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NC brings PC cost of ownership to fore

Proponents of network computers are promising big companies a cost-cutting alternative to maintenance-hungry PCs. And the offer is forcing computer makers to answer why PCs cost so much to operate.

When it comes to selling corporate managers on new technologies, it's hard to beat the claim that "it'll save you money." Proponents of network computers are doing just that in promising big companies a cost-cutting alternative to maintenance-hungry PCs.

It's still an open question if this tried-and-true technique will really give the PC a run for its money for control of the corporate desktop. But what is already abundantly clear is that NC proponents are forcing manufacturers to respond to the charge that PCs cost too much to operate.

Ray Lane, Oracle's president and COO, on promoting why network computers are the future
A growing cadre of hardware makers now launching NCs--pared-down, diskless, and cheap PC alternatives--could soon give tantrums to makers of the current crop of putty-colored boxes. NC backers say the systems will be less expensive to buy and maintain than ever-complex desktop PCs, partly because unlike PCs, they are designed to be Net-ready right out of the box. (See chart)

While the headlines have focused on the targeted $500 base price, this figure is mostly conceived to appeal to the consumer market, where the conventional wisdom dictates that the average consumer won't pay more than $500 for what is basically an entertainment device. But in the corporate world, the difference between a $500 NC and a more capable $1,100 PC is negligible.

Where the dollar signs really start adding up is with a hard-to-measure but widely used figure called "cost of ownership." This number quantifies the cumulative costs of paying IS employees to support desktop users, buying new software or hardware, repairing broken parts, and general administration costs like preparing manuals for customized corporate applications.

Oracle CEO Larry Ellison on the relationship of server software to the NC
NCs include only the essentials: a keyboard, mouse, monitor, memory, and an all-important network connection. Current client-server applications typically require the cleaving of applications into client and server sections, which makes development more complex and costly. Under the NC scheme, all applications remain on a central server, drastically simplifying development, maintenance, and support. Users access server-based applications over a Web browser embedded in the NC.

Proponents of the NC, most notably Oracle (ORCL) and Sun Microsystems (SUNW), claim that NCs can reduce the total cost of ownership by as much as 70 percent of that of the PC.

Why? The argument goes that NCs are simply simpler. Support personnel don't open the hood to install new motherboards or add-in cards, and they just install new applications on servers instead of having to run from desktop to desktop loading or configuring software. All this saved time means saved cost-of-ownership money.