In January, IBM made an announcement that probably wouldn’t have garnered much attention on even the slowest news day. The company signed a $5 billion deal with Sanmina-SCI Corp. to outsource the manufacture of its NetVista PC line.
With the industry’s margins almost nonexistent and worldwide PC sales declining outright last year for the first time ever, such an outsourcing deal seems sensible and even inevitable. But the move has symbolic significance, because it comes 20 years after IBM transformed the personal computer from a hobbyist’s fixation to, well, Corporate America’s fixation. In the past two decades IBM has sold tens of millions of PCs, and while it hasn’t been the market leader for some time, the company has remained synonymous with desktop technology. That IBM would leave it to another company to build the boxes that have become the virtual appendages of knowledge workers everywhere certainly says something about the state of the corporate desktop today.
But what exactly? Steve Jobs’s indefatigable efforts to make the PC a sexy consumer item notwithstanding, corporate employees are usually more attached to their mouse pads than their PCs. And those PCs are getting older: analysts say that the economic slump, combined with a move toward Web-centric computing, which requires no particular boost in desktop horsepower, is now prompting companies to replace PCs every four years rather than every three. “Historically, new software drove the demand for faster PCs,” says Gartner analyst Mark Margevicius. “But now we all use the same basic programs–E-mail, word processing, spreadsheets–and there hasn’t been any new ‘killer app’ for some time.”
But today’s knowledge worker is not, despite appearances, a wretched scrivener forced to toil at an ancient machine while using the same basic software programs he or she has used for years. The Internet has, of course, brought an entirely new dimension to corporate computing, but there are a number of other, less-conspicuous trends that promise to reshape the corporate desktop.
Freed of manufacturing concerns, IBM plans to push PC enhancements on several fronts, all of them valuable if not glamorous. The company’s “four-pillars” strategy is intended to provide a number of behind-the-scenes improvements that make PCs more secure, more flexible, and simpler to manage, all while holding costs down. “We want to be on the cutting edge of cost-competitiveness,” says IBM’s Clain Anderson, a wish that is not as oxymoronic as it may sound. Anderson, IBM’s director of market development and alliances for its personal computer division, says PC vendors can still distinguish themselves on features, they just can’t get more money for them.
Helping customers save money on the after-purchase costs of PCs, in fact, is one way that IBM hopes to stay competitive. In January, Kodak signed a deal with IBM to buy 40,000 desktop and notebook computers over several years. Kodak cited lower total cost of ownership (TCO) as the key factor behind its choice, and in particular the ability to manage the software “image” on each machine, a chore that can account for half of the total hardware support budget. IBM has developed ImageUltra, special software that maintains a single “superimage” of PCs on a network and helps ensure that despite different operating systems, applications, drivers, and other features, the PCs interoperate smoothly. That may sound arcane, but IDC Corp. analyst Roger Kay says such chores can occupy up to one-third of a company’s PC support staff, and IBM says the software can lower TCO by $100 per PC per year.