Intel Joins the ‘Refresh Now’ Chorus

SAN FRANCISCO — Intel wants you to buy more hardware.

No surprise there: The world’s largest chipmaker, like the rest of the IT industry, is feeling the effects of the global economic meltdown, with CEO Paul Otellini noting during Intel’s (NASDAQ: INTC) Q1 earnings call that corporate sales were much slower than consumer sales.

So it’s easy to be very skeptical when an Intel-sponsored report says buying new hardware now can cut costs in the long run while improving security.

But Intel insists this is not just a self-serving report, nor does one analyst.

Intel’s new study, conducted by Wipro Product Strategy and Services, looked at the projected costs of maintaining enterprises desktops and notebook PCs over four years, both from a hardware maintenance standpoint and from security as well.

Wipro found that security incidents increase by as much as 53 percent by year four because those laptops are lacking in many security systems Intel has built, such as vPro. With modern technologies like vPro, PCs get updated more rapidly.

Intel cited Calgary Health, a health care provider in Canada, as an example. On systems without vPro, it took five days to get 70 percent of machines patched, such as Microsoft’s Patch Tuesday releases. With vPro systems, 98 percent of Calgary Health’s systems were patched in four hours.

“We know this is a major pain point for IT professionals,” said Robert Crooke, vice president and general manager of the business client group at Intel, said during a briefing at the offices of its PR agency here in San Francisco. “We should not be surprised that the features we’ve been adding to the platform are having a positive impact on operations. It’s what we’ve been planning to do.”

The other benefits are in maintenance. By sticking to a three-year replacement cycle instead of four, when warranties expire, companies can keep costs down. Support costs rise 30 percent in year three of a PC’s life span, but then shoot to 53 percent after year four as machines break down faster and more frequently and parts get harder to obtain.

Cut costs: Spend now?

It’s the second such study in recent weeks. Last week, a report by J.Gold Associates came to similar conclusions in a study that focused primarily on hardware maintenance costs.

The J.Gold Associates study found that if an enterprise keeps laptops that are four or five years old, the costs to maintain them could outweigh the costs of buying new systems — in addition to costing the business still more money in lost productivity.

At least some may be heeding such advice. In Intel’s study, Wipro found that 68 percent of the businesses it surveyed are maintaining or increasing their refresh rate, with 8 percent speeding up replacements and 60 percent keeping their replacement rate the same. But that means 32 percent have slowed their rate of replacement.

The Intel research focused on large enterprises, 50 from the U.S. and 50 from Europe. From those firms, Wipro created a model company with approximately 30,000 computers, about two-thirds desktops and one-third laptops.

According to Wipro’s findings and based on its 30,000 machine model, a three-year refresh can also save up to $3 million in operational costs when compared to four years, due to the improved power management in newer Intel machines, and vPro can double that savings, because computers don’t need to be left on overnight for maintenance. An administrator can send a power-on signal to the computer, do their work, and power down the computer, rather than leaving it running all night.

Intel cited two other recent examples of savings obtained through upgrades. The state of Indiana’s Office of Technology refreshed 20,000 desktops with vPro-based machines and proceeded to save $122,000 per year in helpdesk visits and $1.2 million over four years in reduced power consumption.

Georgian University in Canada replaced 2,500 computers across seven campuses and said it expected to save $85,000 over four years in reduced helpdesk costs.

Legitimate claims

Sure, it’s convenient for an Intel-funded study to come to these conclusions, but the conclusions are also valid, said industry analyst Nathan Brookwood, a research fellow with Insight 64.

“It’s a fortunate coincidence, but it’s not as if they said you might as well buy a new computer that’s just like the three-year-old model,” he told

“There are many legitimate things that have happened over the last three to four years, especially in the client space. The idea of opening those old boxes to add more memory or upgrade them is a lot of work. It would be a lot easier to call up your friendly sales rep and place an order,” he added.

On the subject of waiting for Windows 7, Intel joined in on the ‘Don’t Wait’ chorus that everyone from Jack Gold to Microsoft is also singing.

“I think the opportunity is too ripe to wait for [Windows 7], if you look at the payback here,” Crooke said. “A large percentage will upgrade in 2010. My anecdotal experience from talking to CIOs is mixed. A fair number are ready for something new.”

Brookwood agrees that IT buyers should not wait.

“As much as the upgrade is overdue and I think Windows 7 is an improvement, there’s a lot to be said for upgrading. The points they made about changes in the hardware, especially in regard to vPro for being able to patch things offline, without making help desk visits to the machines in need, are all legitimate observations. Those are OS-independent. There’s a lot to be said for getting your hardware upgraded.”

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