Law Office Computing
†††††††††††† Winton Woods
I opened my Wall Street Journal the other day and was immediately drawn to a full-page advertisment† from Dell Computer advertising a desktop computer for under $500.† When I checked out the specifications it turned out that the $500 computer was in fact more powerful and better configured than a computer that I had spent $1500 on only a year ago. The fact is, Dell has started a price war not just with desktop computers but with servers and laptops is well.† The question is whether this is a temporary phenomenon or not.† Here is what I think is happening.
By the end of last year, the market for desktop and server computers was saturated.† That was a product of ordinary equipment acquisition policies coupled with the Y2K purchasing binge that was necessary to bring older computers up to speed so they could handle the Y2K glitch.† As you know, we had very few Y2K problems and that is largely because most of the computers at risk were replaced.† The second factor is that a year or so ago we reached a state where current computer technology was exceptionally good.† In a sense, the computer companies and major software companies like Microsoft found themselves in a position where their wonderful successes over the preceding couple of years put most computer users in a situation where they could see no real need to replace their existing equipment.† Since the days of the 486 computers, the market has been driven by both new purchases and replacement of existing equipment that became rapidly outdated. It was a huge change when the standard chip went from 200 to 600 megahertz. It was a very big deal when the standard hard drive went from 5 gigabytes to 20 or 30.† It changed computing profoundly when the standard RAM in an entry-level computer went from 32 Megs to 128. If you have a 600 megahertz Pentium III with 128 megs of RAM and a 40 gigabyte hard drive you are hard put to find a business case for replacing it now or in the foreseeable future. In the last year many of us have made a decision to not upgrade hardware and software because the cost of doing so provides only a small marginal benefit to our office functions.† Microsoft Office 97 was a powerful product that drove many businesses to upgrade their computers and their software.† Office 2000 had a similar effect but the fact of the matter is if you have now Office 2000 you have a software setup that will handle the vast majority of your business needs. From a business standpoint, is hard to justify spending thousands of dollars for what is at best a marginal improvement and the addition of features that you probably will never use.† The same thing is true with computer hardware.† Once you get a computer with at least 128 K of RAM and a Pentium III chip running at 500 MHz or above you will find only marginal improvement by upgrading to a faster chip and more RAM.† But many of you don't have machines like I have just described.† Many of you have computers that are three or four years old and are running older versions of Windows with all of its many problems.† You know you're going to have to replace those computers and the question is whether the time is now?
I believe that the time is now.† I believe that basic entry-level computers for businesses will stay at around $600 until the current inventories are exhausted.† I think that will be sometime this summer or early fall.† If the economy recovers by then many businesses will start to replace or refresh their information technology hardware with the then most current machines.† They will be much faster and have more memory than the $600 machines that are now on the market.† They will have the latest operating systems and lots of other bells and whistles.† They will be machines you probably do not need to buy in terms of your office functions.† I think that right now† there is a buying opportunity for both stocks and personal computers.† There is in fact a blood bath going in the PC business and at the end of the day only a few of the major computer manufacturers will still be in that business.† In the same way that IBM dropped out of the personal computer business a few months ago, other companies with well-known brands will withdraw from the marketplace and focus on more lucrative aspects of the business as did Micron.† Dell, Hewlett-Packard, and Compaq are fierce competitors who will remain in the PC business.† Marginal manufacturers like Gateway and others may disappear.† But when that shakeout is done the current stock of computer hardware will have been depleted and the new machines, which will be much better and much more powerful, will certainly cost more. Here is what you can get today from Dell (www.dell.com) on a $30/month business† lease: Dimension L machine with a Pentium III Processor at 933 MHz, 256MB of Ram, and a 20 Gigabyte hard drive. Compaq (www.compaq.com) has a Deskpro EXS Intel Pentium III Minitower (Millennium Edition) for a similar price.
That means you can replace your 10 computer office network with all new machines and a new server for a hardware lease cost of less than $500 a month. Of course you will have other expenses. You may want to replace your network cabling and hubs or upgrade to 21-inch monitors. There are lots of ways you can spend lots of money but you donít really need to. If you are on a tight budget this is a time to run the numbers and see where they go. I think you will be very pleased with the outcome.