Looking for an active market? Then look no further than the SMB space. That seems to the current buzz. Certainly, notebook vendors and resellers alike have got the messsage and are becoming increasingly attracted to the feeding frenzy that is taking place.
So what's all the fuss about? Big figures. Impressive figures. Money-making figures. Research firm IDC has just recorded an Australian SMB market Q3 to Q4 growth rate of 22.8 per cent and a stellar year-on-year rate of 110 per cent.
Stacked up against the enterprise figures you can see why SMB is the current darling, especially when you consider that the enterprise segment mustered a mere three per cent Q3 on Q4 2004 growth, and a calendar year-on-year performance of just 21.1 per cent.
But, and here's the bottom line, growth figures don't tell the whole story. Savvy observers are looking toward the total units shipped figures for the real view. IDC figures show enterprise actually managed to ship a whopping 609,000 units year-on-year compared to 255,000 into SMB.
So despite the noise over in SMB, the real life of the party is enterprise. No wonder there are still a bevy of analysts and vendors keen to sell the segment on the business benefits of mobile computing, when compared to a desktop PC.
One of those, Gartner PC analyst, Andy Woo, highlighted the productivity gains mobile computing could add to an organisation.
"The productivity increase an enterprise can gain from a worker with a mobile PC can go up by as much as 20 hours a week," he said.
Intel PR manager, Daniel Anderson, said it was notebooks' value as flexible productivity enabler - allowing employees to work in between meetings or while waiting for a plane.
When combined with access to a wired or unwired network connection, the business benefits of notebooks could include business continuity, he said.
"If I look at how that has been of benefit to a company like Intel, I can use the SARS scare as an example," Anderson said. "We basically had to close our Asian offices but that didn't have an impact on the business as we could all log in from home and continue to work."
General manager of Toshiba's information systems division, Mark Whittard, said notebooks could help enterprises gain a measure of an employee's true value.
"Productivity is a key measure for organisations these days and measuring people by their performance, rather than attendance, is probably mobile computing's biggest benefit overall," he said.
The cultural change mobile computing was having on organisations was also of benefit, Whittard said. Giving an employee a notebook in effect allowed them greater control over their own lives when it came to balancing work with life.
"It is a two-way street," Intel's Anderson said. "In exchange for the employee doing a bit more work, the employer is more flexible about things like working from home."
Notebooks, when given by an employer to staff also had the ability to increase trust between the two, Whittard said. "So when you compare notebooks to desktops, there is a greater productivity, and that productivity is achieved through the technology," he said.
The link between improvements in notebook technology and business benefits was supported by IDC's A/NZ user programs director, Catherin Bennett.
How gains can be made
As author of the IDC ITEyewitness report, Cutting the cable - The business benefits of wireless working, she said wireless technology - when combined with notebooks - was central to real-world business applications such as accessing information and real-time updates.
"Having high-speed, reliable and secure access to critical business information such as pricing, customer records, inventory lists, and the status of orders while with a customer can significantly improve productivity and efficiency," Bennett said.
Similar gains could be made by the real-time access to schedules, job distribution, email and calendars, she said.
While Intel's Anderson and Toshiba's Whittard echoed these benefits, Gartner's Woo said the rollout rate of wireless infrastructure was proof that enterprises considered wireless technology to be largely hype.
"If we look at enterprise department deployments, only one or two access points are being deployed and they are being trialled on a couple of employees," he said. "The big use of wireless LANs is in the consumer space. They would account for 85 to 90 per cent of all deployments."
Bennett said the majority of enterprises were yet to mobilise their back-ends for devices such as wireless enabled notebooks.
"Currently 21 per cent of enterprises are looking to mobilise office systems and databases, 15 per cent their enterprise-level applications and 14 per cent their company intranet," she said.
Admitting that the rollout rate of wireless infrastructure had been slow - largely because of prior investment in wired hardware - Toshiba's Whittard argued that wireless had grown beyond hype.
"Most organisations are piloting, or already have, some wireless capability," he said. "Bar our entry-level model, every notebook we have is wireless-capable.
"Whether or not organisations have wireless infrastructure now, they are planning to, as they are demanding our products have wireless capability upfront."
HP's market development manager for enterprise notebooks, Laurie White, said all of the company's enterprise notebooks were also wirelessly enabled. Intel's Anderson backed this up.
"We launched Centrino in March 2003 and in just two years IDC is already saying that 75 per cent of all notebooks sold today have wireless capabilities," he said. "So the adoption rate is really moving very quickly."
With mobility being a key factor underpinning the business benefit of notebooks, advances in battery technology were also worth considering, IDC's Michael Sager said. "Battery life is very important and will be a factor until users can run a notebook all day off one charge," he said. "We are heading in the right direction, but until you get 8-10 hours a day it will count as a factor against notebook purchases by enterprises."
HP's White said enterprises were aware that mobility was a trade-off between performance and battery life, but the advent of Intel's Centrino technology had been a major boost for notebooks. It had allowed HP to develop notebooks that ran for up to five-and-a-half hours off a single charge, he said.
"Considering lunch, travel and in front of client times, four-and-a-half hours is considered to be enough by many organisations," White said.
Toshiba's Whittard said his company had been working on making battery life a non-issue for enterprises considering adopting notebooks.
"We have just launched a product with the ability to switch off the optical drive when it isn't in use and that can add up to 30 minutes of extra battery life," he said. "With our ultra-portable products, or with a second battery, you can now get anywhere between six and 11 hours of use."
A hybrid fuel cell was also due from the company early next year which would give users an initial 10 hours of use from one charge, Whittard said.
Advances in its polymer batteries in the last year had seen an additional 20-30 per cent of life added to Toshiba's range.
While notebook processor speeds were a natural point of comparison against PCs in a purchasing decision, both IDC's Sager and Gartner's Woo argued that business benefits were not linked to processor speeds.
"Enterprise cares about performance to the point it meets the needs of existing, mainstream applications," Woo said.
"If you talk about comparisons to desktop speed, it is still valuable but not highly ranked in purchasing criteria. Over the last five years there has been less focus on processor speeds mainly because productivity isn't directly linked to processor speed," HP's White said. "That's why Intel now refer to their chips numerically rather than in GHz."
Intel's Anderson disagreed, however, arguing that as notebooks increasingly met the technological grunt of desktops, so the demands on them grew.
"The more you work mobile, the more applications are loaded onto a notebook, so the more you need powerful processors," he said. "There are also an increasing number of programs such as virus checkers and firewalls which run in the background, so this adds to the need."
According to Gartner's Woo, enterprises were increasingly informed of the link between mobile technology and its business benefits. This was clearly observable in the shifting sales mix of notebooks to desktops in recent enterprise tenders.
"From a technology and price perspective the mobile PC has moved from being a niche product in the enterprise space to a mainstream product," he said. "Mid-tier departments are now using them whereas five or six years ago only a CEO would have one."
Despite this, several factors conspired to limit the further adoption of notebooks into the enterprise space. The first of these was the market itself.
New sales cycle
While sales figures show that the enterprise market managed to ship more than twice as many units as the consumer market last year, a slow overall growth rate presented a major challenge for resellers and vendors alike, IDC's Sager said.
"The problem in the enterprise space is that they were the first segment to go for notebooks and mobility, so any growth is off a very large base," he said.
Most enterprise departments which had a use for mobile computing had also already adopted notebooks, Sager said. However, there were still opportunities.
"You've had a good four years since Y2K, so at this stage there is potential growth in replacing first generation notebooks," he said.
Toshiba's Whittard said the company had developed a 'back-door' approach to growing enterprise sales.
"Our Take Home A Toshiba [THAT] program is a way to get in the door of larger organisations without having to go through the IT department," he said.
"As it is a salary sacrifice program targeted at employees, we can engage with the HR department instead."
As many enterprises had already invested in notebooks, a new bread of savvy IT purchasers were presenting challenges to notebook sales via their questioning of the real value of mobile technologies, IDC's Sager argued.
"It's no longer 'give me a notebook because I want one'," he said. "Enterprises are looking at ROIs, TCO, form factor, platform and specifications.
"If I buy a 15.4-inch screen does it mean I don't have to buy an external monitor? Or, based on the job function, do I buy a smaller screened one so I can afford an external monitor when the person comes into the office to hot desk."
Toshiba's Whittard said a more informed install base was actually of benefit to vendors and resellers in their effort to bring mobile computing to enterprises.
"It means that they understand that price isn't everything," he said. "When you talk to organisations which are buying their first notebooks the conversation is all about price, when really it should be about what business goals they want to achieve.
"These days you can have higher level discussions about what applications they are deploying, or what their field sales, service and wireless strategies are," he said.
Despite this, IDC's Sager and Gartner's Woo both argued that the price gap between desktops and notebook remained the biggest inhibitor to notebook adoption.
"The price delta has narrowed considerably, but there is still a $300 to $400 difference," Woo said. "When you are deploying 5000 units enterprise-wide that difference adds up to a lot of money."
To get around this issue, Toshiba's Whittard said the company had taken a total cost of ownership (TCO) argument to market.
"The initial capital outlay, according to Gartner, is only 12-14 per cent of the TCO," he said. "When you consider the productivity gains against the other costs - like providing and supporting the user infrastructure - initial cost is quite low."
HP's White said the company was working to address this issue by taking a reliability argument to market. "Whether or not notebooks are going to be a reliable extension of their workforce has been a major question for enterprises," he said. "Reliability is related to productivity - the less down time the more productive you are."
Agreeing with White, Gartner's Woo said mature enterprises were willing to pay an upfront premium to avoid lost productivity in down and repair time, and to achieve a cheaper long term TCO.
"The quality of the product, after sales service and support are critical, so end-users want to go with a reliable vendor," he said. "This is why multi-national, branded vendors still dominate the enterprise notebook space in Australia with about 80 to 90 per cent share."
HP's White claimed that the company had managed to grow its Australian enterprise notebooks sales in the last three months 30 per cent quarter on quarter, based on a perception of increased reliability.
He also said that a strategy of increasing product lifecycles was working to reduce decrease TCOs. Previously, a given notebook was available for one year, but the vendor had been extending this to 18 and 24 months.
"Qualifying and certifying client devices for an enterprise's different applications can be quite a high cost," he said. "Having a longer lifecycle makes it easier for IT managers to keep a coherent operating environment and deploy mobile computers."
Secure ... or not?
Security, as an inhibitor to notebook adoption was up for debate. IDC's Sager said it was not an issue for enterprises, while HP's White said it had been one of the larger inhibitors.
"Security has been an issue in financial and other information-sensitive industries. It has limited their adoption of mobile technology," he said.
Intel's Anderson said security was as much an issue in wired environments as in unwired environments, and was hence not an inhibitor.
However, Intel was still working to abate customer concerns by working with security vendor partners such as Cisco.
Toshiba's Whittard argued that education had done much to negate security as an inhibitor to notebook adoption.
"The objection to wireless LANs was due to some bad press when the reality is that they can be safer than wired networks," he said. "In the last two years there has been a lot of education in that area."