Article

Notebooks in the data center take root

Shamus McGillicuddy, News Writer

In the business word, the desktop PC is still king, but the notebook is the future.

Although desktop computers still make up 75% of the corporate PC market, that market is stagnant, according to Simon Yates, principal analyst at Cambridge, Mass.-based Forrester Research Inc. Meanwhile the corporate notebook market is growing.

Lenovo Group Ltd., the world's third-largest PC manufacturer, recently announced plans to cut 1,000 employees, about 5% of its global workforce, mostly from its business desktop division. The company will consolidate its desktop operation in China, where "desktops rule," according to Yates.

Yates said this is partly a reflection of Lenovo's IBM legacy. He said IBM never put the same amount of marketing and product development money into its desktop products as it did into its ThinkPad brand. Consequently, IBM was known as the company to go to for notebooks, while manufacturers such as Dell Inc. and Hewlett-Packard Co. dominated the desktop market.

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The gap is certainly closing and closing fast.
Simon Yates
principal analystForrester Research

 Roger L. Kay, president of Endpoint Technologies Associates Inc., a Wayland, Mass.-based research and consulting firm, said Lenovo isn't giving up on desktops. Instead, it's tightening its desktop manufacturing supply chain by consolidating desktop operations in China. Kay said Lenovo will probably sell about 90% of its desktops within China. However, the company's worldwide emphasis has been -- and will continue to be -- on notebooks.

Lenovo's desktop consolidation also reflects the business world's transition toward PC mobility.

"Notebook prices have fallen a lot over the last few years," Yates said. "Traditionally the people who got notebooks were business travelers, but within the last couple years companies have tried to create a more flexible working environment even for the more office-based people."

Yates said many companies feel the flexibility of notebook computing improves worker productivity and job satisfaction.

"You can see clearly in companies that have very large footprints in notebooks -- companies that have more than half their workers with notebooks -- believe that they have made their workers more productive and satisfied in their jobs."

Companies that are still dominated by the desktop tend to see no need for worker mobility, Yates said, since happiness and productivity can be hard to quantify.

However, with the market clearly shifting, some CIOs should ask themselves whether it is time to deploy more notebooks to their workers. "CIOs should take a look at the fleet of machines they have and the mix of uses and kinds of work they do," Yates said. He said CIOs should consult with line-of-business managers to determine if there are opportunities to improve the business with notebooks.

"A couple of years ago, IT held all of the cards and was the power behind deciding what user got what machine. The pressure for notebooks really came from the bottom up, from users saying 'I want to be more mobile.' They pass this along to the line-of-business managers and the line-of-business manager is always the one who knows whether they can be more productive with notebooks."

Despite the growing popularity of notebooks in business, acquisition, support and maintenance costs continue to be higher for notebooks than desktops. But that disparity in cost is shrinking.

"The gap is certainly closing and closing fast," Yates said. "Companies can use the same management tools now to keep desktops and laptops updated. The biggest potential barrier to the cost difference being zero is that laptops have to be refreshed more often. Not that many companies open up a desktop anymore to put more memory in, but it's a lot easier to upgrade desktop hardware than it is to upgrade a mobile system."

Kay said the difference in refresh rates between desktops and notebooks is smaller than most people realize. It is now measured in months rather than years.

But he said there are other reasons why the desktop will continue to hold on to a large share of the business PC market. First there is the concept of task machines, Kay said. These are machines that perform specific business tasks and are shared by workers. Companies don't want those machines to be mobile.

Kay also cited the "white box" concept. These are low-cost desktops made by businesses that cobble together computers from cheap parts acquired through opportunistic buying. For instance, if a PC manufacturer has an abundance of 180 GB hard drives, it might dump them on the market at a below-cost price. "White box" computer makers would buy them, and install them in desktops that can then be sold at very low prices, Kay said.

This practice of assembling a PC from disparate low-cost parts isn't possible for notebooks because their parts are highly integrated, Kay said.

Kay said notebooks are also still far from capable of replacing high-performance machines used for industrial design and other business functions that require a lot of computing power.

"Mobility is a good thing that is pretty much only mitigated by prices, performance and comfort," Kay said. "The price belt is declining, the performance belt is declining." All that is left is comfort and ergonomics, Kay said.

Ergonomics are compromised by notebooks, but this something that can be corrected with a docking station equipped with a monitor and keyboard.

Let us know what you think about the story; e-mail: Shamus McGillicuddy, News Writer


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