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PC market decline casts doubt on future of corporate PC refresh cycle

As the UK PC market continues to decline, Jenny Williams finds out how corporate refresh cycles will change.

Corporate PC refresh cycles have been delayed as IT managers consider alternative mobile devices, tackle restricted IT budgets and manage the consumerisation of IT.

However, the continued decline of the UK PC market is the worst the industry has had for a decade, according to Gartner. Will corporate refresh cycles pick up pace?

Poor economic conditions

Bobby Watkins, UK managing director at Acer, says there is money to be spent in the market in capital expenditure but CIOs' decision-making is slower due to uncertain economic conditions.

The manufacturer set up a 20-strong UK team in February 2011 dedicated to helping its customers make decisions about what to buy.

Dell's Q1 fiscal 2012 year results show corporate PC refreshes caused sales of Dell's desktop and laptops to rise 7%, with enterprise services sales to large businesses increasing 5% to $4.4bn.

HP also experienced growth in its commercial client (PC) business, which grew 13% in Q2 2011.

In the past it has been possible to predict when the next big corporate PC refresh would occur by working forwards from the year 2000, when many businesses upgraded their PCs, due to fears over the Millennium bug. Given a corporate desktop may last three to four years, a major PC refresh is due now.

However, PC upgrade cycles are no longer predictable. "The days when CIOs could mandate a product as standard are over. Organisations are adopting 'bring your own computer' strategies. Corporate refresh cycles will largely disappear as companies are refreshing at different rates and different times," predicted Trevor Evans, UK channel sales director at HP.

"Managing the estate is a new dilemma where the long-term notion of wholesale refresh of product line and systems will come under pressure," adds Trevor Evans.

In the meantime, Evans says migrations to Windows 7 and a move towards virtual desktop infrastructure (VDI) have increased corporate refreshes in the last quarter. But 2010 was still a fairly tough time in the corporation market, said Evans

Consumers drive upgrades

Evans says HP are preparing to adopt to shifts in the corporate market driven by the consumerisation of IT.

Ranjit Atwal, research director at Gartner, believes PC refresh cycles will become more frequent. "Organisations don't want to own and manage devices. The four-year replacement cycle will come down but there's still no evolution of technology to drive that at the moment. It's less about how quickly PCs are replaced but more about what is being bought."

Lenovo is the fastest growing PC manufacturer, according to analyst Gartner. It expects buying habits to be driven by employees' consumer purchases.

David Blackmore, Lenovo's UK general manager, says the company is strengthening its consumer offering to maintain corporate customers.

"We can never be an overall success in the UK without entering into that space," said David Blackmore.

"Consumerisation is important to corporate accounts. Even with our large corporate customers, we've had a number of conversations about bring your own computer to work. We're looking at creating a good consumer experience that's also right for IT's requirement of running an estate," added Blackmore.

Lenovo has not ruled out providing enterprise services alongside its product portfolio in a few years' time. This suggests a shift away from PC sales and refreshes towards enterprise services to survive changes in the PC market.

Indeed, Dell's enterprise services division accounted for 30% of its total $15bn sales in the first quarter of 2011. Dell is to hire more UK staff to grow its enterprise services by the end of June 2011, reflecting further investment in the division.

Stephen Murdoch, general manager of EMEA large enterprise at Dell, says it is important for the company to have balanced growth in commercial and processional services as well as extending its portfolio to offer cloud-based services.

Cloud alternatives

Cloud-based devices could overtake the traditional corporate PC.

David McLeman, managing director of Google Apps partner Ancoris, says the launch of Google's Chromebook marks the end of the inevitable desktop refresh cycle most organisations face every three or four years.

"We expect true cloud-based desktop to be the norm within the next three years," he added.

Google's Chromebook costs $28 (£17) per user per month. Using IDC's estimated average cost of £1,658 for owning a desktop for three years (working out at approximately £46 per month), David McLeman claims IT managers can save at least 50% on refreshes, OS upgrades and hardware replacements with a Google Chromebook rather than the traditional Microsoft Windows desktop.

"Microsoft OS upgrades have typically driven the desktop refresh cycle but this requirement will now begin to wane," McLeman said.

The PC corporate refresh cycle has already waned. As Windows 7 upgrades and desktop virtualisation continue to fuel some corporate refreshes, most PC manufacturers are expanding its product offering to respond to the consumerisation of IT or bolstering enterprise services divisions to help manage IT estates and encourage CIOs to make complex decisions more quickly.

Either way, corporate PC refresh cycles have changed to embrace the use of employees' personal consumer devices in the workplace to adapt to new technology and models of working.


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