Suppliers introduce price incentives to get users to invest in the latest PC hardware

Users who are delaying the hassle of upgrading their PCs are being offered a host of different outsourcing options by suppliers...

Users who are delaying the hassle of upgrading their PCs are being offered a host of different outsourcing options by suppliers acting as managed service providers.

Hewlett-Packard has become the latest computer manufacturer to introduce an upgrade offer to tempt users to replace old desktop equipment.

According to some industry experts, users are now keeping their desktop PCs and related IT systems for as long as seven years before upgrading - a situation which has prompted the major hardware suppliers to create attractive upgrade, outsourcing and financing schemes for desktop IT.

While users may save on capital expenditure by delaying a PC upgrade, Meta Group analyst Ashim Pal warned that supporting older PCs was more expensive in the long term.

"Users are generally poor at managing antiquated desktop equipment," he said.

Faced with the challenge of justifying the cost of upgrading an organisation's desktop infrastructure, many IT managers prefer to upgrade server and datacentre infrastructure rather than desktop PCs.

Pal said this was because newer operating systems, such as Office XP or the forthcoming Office 2003, do not offer firms a significant return on their money.

Like other hardware companies, HP is banking on the take-up of products such as Office 2003 to drive demand for new business PCs. But Jon Lynch, business manager at HP's personal systems group, insisted companies could benefit from PC upgrades.

He said, "Users see a 21% gain in performance when they move from a Pentium III to a Pentium 4-based PC."

The HP offer will mean that users running 1GHz Pentium III desktops are entitled to a rebate of up to £103, representing a 15% saving on the list price of its most popular desktop, the d530.

This machine has a list price of £715 and is configured with a 2.4GHz Pentium 4 processor, 256Mbytes of memory, a 40Gbyte hard disc and a CD-Rom.

HP also offers a financing scheme that lets users lease the d530 over a 36-month period. In a desktop environment with 250 PCs, the quarterly lease price from HP would be £15,662.

Along with rebates and flexible financing, one of the big trends in 2003 has been for users to outsource their desktop IT to a managed service provider. In August, EDS teamed up with Microsoft to offer remote deployment and upgrades for software such as Windows and Office XP.

EDS said its service, called myCOE, could save users between 10% and 20% on the cost of managing their desktops internally.

Ovum analyst Marc Jacobson said desktop outsourcing was becoming an easy way for IT directors to reduce IT costs. This year IBM has signed several desktop outsourcing contracts with companies including Electrolux, Nordea, JP Morgan Chase and ABB.

HP has also been busy. Proctor & Gamble signed a 10-year, £2bn outsourcing contract with HP to manage its IT infrastructure. The deal included desktop outsourcing services for Proctor & Gamble staff.

Most of the major outsourcers, system integrators and PC manufacturers also provide such a service.

At the end of August, Dell launched managed services for desktop PCs. The service was designed to reduce the complexity users can face in managing desktop IT. The outsourcer takes over the control of upgrading the software and hardware and end-user training.


Different categories of PC outsourcers

In a research paper on desktop outsourcing, Gartner identified three categories of desktop outsourcer: the global outsourcer; the system integrator; and PC manufacturers/resellers.

Global outsourcers

Although global outsourcers such as IBM Global Services, EDS and Computer Sciences Corporation offer desktop outsourcing as part of their services portfolio, Gartner warned that desktop outsourcing was generally not a core business for comprehensive outsourcers. As a consequence, desktop services would often be sub-contracted to partners and other service providers.

System integrators

System integrators include companies such as Accenture, Atos Origin and Deloitte Consulting.

Here Gartner said the agreement between user and system integrator could include supporting or outsourcing the desktop environment. Although system integrators could offer a range of desktop outsourcing services, Gartner said asset ownership and staff transfer were usually not covered.


Manufacturers such as Dell, and service suppliers such as Siemens Business Services, SchlumbergerSema, Getronics and Unisys and resellers such as Computacenter and ComputerLand are distinguished from other desktop outsourcers by their strong technical and project management skills.

The desktop outsourcing services for this category focused on cost efficiency, or when the desktop contract was based by region or by country, according Gartner.

Sometimes these suppliers can belong to consortia bidding for large-scale outsourcing, but generally, Gartner did not regard these suppliers as suitable for global outsourcing, compared to traditional outsourcers.

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