It sure looks like convenient timing to release a report on this topic, but Jack Gold, president of J. Gold Associates, insists his research was not intended to goose flagging PC sales in the current economic downturn.
Many firms have been delaying PC purchases all together unless they had to replace one that was broken or stolen. Both Intel (NASDAQ: INTC) and AMD (NYSE: AMD) have said that consumer sales are decent but corporate sales have slowed to a crawl, and there has been survey after survey showing businesses are waiting for Windows 7 before buying new laptops.
Gold started the survey a few years back and watched laptops over their average three year lifespan. When firms started pushing them out to four and five years, he continued to monitor how things went.
“We tried to come up with a realistic cost [over time],” Gold told InternetNews.com. That includes thing like lost work time, time with help desk, the cost of maintaining a help desk, having to overnight pieces from a home office to a remote office, and more.
“Most companies don’t include that, but that’s a real cost to a company. That’s where all of this came from. The reason we focused on the last two years is because so many companies are saying we’re going to keep them another two,” said Gold.
Gold called repair calls a “Failure Tax” and said that in the first year of deployment, the average “Failure Tax” was $138, increasing with each year. If a company keeps the laptop an additional two years, maintenance hits an average of $1,050 by years four and five, which is more than the cost of a decent new laptop. Furthermore, outdated equipment will cost the organization $9,600 in end user lost productivity.
The reason costs go up so much past year three is that’s typically when warranty coverage ends, so the customer eats the full cost of parts and labor. After three years, it may also become harder and more expensive to get parts. The total cost to repair a failed notebook that’s under warranty is $1070, while the cost to repair a failed notebook not under warranty is $1,525. These costs include shipping, lost productivity, etc.
Also, as the machines get older and slower, they become drags on productivity, costing three percent productivity in year four and five percent by year five, on average, Gold said.
Hurry up and don’t wait for Windows 7?
As for waiting for Windows 7, don’t, he maintains.
“I think if you’re holding off because of an operating system, you’re doing your company a disservice, because if the machine is old enough to replace, you should replace it regardless of the operating system on it. If you want to upgrade when Windows 7 comes out, fine. You’re going to get more payback replacing it now then if you wait six to nine months,” he said.
He was surprised at how many elements are overlooked by companies. For example, most firms don’t think about battery replacement as a cost issue, but it happens. The average is about 300 recharge cycles, meaning one or two years’ lifespan before a new battery is needed. Most companies don’t take that into the overall cost equation.
Other uncounted expenses include lost productivity, hard drive crashes and data recovery, and failure to backup.
Gold also said that he was surprised at how much variance there can be within product lines from the same vendor. It might be just the placement of a screw or using two different suppliers for a hard drive, but two different models from the same vendor can have very different failure rates.