Does PC stand for 'pretty cheap?"

Hewlett-Packard's HP Compaq dc7100 convertible minitower, priced at $919, has a 2.8-GHz Pentium 4 processor and 80GB hard drive.

The Gateway 3310 Series desktop PC's price of $400 includes a monitor.

Sony's Vaio RB40 desktop PC is priced at $850 without monitor.

Plunging prices for PCs let agencies cut client costs, put money elsewhere

People have been predicting the PC's demise for a decade. In IBM Corp.'s 1998 annual report, former chairman Louis Gerstner proclaimed, 'The PC era is over.' The next year, at the Fall Comdex show in Las Vegas, Oracle Corp. chairman Larry Ellison said: 'The only things left on PCs are Office and games. You're considered a dead company if you write applications for the PC.'

IBM did finally get out of the PC hardware arena, selling its PC business last year to Lenovo Group Ltd. of Purchase, N.Y. And Oracle writes network-centric applications. But people in the rest of the world seems to have missed the memo; they are still buying and coding like it's 1999.

According to Gartner Inc. 188.9 million PCs were shipped last year, an 11.7 percent increase over 2003 and the second consecutive year of double-digit growth. And as far as developers are concerned, CNET Networks Inc. lists 30,000 Windows XP applications available for download.

However, there is a difference between what was sold in 1999 and what is being sold today on the PC market. For example, mobile PCs account for a quarter of worldwide sales and half of U.S. sales.

The desktop PC market is also diversifying. There are high-end, dual-processor, 64-bit machines designed for media, gaming and scientific applications. At the other end are sub-$500 PCs, with some companies working to bring the cost down into the double digits.
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For most applications, however, the extremely low-priced devices will likely wind up being more expensive when support costs are added in. But by carefully evaluating the options, an agency can reduce its hardware costs without compromising service levels.

Buying a low-cost computer

PC price drops make it possible for organizations to cut their client hardware costs and put that money somewhere else. But initial hardware outlays are just the start. That must be balanced by consideration of the type of applications it can easily support, the level of service it provides users and the burden it places on the IT staff to keep it running. Deciding whether to go to a low-cost PC starts with assessing how it will be used.

'In a typical enterprise setting, the usage models are relatively mundane'surfing the Web, reading e-mail, creating [Microsoft] Office documents and accessing a few corporate applications,' said Steve Kleynhans, Gartner vice president for client platforms in Toronto. 'As such, from a design standpoint, you don't tend to need a lot of fancy functionality'basic graphics, middle of the pack processors, moderate memory and hard drive will probably suffice.'

He also said that if the PCs will be connected to a network, you will want to add some networking functionality, which will add a bit to the cost. Still, it is cheaper to have this installed in the shop than on site.

That type of PC will meet the needs of many, but not all, users. This is where you have to make a judgment call. Having PCs tailored to the needs of specific classes of employees may cut costs in the beginning, but it will add to your support burden as you expand the variety of devices in the system.

'As long as you are not sacrificing management capabilities, product consistency or functionality for the user, moving to a less expensive PC is probably fine,' Kleynhans said. 'However, it's a tricky balance, and in the end you want to ensure you have fewer models to support rather than trying to carefully fit a PC to a particular user and ending up with a lot of diverse options.'
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In choosing a low-cost PC, there are certain strategies that can help cut costs without sacrificing performance. The place to start is the CPU, an item that can add greatly to cost.

'CPU power is sold as an investment protection'pay more now and the machine will last longer,' said Jon Peddie, president of John Peddie Research of Tiburon, Calif. 'It's a false argument. PC prices drop so fast and so predictably that it's cheaper in terms of [total cost of ownership] to change out a PC every second or third year than it is to buy up and carry it for four or five years.'

Memory, on the other hand, shouldn't be skimped on, Kleynhans said. 'Buying 256M to save a few dollars can pretty severely impair performance, and the cost to add the memory after the fact can be pretty prohibitive.'

He advised buying and installing at least 512MB, and preferably 1GB, which should also be enough for the Longhorn version of Windows, which Microsoft plans to release next year.

Even if you get high enough numbers on the three items'CPU, RAM and storage'it's a good idea to take a good look at the other specifications to make sure that the PC will fully meet your needs.

'Additionally, many low-cost PCs trade off warranty or come with additional charges for common services that may drive up the final price,' Kleynhans said. 'Buyers need to look at the bottom-line price and what value is actually included at that price.'

Drew Robb of Glendale, Calif., writes about IT.

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