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Your Replacement or Mine?

For desktop computers, something newish this way comes.

Is Thin Finally In?

While tablets combine some familiar elements in a new form, the other trend in desktop computers is a straightforward rehash of an idea put forth by Oracle chairman Larry Ellison back in 1996. The idea, then and now, is that a stripped-down, “thin-client” machine can serve as the PC equivalent of a telephone—that is, a device that does little more than provide access to a central network, where all the software and data reside.

Ellison’s concept, which he dubbed an Internet appliance, failed to catch on. Only a small number of thin-client machines were sold, primarily for limited vertical applications such as handling reservations, performing airport check-ins, or processing forms. With PCs cheap and able to do more, most companies saw little reason to rock the boat.

Despite their earlier belly flop, thin-client machines are back and winning new converts. One of their biggest attributes has proven to be the lack of PC amenities: with no hard drive, no floppies, and no CD-ROM players, they are less likely to malfunction and are easy to manage—particularly from an employee-abuse standpoint, as they make it very difficult to download music or copy company data onto floppies. And CIOs love thin clients because their total reliance on servers makes them far less likely to be affected by computer viruses. That also slashes administrative costs such as help-desk requests and software installation.

According to IDC, sales of thin-client devices are on the uptick, increasing 18.8 percent last year and projected to grow at a 15 percent clip this year. Even so, these machines represented little more than 1 percent of all PC sales in 2002. And some makers of thin clients have begun branching out into other product areas, in search of faster growth.

PCs may be cheap, but thin clients are cheaper still, usually priced from $300 at the low end to $600 at the top end, a substantial savings over a conventional PC and a near-giveaway compared with tablets. One company, Hollywood Entertainment, bought 3,500 thin clients and installed them with no added IT staff, for a net savings of $7 million right out of the gate, says Michael Kantrowitz, chairman and CEO of Neoware Systems, a King of Prussia, Pennsylvania-based manufacturer of thin-client machines. “Companies want to know how they can do more with less,” says Kantrowitz. IDC’s Kay agrees. “There is a very good financial argument for having thin-client computing today,” he says.

Thin-client computers may be outside the mainstream, but that doesn’t bother Steve Starkey, CIO at Ardent Health Services, a diversified health-care provider. With its main office in Nashville, Ardent is in the midst of replacing PCs with thin-client computers for some 3,000 employees at 28 hospitals, one physician group, and an HMO. The company’s strategy is to acquire hospitals and provide them with centralized management services.

Starkey likes the ease of centrally managing the company’s fleet of desktop machines. “If we want to change to Microsoft Outlook 2003, we can do it via our central server, and it’s automatically out to the users,” he says. “Hospital-specific applications are complicated and difficult to roll out, but this technology makes it easier. It certainly lowers the total cost of ownership of these systems, and we don’t have to replace them as often as we would have to if they were full PCs.”

Doug Bartholomew is a Berkeley, California-based writer and former senior technology editor at IndustryWeek.

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