PC replacements: Lawyers, auditors and common sense

Think you're saving big bucks by hanging on to those "seasoned" PCs? Aberdeen Group explains why hanging on to those graying gadgets can cost you plenty.

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Too many businesses have been hanging on to Windows 98- and NT Workstation 4-generation desktop computers. IT managers know that these PCs are past their prime, but have met stiff resistance from CFOs and CEOs who would rather hoard the cash saved by endlessly postponing capital asset replacement. Aberdeen explains why it's time to throw the words "fiduciary responsibility" around the boardroom, and get a PC replacement cycle going...

soon.


It's ugly out there in Cube Land

More than 50,000,000 aging PCs sit on desks in corporate cubes and offices around the world. They were built and sold before the millennium -- in fact, many were bought circa 1998 because of anticipated Y2k problems with even older Microsoft DOS and Windows 3.1 PCs. Small businesses often purchased consumer machines with Windows 98 and larger enterprises installed both Windows 98 and NT desktops as the "fat clients" of Y2k-generation application enhancements. 

Fast forward to mid-2003. Those machines -- dusty monitors surrounded by sticky notes and keyboards that show distinct signs of harboring biological activity -- are still in operation, which is the problem. 

If all of those PCs just died with a hard-drive whine and a puff of smoke, the IT and corporate management issue would be simple: buy a new computer with an up-to-date operating system. However, PCs do not all expire on some arbitrary date, such as the day the computer is completely depreciated. The computers keep running, more or less, the way they have for four or five years -- which is why so many executives have repeatedly used the low risk, "no way" answer to requests for a new generation of business PC replacements.

"Software never wears out"

Non-technical executives believe that as long as the PC hardware keeps running, the PC software will keep running. This is true, but only in a vacuum under laboratory conditions.

The fact is that software does wear out. PC software is programmed and supported by businesses that need to be efficient and profitable, just like their customers. Ford only guarantees spare parts for five years after a car is built. Guess what? Microsoft will only support an operating system for five years after it is introduced.

There are two parts of Microsoft's support policies that the CEO needs to understand clearly. First, Microsoft products that are past their support dates cannot have support contracts, so telephone remediation ceases, and there are no new service packs. Second, security hot fixes are no longer provided, meaning that newly discovered security bugs in non-supported products won't be fixed by Microsoft and, thus, become an attractive entree for hackers.

W95.Tenrobot is a memory-resident file appender that only infects files when it is executed on a Windows 95/98/Me system. It was discovered on April 3, 2003, and is a "latest threat" at Symantec's Web site. W95.Tenrobot gives a hacker remote access to a computer through IRC. This virus shows that old software is still very attractive to the bad guys.

Windows 98 and Windows NT have no facilities to indicate that a machine has been hacked, unlike more recent versions where at least a trail is left behind.

Windows NT 4.xx goes into the non-support stage on June 30, 2003 and Windows 98/SE on January 16, 2004. It is logical to assume that support reductions by other hardware and software suppliers will be influenced by those dates.

Act Two: The auditors enter…

Aberdeen Group believes that corporate desktops that are left vulnerable to security problems of unknown risk represent an unacceptable information technology practice. A Big Four accounting firm partner indicated that his firm's auditors, as they did during the Y2K period, would look askance at clients running mission-critical business processes on unsupported and vulnerable computers.

… Followed by the lawyers

The corporate attorney we spoke with asked to see a copy of this article, saying his firm had a lot of old machines. He said that some circumstances, such as knowing that the use of old PCs might result in an enterprise catastrophe, could lead to a claim of negligence. But his more insightful comment was that no corporate executive wants to become a laughingstock by doing something stupid that harms the business, yet is avoidable.

Looking down the road, we think keeping Win 98-era PCs around much longer will move from the executive's prudent category to the stupid category.

It's a great time for a PC replacement cycle

If you buy the above arguments and are still reading, then we have good news: mid-2003 is an auspicious time for starting or accelerating a PC replacement cycle:

  • Windows XP Pro Service Pack 1 is out in the field and working well. No stability problems here. A great client OS on today's more powerful desktops and laptops.
  • Windows Server 2003 brings a new round of support servers, notably Exchange 2003 and SQL Server. These use network and server resources more efficiently.
  • Office 2003 will be out in a few months, along with new collaboration options. Definitely worth evaluating.
  • Intel's new Springdale chip set inaugurates a 12-month-plus period of platform and software image stability. Features include a fast, 800 MHz front-side bus, better graphics, and more efficient Ethernet handling.
  • Intel's Pentium 4 microprocessors with HyperThreading are now mainstream. They are better at dealing with the multitasking that is prevalent in the operating system, as well as thread-aware applications.
  • About one-third of corporate PC purchases this year will be notebooks. The Intel Centrino wireless laptops feature a long battery life and have the benefits of work-wireless productivity.

At Aberdeen's PC Deals, business PC prices on our reference desktop, which includes Windows XP Pro and Office XP Pro licenses, run from $1,250 to $1,400 this month from the top suppliers. That works out to roughly $2 per day over three to four years in capital asset costs.

Aberdeen conclusions

Last year at this time, Aberdeen was a company filled with those aforementioned old PCs. We did not at all like spending hard cash in a down economy to upgrade our PC ecosystem. However, we analyzed the business situation and concluded that we could not afford the aggravation and potential disruption to our knowledge-worker-driven business by not upgrading. Tough medicine, we concluded, but common sense.

For businesses that are at the tipping point -- especially the small-to-medium ones lacking a 24×7 global IT operations department -- it is time to crank up the planning for the recession-disrupted PC replacement cycle, and get with the 21st century. 

Tell the C-level execs that your organization may be able to limp through the next year or so, but at an increasing risk to individual productivity and business-process continuity. 


Peter Kastner leads hardware platforms, pervasive computing, and semiconductors research for Aberdeen Group, a Boston-based IT market research and consulting firm.

To read more articles like this one, visit Aberdeen Group and register for free online access to Aberdeen's IT market research and analysis, and to subscribe to technology-specific e-newsletters.

© 2003 Aberdeen Group Inc.

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