Predicts 2004: PC Desktops

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1 Strategic Planning, M. Margevicius Research Note 25 November 2003 Predicts 2004: PC Desktops Desktop PCs are mainstay components of nearly all IT infrastructures. Gartner's predictions evaluate forthcoming changes to the desktop market and offer tactical advice for Core Topic Hardware and Systems: Computing Platforms Key Issue What client issues should Gartner research address? Strategic Planning Assumptions By 2008, desktop PCs will account for fewer than 50 percent of the client devices in use at the enterprise level (0.7 probability). Through 2007, the adoption of server-based computing will grow at twice the rate of desktops (0.8 probability). In 2004, unmanaged/illegal downloads will consume 10 percent of enterprise bandwidth and storage (0.7 probability). Through 2008, 80 percent of enterprises will use a four-year life cycle for desktop PCs (0.7 probability). By 2005, 50 percent of enterprise desktop PC purchases will include either 15-inch or 17-inch LCD monitors (0.7 probability). The desktop market is relatively mature, and customer use and demand are in flux. With this in mind, we offer our desktop predictions for 2004: Prediction Because of the changing business landscape, device diversity (as well as the number of devices per user) will continue to grow. Other than a land-line phone, desktop PCs have been the predominant end-user device for more than 20 years. We believe that will change by Enterprise users no longer work in one location for all of their work, nor do business functions stop when the workday ends. These on-demand real-time data requirements mean that devices in use must be able to accommodate the need. This does not mean that desktops will disappear from the corporate landscape; rather, we believe that notebooks, personal digital assistants and smartphones will sometimes be used as replacement devices, but more frequently as devices that are complementary to the desktop. For IS organizations, this means that new support policies will be needed to meet the device diversity requirements of end users. In addition, we also believe that the adoption of thin-client devices (aka "terminal devices," from vendors like Wyse Technology, Neoware Systems and Hewlett-Packard) will continue to grow. Thin-client hardware offers unique attributes that address issues around harsh environmental conditions, space and power limitations, manageability, and, most important, security. Enterprises continue to focus on client security as a real threat; clients cite the PC as a primary weakness in their IT infrastructure. Thin clients offer no local data store or configuration capability, thereby eliminating the PC as an exposed weakness. Gartner Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.

2 Strategic Planning Assumption: By 2008, desktop PCs will account for fewer than 50 percent of the client devices in use at the enterprise level (0.7 probability). Action Recommendation for 2004: Enterprises should segment their users according to work functions and examine the computing requirements of each. Consider alternative platforms where data needs or security issues are paramount. Look for management tools that will support multiple platforms. Prediction Because of management, security, and operational and cost issues, more enterprise customers will deploy server-based solutions in lieu of traditional PCs. Server-based computing (SBC) is predominantly used for specific areas or vertical functions within enterprises. Common deployments include call centers, contact centers and other taskbased workers. However, because of management, security and operational issues, SBC will find adoption by more enterprises. Perceptions about manageability and desktop ownership are shifting in favor of a more controlled environment. In addition, we see enterprises gravitating toward SBC because of the migration costs and churn that tend to creep up on IS organizations. Some customers will deploy SBC solutions so that they can extend the life of their PC installed bases. Furthermore, wide-area communications are becoming commonplace in mature markets, enabling remote branch deployments and work-at-home employees to have application performance as if they were at a corporate office. From an application perspective, the limitations of early serverbased architectures were very evident. Users needed to compromise on performance or features when moving to SBC. Recent improvements in the protocols and load balancing on servers have helped with the problem. Furthermore, a new breed of tools, referred to as "on-demand application delivery," enables legacy applications that normally have performance issues with SBC to execute under an SBC environment. Enterprises have also expressed interest in SBC architectures for security reasons. Using thin-client devices eliminates the ability of users to install applications, configure systems, download viruses or store local data. Finally, server hardware continues to grow in performance and being able to support more users, thereby helping lower costs on a per-user basis. Strategic Planning Assumption: Through 2007, the adoption of server-based computing will grow at twice the rate of desktops (0.8 probability). 25 November

3 Action Recommendation for 2004: Organizations should consider server-based architectures as a method to more effectively manage end-user applications and the costs associated with deploying, maintaining and supporting client hardware. Enterprises also need to recognize that SBC is not a panacea for all uses (such as mobile or limited bandwidth) and that, for certain environments, traditional PCs are the preferred architecture. Prediction Unsanctioned end-user computer use will continue to grow for most enterprises, resulting in higher operational costs and less productive workers. PCs within the enterprise are valuable tools that are used in reaching user, department or organizational goals. Their commonplace use has made PCs a critical IT infrastructure. The PC is also a flexible tool that can be configured to perform many tasks. It is this flexibility that makes PC usage both a blessing and a curse, as organizations that fail to control or lock down their users (either by technical means or by policy) typically have users who abuse PC use and are, therefore, not as productive as they could be. The problem will continue to escalate as users continue using e- mail and Internet access to send and solicit non-business-related , visit Web sites that are not related to or required to do a job, install nonstandard software, and use instant messaging as an electronic form of "water-cooler chat." Compounding the problem is that these inappropriate behaviors often have an impact on network resources, where users can consume significant amounts of bandwidth. Strategic Planning Assumption: In 2004, unmanaged/illegal downloads will consume 10 percent of enterprise bandwidth and storage (0.7 probability). Action Recommendation for 2004: Enterprise customers should institute strict policies that indicate to what extent users can use their technology, complete with disciplinary measures for failure to comply. From a technical perspective, the IS organization should use the necessary tools (for example, firewalls, proxy servers and user profiles) to aid in enforcement. Legally speaking, enterprises should also pass all legal indemnity to the individual should the content owners (for example, the recording industry) sue the corporation for downloading, as they have begun suing individuals for setting up small domains and so on. 25 November

4 Prediction New PC technologies will fail to change the product life cycles established by enterprise customers. Enterprises continue to struggle with desktop longevity and usefulness within the organization. Most have standardized on a four-year refresh strategy, with good cause. That being said, significant changes to the foundational PC platform have the PC vendor community hopeful that a shortening of life cycles (three years or less) may again become in vogue. We don't believe that it will. Advancements in security through efforts like Next- Generation Secure Computing Base (NGSCB) from Microsoft and LaGrande from Intel and bus architectures (PCI-Express) will be changes that will require new hardware. However, we believe that most organizations will have to deal with legacy application issues and be hard-pressed to find sufficient justification in these advancements to shorten desktop life cycles to less than four years. We also see no "killer application" on the horizon that will upset the longer desktop life trend. Microsoft's forthcoming Longhorn will offer a bevy of new features (new user interface, file system changes, better manageability) that will take enterprises significantly longer to validate, adopt and deploy (we estimate 12 to 18 months after general availability). Assuming general availability in mid-2006, the earliest adoption for mainstream use will be late 2007 or early 2008, which is roughly four to five years from now. Strategic Planning Assumption: Through 2008, 80 percent of enterprises will use a four-year life cycle for desktop PCs (0.7 probability). Action Recommendation for 2004: Enterprises should include new business drivers, application needs, customer demand and platform diversity in their desktop life cycles. It will be common for enterprises to have users with different life cycle needs; some PCs will need to be replaced more frequently than others. Most enterprises acquiring desktops configured with current software (such as Windows XP and Office 2003) in 2004 will not need desktop replacements before Prediction Most enterprise customers will establish sufficient justification to standardize on liquid crystal display (LCD) monitors for their desktops. For many enterprises, LCD monitors have been viewed as a costly luxury doled out to primarily customer-facing users (such as receptionists and bank tellers) and senior executives. Legitimate justifications are also made for those users faced with limited space (those who work in hospitals, financial traders who 25 November

5 use multiple systems or the already-space-conscience Japanese market). We believe, however, that LCD monitors are no longer limited to an elite few or users with specialized needs. Manufacturing yields continue to get better, newer (and more) manufacturing plants are coming online, and, as a result, it is possible to offer LCD monitors at less cost than prior generations of displays. The fluctuation in pricing and availability experienced in 2H03 will continue through 1H04, as the competition for LCD monitors includes not only the PC market but the telematics, consumer electronics and entertainment industries. Customers will buy LCD monitors at higher cost because of their intrinsic values (better ergonomics, less heat, less power consumption, slightly longer lives) and a shift in the distribution of costs of a PC system (less money on the CPU means more to spend on the display). Even though LCD monitors have a higher acquisition cost, from a total cost of ownership perspective, LCD monitors are comparable to cathode ray tubes (CRTs), as power, shipping and disposal costs are less. We also believe that LCD monitors have lower risk and cost compared with CRTs with regard to disposal, as the toxic materials present in CRTs are no longer present in LCD monitors. Strategic Planning Assumption: By 2005, 50 percent of enterprise desktop PC purchases will include either 15-inch or 17-inch LCD monitors (0.7 probability). Action Recommendation for 2004: Enterprises should seek out those areas and users that have sufficient justification to standardize on LCD monitors. We also believe that prices and demand will be higher through the first half of 2004, and enterprises should accurately forecast and negotiate with their suppliers to ensure availability and pricing. Acronym Key CRT cathode ray tube LCD liquid crystal display NGSCB Next-Generation Secure Computing Base SBC server-based computing Bottom Line: Although one isolated PC may have little impact on an enterprise, collectively PCs are a critical IT infrastructure component and are still very much a strategic platform. Enterprises are encouraged to understand the relevant technical changes to the client device market and act according to the recommendations outlined in this research. 25 November