A few days ago in The Wall Street Journal someone with a 5-year-old PC asked Walter Mossberg how to determine when to buy a new PC. The response in the paper was short. Fortunately, this blog lets me offer a longer, more detailed answer.
The first thing Mossberg said in his response was "There's no universal answer to your question." I disagree. The simple answer is that a computer needs to be replaced only when it no longer does something you want or need it to do. This has nothing to do with the age of the hardware.
That said however, the Internet comes into play too. It's a dangerous place and one in which Windows users need a lot of protection. (I blogged about protection offered by the freeback in August.)
There comes a point where old Windows computers can no longer defend themselves online because the necessary anti-malware software no longer supports the machine, for hardware and/or software reasons. Then too, there is the constant flow of bug fixes that every operating system needs to install. At some point, Microsoft stops issuing bug fixes for old versions of Windows.
When an old computer can no longer defend itself on the Internet, either because of the lack of new bug fixes or the lack of support from anti-malware software, then the machine should no longer be used online. However, it can still serve many off-line functions and isn't necessarily at the end of its useful life.
I would not use Windows 95, 98, ME, or NT4 on the Internet. Many, if not most, anti-malware software no longer runs on these old versions of Windows and Microsoft no longer fixes bugs. Windows 2000 however, is fine.
Excluding the Internet, the most likely issue with an old computer is that it can't be used to run the most recent software. At times this can be a blessing in disguise, but if the hardware is what's lacking, there may be a simpler and easier option than buying a new machine.
If the new software requires additional RAM, I suggest going to crucial.com and letting it scan your computer. (This only works with Internet Explorer, and if you use DropMyRights, it needs to run in unrestricted mode.) The Crucial System Scanner reports on the number of memory slots in your computer, how much, if any, RAM is currently installed in each slot, and the maximum amount of RAM your computer supports. It's also smart enough to tell you whether your computer requires equal amounts of RAM in each slot. Obviously, this is a sales tool; it displays the prices for Crucial RAM compatible with your computer.
If the new software requires more hard disk space than the old machine has available, that too is not fatal. In fact, it's a good idea to replace the hard disk in an old computer. Perhaps even an excellent idea. A new hard disk is relatively cheap and sure to be faster than the old one. Plus, hard disks are perhaps the most likely component to fail in the long term.
Any competent computer nerd should be able to replace the hard disk, either in a laptop or a desktop computer. One approach is to connect the new one to the computer using a special adapter cable that plugs into a USB port and then use software to copy the old hard disk to the new one in its entirety. I prefer to use disk-imaging software to back up the entire hard disk to an external hard disk, then install the new hard disk and use the same disk imaging software to restore everything.
There are two things to be aware of when buying a new hard disk for an old computer. First, avoid hard disks with a SATA interface. Older computers use an older interface that goes by the names IDE, ATA and PATA. Second, rather than shop by price alone, I suggest buying a hard disk with the longest warranty you can find.
If an old computer is running slower than it used to, that's not a reason, in and of itself, to replace it. There are many things that can be done to make an old computer run almost as fast as it used to when new, too many to list here. If you can take it to a techie, he should be able to drastically increase the speed just using software. With extra RAM and/or a new hard disk, it should run faster than when it was new.
Finally, a big part of online safety is keeping software up to date, both the operating system and your applications. Even a new computer can be running vulnerable versions of popular programs such as the Adobe Acrobat Reader, QuickTime and Real Player and thus be more vulnerable than an older machine running patched versions of the software (not to pick on these applications, but they all had recent security problems). From what I've been reading about the firewall in the just-released Mac OS X Leopard, even old Windows computers are likely to have better firewall protection than a new Mac.