIO 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 percent, 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.

Reason 1

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, N.C., 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 centralized, 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."

Reason 2

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 percent 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) Co. 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, realizing she’s basically admitted that many people turn NIC’s appliances into low-end personal computers. "We don’t run around publicizing 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, based in San Jose, Calif., 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 percent of Wyse’s thin-client revenues.

Supposedly, 2001 was the year when thin clients turned the corner. Neil MacDonald at Gartner predicted in 1997 that 20 percent of the desktop market would be thin by the end of this year. Wyse’s McNaught thinks it’s more like 1 percent. 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 $200 for the big NIC. "I think we could do it for $300," 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, N.C. "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."

Reason 3

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 Auto Glass Specialists in Madison, Wis., 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 February 2000, has put PC management on par with thin clients. And then there’s cost. Terminals cost him $800 per unit. New PCs: $830.

Sykes says his PC choice was easy. "I asked myself if I wanted a Chevy Suburban, 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 centralized 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."

Reason 4

TCO should stand for "Thin-client Costs are Oversimplified." There’s a colorful 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 $218,000 for five years, while 15 NCs would cost around $94,000. Gartner was also aggressive, reporting that one networked PC costs about $10,000 annually, and thin clients could save up to 39 percent on that. The math was 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 CRM services company in Nashville, Tenn. "The cost of thin clients is not so low that it’s worth reengineering, 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.

Centralized 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."

Reason 5

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 $2,000 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 $1,000 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. "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 anymore."

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 percent of CIOs in our survey said their PC life cycle is 31 months or longer, and 54 percent 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.

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