The shift in sales model required for resellers to profit in an age of network computing has already taken place, according to IBM PC Company general manager for commercial desktops, Rod Atkins.
Atkins believes that when looking at the money to be made on PC technology today, it is better to look at the total cost of ownership, rather than simply the purchase price. Hence, the reduced margins involved in thin-client PCs will not result in a marked loss of revenue for many resellers. "Most of the cost is not in the hardware of the clients, a lot of it is in technical support or administration. If you look at the five-year life cycle cost of a PC, only 14 per cent is the initial capital acquisition.
"You've really got to look at the infrastructure costs and the overall cost of running your network. The opportunity is in how you bundle solutions for the LAN environment, and that revolves around how you help the customer reduce their overall cost of ownership," he said.
Atkins says this way of thinking also applies to thin-client network PCs. "The key with a network computer device is total cost of ownership. You will see as we roll out network computer products in the marketplace, the solutions we gear our products around will be business solutions that attack this issue of total cost of ownership," Atkins said.
The first of IBM's network PCs will be available by the end of the year, he added, with IBM having already trialled several designs for both vertical and mass markets. "Our initial set of products will be targeted at the commercial market.
"That model is well understood, where you have a server and non-programmable terminal or displays connected. And there's an opportunity to replace that level of functionality with a device that has Internet capabilities," he said. IBM has already rejected one test model that placed the monitor in the unit, finding the customer disliked being restricted in monitor selection.
The changes brought on by thin clients are also unlikely to impact greatly on ISSC's leasing arrangements. Atkins says that as the NC market is untested, it is difficult to say whether these machines will involve the same turnover as the PC market. "It really depends on the application environment. If you're running standard things like e-mail and if your application demands don't grow over time, you can probably stretch the life of that asset.
"Part of the cost of ownership studies see us looking at various customer leasing models. We found with people who have a much more rapid replacement model, the leasing model appears to work better, because they can maintain a standard and take advantage of the latest technology."