Companies Seek Alternatives to the Old Desktop PC

IT departments attempt to cut costs by experimenting with thin clients, netbooks, virtual desktops, and other substitutes for traditional computing

Tech executive Parikshit Arora had an unconventional response the morning he discovered that his office computer was no longer working. Rather than fixing it himself or calling in help from the information technology department, he discarded the device. "It wasn't booting up," says Arora, vice-president for technology at iQor, a company that handles call-center work for clients. "I didn't even care to find out why. I threw it away and got another one."

The same goes for most of iQor's 11,000 employees. Why the seemingly cavalier take on computers? Two years ago, New York-based iQor ditched most of its Dell (DELL) and Hewlett-Packard (HPQ) desktop computers and installed a fleet of cheaper, stripped-down machines that lacked hard drives. Also made by HP and known as thin clients, these smaller, virtually disposable devices leave most processing and storage tasks to a centrally located server. "We refer to thin clients as lollipops," says iQor Chief Executive Vikas Kapoor. "If yours isn't working, just get another one." Now, about 75% of iQor's employees use thin clients with files and software stored elsewhere. When a machine dies, staffers get a new one and resume work in minutes.

iQor may be a harbinger of things to come in corporate computing. While traditional laptops and desktops reign supreme in the workplace, accounting for the vast majority of employee computers, companies are increasingly willing to consider alternatives. Some are experimenting with thin clients in a bid to cut costs while many others are betting on netbooks. Employees are spending more work time on smartphones, while Apple's Mac—once viewed as a machine for artists and educators—is wending its way into corporations. "We've got the most diverse offerings of PCs that we've ever had," says Richard Shim, research manager for IDC's personal computing program, which is now tracking some 20 different kinds of personal computers, up from 16 in 2008.

No single kind of machine has gained wide workplace acceptance. Yet in aggregate, the alternatives reflect a shift in the way corporations think about computing. For instance, the Mac operating system was installed in about 2.7% of corporate computers in July 2008 but the figure had increased to 3.6% by March 2009, according to Forrester Research (FORR). As of October 2009, about 9% of 1,414 business technology professionals surveyed by InformationWeek Analytics said that their organizations made extensive use of netbooks and 19% predicted they would make extensive use of them by 2011. About 33 million netbooks were shipped worldwide in 2009.

Eliminating the Help Desk

The worldwide thin client market may grow to 7 million units in 2012, from 2.9 million in 2007, according to IDC. Gartner (IT) expects that by 2014, 15% of traditional professional desktop PCs will be replaced by so-called virtual desktops, which also leave most computing and storage tasks to a centrally located computer, rather than maintain them at the employee's workstation.

Executives at iQor opted for a nontraditional computing environment in large part to save money. "For every dollar I spent buying a PC, I spent 50¢ to the dollar every year maintaining it," Kapoor says. "There's a lot of technical expertise that's required to do that maintenance." iQor has eliminated its help desk and, before long, expects to cut its IT staff to about a quarter its previous size.

Decisions about what kind of computer to buy will come to a head in 2010 for the multitudes of companies expected to step up hardware purchases as the recession ends. In a November survey of 1,752 IT employees by ChangeWave Research, about 22% of respondents said they plan to increase IT spending in the first quarter of 2010, up from about 10% a year earlier. No longer can chief information officers make a straightforward choice between a desktop or a laptop. Now companies need to assess rising demand for portable computers, smartphones, virtual desktops, and so-called cloud computing, where processing, storage, and other tasks are handled off-site, often by a third-party provider such as (AMZN).

While many companies are basing IT spending decisions on the state of the economy, several are also taking their cues from the availability of the newest Microsoft (MSFT) computer operating system, Windows 7. The recently released OS is accelerating hardware purchasing decisions for about 19% of the respondents in ChangeWave's survey. In many cases, corporate IT departments put off computer upgrades not only because of the economic slump but also from dissatisfaction with Vista, the prior iteration of Windows.

Windows Vista Prompted Doubts, Change

Case in point: Silicon Valley law firm Fenwick & West, which like many companies still uses machines that run Windows XP, the operating system that preceded Vista. In early 2010, Fenwick & West will give its 700 employees new machines, their first computer upgrade in three years. As of March 2009, Windows Vista was installed in about 11.9% of corporations, while 86% of companies remained on Windows XP, according to a July 2009 Forrester Research report. Windows Vista generally required hardware upgrades, which was one reason more companies didn't adopt it.

Dismay over Vista prompted many companies to contemplate alternatives to PCs, including Macs and machines that run the open-source Linux OS. In an October 2009 survey by InformationWeek Analytics of about 1,400 business technology executives, 13% of respondents said Vista's foibles had significantly affected their organizations and that they were actively encouraging the use of non-Windows systems. Another 26% said Vista had a minor effect and that their organization was now more open to non-Windows systems.

Windows 7 has been well-received and in some cases may wed companies more closely to a traditional PC environment. Yet because it—unlike earlier iterations of Windows—doesn't compel users to change their hardware, Windows 7 is also giving IT execs greater leeway for experimentation. "Windows 7 is the first Windows operating system we've released that didn't require an upgrade to hardware," says Gavriella Schuster, general manager for Windows at Microsoft. "Our goal is to make sure that we capitalize on the latest technology like touch and netbooks." Microsoft has also made enhancements to Windows 7 to better support desktop virtualization.

Transition Left "Lashes on My Back"

This time around, Fenwick & West is upgrading to laptops and desktops, but Matt Kesner, the law firm's chief technology officer, says opting for conventional machines won't always be a given. "It's possible this is the last refresh we will do with traditional computers," Kesner says. The company is considering desktop virtualization, an arrangement that would give the law firm more flexibility in the devices employees use, and meet the company's need for increasing mobility for its workers. "Next time we may be providing keyboards and monitors for something that attaches to your belt," Kesner says.

Weaning employees off customary equipment isn't always easy. "Initially [the thin client] wasn't as fast as our PCs," says iQor's Arora. "It was quite frustrating at the beginning," he says, adding that since the kinks were worked out, everything has functioned as it should. "I feel I have the lashes on my back to show the pain," CEO Kapoor says.

While growing numbers of companies are toying with alternative computing modes such as thin clients, few have committed to putting thousands of users through the transition, says Annette Jump, research director at Gartner. "In times like this, CIOs are going to experiment with a lot of different technology," says Ric Echevarria, a vice-president at chipmaker Intel (INTC). He says many CIOs conclude that business PCs provide better performance and security and that they're easier to manage.

No one expects PCs to go away altogether. "Up until now, the center of a corporate user's universe was their PC, but as we go forward the PC is going to be just one of the key tools that workers use," says Al Gillen, an analyst at IDC. "The net result is that we're talking about a PC market that will still grow in size in the future but it won't be the fastest-growing market anymore—there will be many more options."

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