HP: Put your old PCs out to pasture

You're going to have to upgrade someday.

That, in a nutshell, is the sales pitch behind the new business PCs released by Hewlett-Packard on Wednesday. The installed base of PCs in the business world are getting older. This situation is creating hidden management costs and security problems.

"One hundred sixty-four million PCs are three years or older. Thirty million of those PCs are in the U.S.," said John Thompson, a vice president in HP's personal systems group. "Once you get over that three-year market, the management costs begin to increase."

Consequently, HP is coupling its new desktops with services and options to make upgrading more appealing, or at least less irritating. The HP Compaq business desktop d530, for example, comes with an optional embedded security chip and bundled software to make it easier to encrypt files that are kept on the hard drive.

HP also guarantees that a customer's software image--the customized set of software and drivers that comes on PCs for particular clients--won't change on the d530 for 15 months. This guarantee presents a level of stability that will cut management costs, Thompson says.

To further encourage customers to swap out their machines, the Palo Alto, Calif.-based company unfurled a PC upgrade program in which it will dispose of old desktop and laptop computers and install new ones for a set fee.

Like other PC manufacturers, HP is building its latest PCs around Intel's 865 chipset, formerly code-named Springdale, which was released on Wednesday. The chipset comes with a faster bus and other improvements to boost overall performance. The d530, which starts at $799, will be targeted at large businesses. The d330, which starts at $499, will be sold to small organizations.

Additionally, HP came out with a new thin client built around the Crusoe processor--the second Transmeta chip to be used in an HP product--and a new 19-inch monitor.

For the past 18 months, PC makers have been predicting that a corporate upgrade cycle will have to begin soon. Large businesses last upgraded PCs in 1999 to insulate themselves from the Year 2000 bug phantom, and those PCs are getting old. So far, though, shipment figures show that corporate IT buyers are not rushing toward the store.

Circumstances that could inspire an upgrade cycle are congealing, said Thompson.

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One of the biggest factors driving customers to at least consider upgrading is security. In November, Microsoft will cease issuing bug patches for Windows NT, Windows 98 and Windows 95. PCs running those older operating systems could become vulnerable to new bugs created in 2004. Roughly 40 percent of the PCs in use right now run those operating systems and will have to be upgraded to ward off future security issues.

"The nature of the questions I'm getting these days shows, to me, that replacement of PCs is on the forefront of (corporate IT buyers') minds," Thompson said. "Putting Windows XP on five-year-old PCs makes no sense."

Older PCs also break, leading to downtime and costly repairs. Corporate buyers are also beginning to see the appeal of some of the newer technologies. Flat-panel monitors, Thompson noted, cut energy costs and desk space.

"We're starting to see the crossover from the older monitors," Thompson said. "(They are) a little bit more expensive, but (they're) close enough, so customers are switching over."