Wielding influence

High flying consumer PC sales may have hit some turbulence as 2000 came to a close, but shipments of PCs, especially laptops, to corporate customers should remain relatively healthy.

As corporate customers continue to account for the bulk of PC vendors' earnings, the influence of their corporate buying habits - which are making the transition from traditional PCs to mobile, wireless, and appliancelike devices - will likely have a direct effect on the shape of future PC vendor offerings for both the consumer and commercial markets.

Ashok Kumar, an analyst at US Bancorp Piper Jaffray, recently dismissed consumer PC sales as the lead indicator of the strength of the PC industry, saying "the make-or-break for (the PC business) is the commercial market".

In fact, if the current corporate buying trend continues, it will assist in nearly doubling worldwide PC and laptop shipments within the next four years, according to a report from IDC.

Sales of new PCs to consumers have slowed over the last several months, primarily due to consumer satisfaction with their current PCs, which generally shoulder light loads such as e-mail and Internet browsing.

But the need to stay on the technological cutting edge of the business world has pushed commercial customers - ranging from soft drink bottler Dr Pepper to US Rental Service, the second-largest construction equipment leasing firm in North America - to plan to upgrade PCs and purchase new mobile computers as 2001 gets under way.

Art Fino, senior vice president of information services at Dr Pepper, says his company is moving ahead full steam with the deployment of new mobile computers and has "just made the decision to reoutfit (its) field sales force with over 500 new laptops".

Dr Pepper will stick to scheduled upgrade cycles for the laptops, replacing ageing units with new ones, Fino says. He adds that, along with its commitment to mobile computing, Dr Pepper will also buy or upgrade PCs used for data-rich accounting tasks every 60 days.

In return for such a large, ongoing investment, Fino wants PC vendors to listen to the needs of the company's workforce in the PCs and mobile computers it buys.

According to Fino, the wish list from the company's more than 1000 computer-outfitted employees includes everything from better multimedia technology and wireless applications to improved ergonomic design. For example, because Dr Pepper's field sales force uses an assortment of high-resolution graphics applications on a daily basis, they are calling for bigger screens and sharper resolution.

Meeting wireless needs

The need for a quality DVD player is also a priority because the field sales force will "actually run commercials out in the field for our customers", Fino says.

Over the course of 2001, most of Dr Pepper's employees will receive mobile computers equipped with desktop replacement features instead of PCs. With this shift, Fino sees his company undergoing an "overall shift toward heavier emphasis on the big servers and network connectivity (with) less capacity on the desktop".

Taking that emphasis one step further, in 2001 Fino and staff will also begin considering which user groups inside Dr Pepper are to change from using full-size PCs to networked, appliance computing devices. In doing so, Dr Pepper can save money by upgrading PC appliances from the server rather than investing in a new PC, Fino says.

"We will be moving department after department beginning next year, looking in our user areas and replacing (PCs) with network terminals, with the exception of the more robust PCs for the spreadsheets and number crunchers," Fino adds.

Jeff Cummings, director of marketing and sales at US Rental Service, says his company is also re-examining its computing needs going into 2001, considering especially wireless connectivity.

As the year unfolds, the equipment leaser will continue to budget for new PCs and laptop computers, but the capability of those devices to link with handheld mobile computers will be increasingly important.

"Obviously, our folks are renting equipment to people on job sites, and most of these job sites don't have computers," explains Cummings. "We have an automated system that we need to offset to a PDA that shows all the things we have to rent and relates to us the status of the rental, as well as a customer's credit history and rental needs."

US Rental currently uses a number of Windows CE-based HPCs (handheld personal computers) that Cummings calls "slow, not reliable, and costly".

"There does not seem to be one company that offers all the wireless services we need for one reasonable price," Cummings says, noting that his No. 1 wish for 2001 is to integrate wireless technology into nearly all of US Rental's PCs, laptops, and handheld devices.

"We are looking for wireless technology that will allow our customers to interface with us. We are looking at PDAs and lap phones, wireless synchronisation for our people in offices that come and go and are using laptops with docking stations," he says.

Taking control of matters

Cummings' main complaint is that the wireless solutions US Rental has tried either "don't work at the job site, are not user-friendly", or leave the company unsure whether or not the application or hardware they need will still be around in the future.

"Once (wireless) becomes inexpensive and reliable enough, we will equip more of our people. But right now, that's not the case," Cummings says.

Despite the fact that US Rentals is adopting a wireless strategy, Cummings has noticed more US Rental employees using PDAs on the job that they have bought themselves - a trend US Rental encourages.

Although company administrators chart PC and laptop strategies, IDC analyst Bruce Stephen thinks that the private use of wireless PDAs by employees plays a significant role in the evolution of those companies' wireless strategies.

"We really believe that the handheld market is in the early phases of corporate deployment," Stephen says. "There is a lot of individual buying. Employees are buying them, and I think this adds more and more valuation to the deployment of handhelds as mobile fleet application tools and devices that companies realise may be appropriate for field support."

In fact, Dr Pepper employees who have purchased their own wireless handheld devices from companies such as Palm and Handspring have asked for better synchronisation technology between Dr Pepper's corporate network and their PDAs.

Such requests spurred Dr Pepper to "add wireless integration for PDAs, but only for about 20 per cent of the sales staff," says Fino, who expects the program to grow over time.

Preferred customers

When considering the influence of corporate buyers, IDC's Stephen says that changing workforce needs will alter the shape of next-generation computers, and the industry "will continue to see the march toward bridging the design gap between consumer and commercial devices."

Along with the increased integration of wireless technology, the growing number of mobility options and a trend toward the appliance computing model will result in "smaller packaging in the desktop world", Stephen says. He also predicts PC vendors will look for cost-saving efficiencies by offering fewer models with more common components.

"The healthiest part of the PC business is the portable PC. And we expect that trend to continue next year," says Stephen, who adds that "a lot of the (portable PC) volume is being picked up by small businesses. As a productivity tool, all types of companies are looking toward laptops more often."

Representatives from PC vendors such as Compaq and Dell say they are already heeding the needs of commercial customers.

Erik Stannow, director of global accounts for Compaq's PC division, says that "in terms of mobility, we are definitely hearing that more companies understand that the improved productivity you get from a portable (device) can easily offset thehigher acquisition cost you have with a mobile computer".

Nevertheless, David Schmoock, Dell's director of marketing for client products, denies any rumour that the PC is, once again, dead.

"You have a movement from desktops to notebook because of total benefit of ownership. More people carry notebooks because of the (mobile) advantages," Schmoock says. "Although we are seeing a higher penetration of mobile (technologies), I don't think the PC dies. You still need an input device; you have to do document creation work."

US Bancorp Piper Jaffray's Kumar agrees.

"Given (that) you have more satellite offices, and the wiring issues associated with a fixed infrastructure, you are seeing a gradual shift away from wired, to wireless," he adds.

"But issues like throughput and security will linger, (making wireless) complementary, augmenting wired infrastructure."

Both Dell and Compaq, like other PC vendors, plan to aggressively pursue integrated wireless technologies in their 2001 offerings.

This is good news for Dr Pepper's Fino, who says "the current talk (at our company) is wireless access to the Internet and better integration with PDAs".

IDC's Stephen, however, says "we're not seeing a huge shift away from PC budgets (for wireless)", meaning budgets for wireless capabilities are not yet taking funds away from PC budgets.

Still, with the day-to-day computing requirements of businesses shifting further and further away from the traditional PC, "we are seeing valuation from PDAs, and I think we are seeing vendors increasingly build wireless into their products" as they take note of their corporate customers' interests and buying requests, Stephen adds.

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