The impact of corporations’ extended technology refresh schedules, pent-up demand, reduced vendor pricing and anticipation of the adoption of Windows 7 converged late last year, generating optimism about this year’s sales of desktop and notebook PCs. But analysts’ hardware predictions are conservative, as early adopters plan to refresh only half their organization’s computers.
Globally, IT spending will reach $3.4 trillion in 2010, an increase of 4.6% compared with last year, Gartner predicts. Competitor IDC estimates IT spending will only hit $1.48 trillion this year, an increase of 3% in common currency. Hardware sales will grow 5% in 2010, according to IDC, with PC sales estimated to expand by 3%.
“Aggressive promotion by PC vendors and channels stimulated consumer PC demand,” said Mikako Kitagawa, lead analyst at Gartner. “However, some vendors made damaging price cuts to increase market share.”
But there is some evidence that Windows 7 could, in part, propel these figures even higher – especially as corporations that choked on hardware purchases over the past year or so plan to acquire Windows 7.
Big Bang Theory?
Early adopters of Microsoft’s latest OS planned to refresh half their existing PCs and notebooks, and replace the other half with new hardware better-capable of tapping Windows 7′s features and capabilities, according to panelists at the Gartner Symposium in October. While some companies were involved in early pilot programs, all four participants plan full-scale launches in the coming months.
Fifty percent of computers will be fork-lifted, with the remaining half refreshed, said Mike Capone, corporate vice president and CIO of security provider ADP. The scene is the same at BMW Group, which uses 85,000 PCs across the world. About half of these devices will be replaced, said Mario Mueller, vice president of the IT infrastructure at the luxury auto manufacturer. The other half of the BMW computers will undergo technology refreshes, he said.
In some cases, scheduled technology refreshes coincided with the migration to Windows 7. At least one company, however, views Windows 7 adoption as more important to the company’s bottom line than waiting for the calendar to turn to its pre-scheduled investment in new hardware.
“We don’t think we can wait on the refresh cycle to [upgrade],” said Randy Benz, vice president and CIO at Energizer, which expects all its 8,800 worldwide computers to run Windows 7 by the end of the year.
Pella Corp., manufacturer of doors and windows, is extending its rollout of Windows 7 into 2011, primarily to stretch out its hardware dollars, said Jim Thomas, the company’s director of IT operations and infrastructure. But the company planned ahead, and began purchasing Windows 7-ready hardware in 2009, he said.
“We’ve been buying hardware we knew was going to be compatible, so we’re well on our way,” explained Thomas. “The reason we’re dragging out into a 2011 rollout will be the wrap-up of the hardware refresh. We’re letting it be a natural lifecycle.”
Smaller organizations may be buying on a less grand scale, but also are being propelled into new hardware purchases. Take the City of Miami, for example, which upgraded from Windows Vista and Windows XP to Windows 7. First, the IT department expected to implement the new OS on 30 department PCs, then buy approximately 100 new machines pre-loaded with Windows 7 for use in other departments within the 2,900 PC-strong Florida city.
In all these cases, the corporations planned to standardize on Windows 7, rather than create a hodgepodge of multi-generational operating systems. Since many businesses avoided Windows Vista and operate on Windows XP, they are rightly concerned about the software’s impending end-of-life — meaning an end of support and potential security and compliance holes.
“Very few ever made the move to Vista. With the end of any remaining support for XP — there will be security patches to 2014 — we’ve hit the end of support for a 9-year-old operating system,” said Mark Tauschek, lead analyst at Info-Tech, who recently embarked on a Windows 7 research study that will, among other topics, address companies’ plans to refresh versus replace. “It’s come down to necessity.”
Since the harsh economy forced businesses to extend refresh rates, many businesses simply have to buy new hardware if they want to use Windows 7, he said. “Over the last year and a half, people were pushing those refreshes out to four or five, sometimes even six years,” said Tauschek. “I think a lot of organizations will push to four or five years but won’t back beyond that.”
Already Microsoft is benefiting from its new OS: The software giant reported revenue of $19.02 billion in its most recent quarter, 14% more than the same quarter last year. In fact, through the end of Microsoft’s second quarter, it had sold more than 60 million Windows 7 licenses, the developer stated.
It’s unlikely that many companies expect to get the most out of the OS if they run the OS on what were the top-selling PCs of 2006, 2007, or 2008.
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