With the economic uncertainty many small-and-medium-sized businesses are delaying their PC hardware refresh cycles to save money, but it's a decision that could actually be costlier in the long-run. That's the message that Intel Corp. (NASDAQ: INTC) sent during a recent Web briefing on the SMB PC market, and it's a message that could help resellers and system builders close sales.
Indeed, Intel pointed to a recently study by Techaisle.com on SMB Pain Points that found as SMBs try to extend their PC lifecycles beyond three years, which is considered the industry norm, the costs to the business begin to escalate dramatically.
"The downturn is pushing the PC replacement cycle out for SMBs, but the consequences are increased viruses and security risks and higher maintenance costs," said Robert Crooke, general manager and vice-president of the business client group for Intel. "Moving-up a new PC purchase or refreshing is actually a better payback, usually within one year."
According to the Techaisle.com study, SMBs are generally bullish in their belief there will be an economic recovery, at 85 per cent. They diverge, however, on just when they expect the recovery, almost evenly dividing on forecasts of anywhere from three months, to more than two years, to just don't know.
Dividing the data between the mid-market and small business, the study found 43 per cent medium-sized businesses are extending their PC refresh cycles, while 54 per cent haven't changed them. Among small businesses, 26 per cent were extending their equipment life, compared to 73 per cent sticking to their original timelines.
"If you have an uncertain situation on the recovery, waiting for it to happen (to refresh your PCs) can be a risky scenario, because there are consequences," said Crooke.
Indeed, according to the study, PCs older than three years raise potential security and productivity issues. For example, the frequency of virus incidents rises 28 per cent for desktops and 58 per cent for notebooks when comparing PCs older than three years to those under. Downtime due to viruses also increased by 23 and 22 per cent, respectively.
Component failure rates also jumped dramatically, with hard drive failure rates rising from eight per cent to 33 per cent, and power supplies from 11 per cent to 49 per cent.
Additionally, Crooke noted that just as maintenance costs increase, PC warranties often expire at year three, putting increased cost on the business to maintain their older fleets. The bottom line, he said, is that when you consider the increased service costs and the lost productivity due to increased downtime experienced by older PCs, the capital cost of acquiring a new PC can be recovered within one year.
"Our view is a three-year refresh cycle is about the right refresh cycle, and it's borne out by this data," said Crooke. "The way SMBs do refresh varies drastically based on their IT sophistication. Some have a schedule and do it on a regular basis, and others do it when PCs fail which is a very disruptive way to do it. We'd encourage SMBs to get on a regular refresh cycle."
Tony Liao, associate vice-president, sales and marketing with hardware component manufacturer Gigabyte, said SMBs are challenged by security and maintenance costs but he expects them to come out of the downturn strong.
"We think SMBs will lead the recovery because they're more flexible, especially in emerging markets," said Liao. "We expect the SMB upgrade cycle to start strong in Q4 beginning with Windows 7, and continue over the next three years."
Liao adds he sees Windows 7's release to really help spark the SMB PC refresh market, because the new OS is more user-friendly, easy to use and doesn't require as powerful a system as Windows Vista did.
Liao's bullishness over Windows 7 sparking SMB PC refresh is echoed by Intel's Crooke.
"Its an opportunity for SMBs to make a migration to something that helps them be more productive, and last longer (on notebook batteries) outside the office," said Crooke. "There's an ease of migration capability with Windows 7, and an additional layer of security. And technology like Intel's vPro helps with that security as well, allowing you to drive patching across systems much more quickly."