In the first quarter of 2009, computer chip maker Intel's earnings dropped 55% and revenues fell 26%. Because they beat Wall Street's estimates, the company believes that declines in desktop computer sales have bottomed out and will soon start climbing again.
Why the optimism from Intel? Inventories of desktop computers and laptops increased in late 2008 as both businesses and home users delayed buying new equipment. As reported in the Los Angeles Times on April 15, 2009, this excess inventory was sold off in the first quarter of '09, increasing demand for Intel chips.
Is a recovery in the high tech industry really underway? Analysts believe that even if the PC market has hit bottom, a full recovery is a long way off. Some industry watchers, like those at ISuppli Corp., believe that desktop sales will continue to be sluggish, but may be offset to some degree by laptop sales, especially netbooks, the less powerful and smaller versions that some home users prefer.
Intel's CEO also stated that consumer demand for computers is much stronger than enterprise demand. If that is the case - and all signs are pointing in that direction - what are companies doing to avoid expensive technology purchases?
Everything Old is New Again - Boosting Your Existing Desktop
To delay new equipment purchases, companies need to be sure their existing laptops and desktop computers continue working. There are a number of approaches they can use, all of which offer a good lesson to businesses looking for ways to cut costs.
* Expectations. I spoke recently to the IT manager of a multinational with its head office in the Toronto region. He said that his employees are being told to live with what they have. Gone are the days when they can ask for a replacement computer just because their current machine is a couple of years old. By explaining cost cutting measures and brining employees' expectations back down to earth, he has been able to cut his new equipment acquisitions budget.
* Rebuilding. Many IT managers are using old-fashioned ingenuity to get them through the current economic crisis. By making small changes to boost the performance of an existing computer - memory or hard drive upgrades, for example - they can extend the life of existing hardware and delay new purchases.
* Used or Refurbished. Companies have discovered the value of used and refurbished technology. From desktop computers to printers, copiers and even individual components, companies are saving money by giving new life to old equipment.
* Cascading. Instead of buying new, many IT managers are taking a closer look at their existing inventories and reusing what they have. High-demand users still get the best machines, but their old castoffs are being cascaded down through the organization to users with lower demands and technology that is too old to serve their needs.
Corporate demand for desktop computers may still be low, but that doesn't mean that companies are doing without. By making better purchasing decisions and by asking users to live with the computers they have, many are able to function quite nicely despite the cuts to their IT budgets.
(Expert=Jane_Fields)
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