COM M. Margevicius

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1 M. Margevicius Research Note 11 September 2003 Commentary TCO Comparison of s vs. Notebooks Differences in technology, price, life cycles and usage patterns dictate that notebook total cost of ownership ranges anywhere from 34 percent to 68 percent more than desktops. In tough economic times, enterprises are continually being pressured to cut costs on all fronts. One area on which heavy focus is placed is the client PC device in particular, the cost of notebooks. In this research, we compare and evaluate the total cost of ownership (TCO) of notebooks and desktops. Notebook TCO can range anywhere between 34 percent and 68 percent more than desktops. The reasons for price inequality are clear: Notebooks have a higher purchase price, shorter useful life, higher failure rate (yielding more downtime), higher operational costs for remote support, and higher end-user costs because of self-support, casual learning and heavier dependence on peer support. In addition, it is important to recognize that, under most circumstances, the hourly wage rate of a notebook user is more than that of a desktop user, which also contributes to a higher notebook TCO. Notebooks Cost More Recognize that the figures listed are those only of costs, and that, as with any IT investment, the value in terms of return on investment (ROI) or productivity must be considered in the viability of the platform. With notebooks, the benefits can range widely and, in many instances, provide justification for their purchase (although not always, as some notebooks never leave the office). If TCO were the only factor dictating the decision-making process, then enterprises would consider abandoning all PC technology in favor of pencils and paper, which have significantly less cost than either platform but also have significantly fewer benefits (see "The Positive Payback of Notebooks Over s"). TCO Analysis We offer three models for comparison. The first is for the user profile of a typically managed desktop worker. The second is the day extender mobile worker, who can be classified as the worker with occasional remote-computing requirements. The third user profile is for the traveling worker profile (also known to some as the "road warrior"). Day extenders are typically in the office 80 percent of the time, as compared to traveling workers, who are typically on the road 80 percent of the time. The assumption is that the day extender's work environment is generally more consistent and less complex, with lower support requirements than for the traveling worker. All profiles assume the same software load set based Gartner 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.

2 on a Windows XP operating system (OS) configuration. The comparison of the models can be seen in Table 1 (see "Notebook TCO Comparison: s vs. s"). TCO Component Table 1 TCO Comparisons Hardware and Software $1,368 $1,799 $1,848 Operations $538 $710 $802 Administration $422 $488 $495 End-User IS Costs $2,320 $3,118 $4,499 Downtime $103 $249 $324 Total Platform TCO $4,751 $6,364 $7,967 % Over TCO 34% 68% Our TCO profiles are weighted averages of current enterprise usage rather than reflections of any particular IS organization. We encourage enterprises to perform their own analysis using our models to determine the site-specific impact of a particular change. Differences in end-user proficiency, installed base size and implementation strategies can significantly affect an enterprise's TCO. The precision of the numbers should not imply accuracy of the models. These numbers, while arithmetically correct, fall within a broad range of possible numbers. Enterprises should not assume that the numbers in our model reflect their enterprise and should use their own numbers with our framework. Hardware and Software Costs Hardware and software costs for notebooks and desktops are estimated in Table 2. Notebook and desktop costs are depreciated over three years, even though usable life for desktops may extend to four years. Additional notebook capital items include a port replicator and extra battery. Items included in capital costs besides actual hardware are OS license, shipping and installation costs, and any other services (for example, image deployment or asset tagging) that contribute to the cost on a purchase order. Hardware and software costs typically vary anywhere from 23 percent to 29 percent of TCO. 11 September

3 Table 2 Hardware and Software Costs Hardware and Software Hardware costs Expense, depreciation and lease fees $425 $765 $791 Upgrades Spares/spare parts Supplies Purchased software costs Personal productivity and personal database applications $173 $182 $182 Business and engineering applications Database, data management and development tools Messaging and groupware Other 54 $73 $73 IS software Network, systems, storage and asset management $28 $25 $29 Service desk management Training devices Test/other $ 1,368 $ 1,799 $ 1,848 Operations Operations cost comparisons can be seen in Table 3. Notebooks have higher costs for several reasons. Notebooks are more-complex configurations, have higher failure rates and are used in a wider variety of environments. Notebook users work in more-diverse environments, requiring differentiated support offerings, such as a 24x7 service desk. In addition, because mobile workers are not in an alwaysconnected state (as in desktops) or are connected at various speeds, the ability to rely on client-side tools for support (for example, software distribution or remote control) is significantly lessened as compared with desktop users. Mobile workers tend to rely on self-support more than on a service desk, which may lead to fewer calls overall but problems taking longer to fix. Finally, notebooks in the field may require alternative break/fix procedures because of the mobile nature of the platform. workers, because of their fixed nature, can benefit from technical-support offerings such as depot service, on-site technicians and high-speed network connections. This issue is a much greater concern for traveling workers than for day extenders, because the traveling workers have even less access to support resources. 11 September

4 Table 3 Operational Costs Operations Technical services Tier 2 problem resolution $14 $21 $16 Tier 3 problem resolution Traffic management and planning Performance tuning User administration (adds and changes) OS support Maintenance labor Software deployment Application management Hardware configuration/reconfiguration Hardware deployment Disk and file management Storage capacity planning Backup, archiving and recovery Repository management Planning and process management Account management $18 $18 $18 Systems research, planning and product management Evaluation and purchase Security and virus protection Business recovery Data support Database management and administration (DBA) $65 $65 $81 Service desk (Tier 0/1) $197 $268 $323 $538 $710 $802 Administration Administration costs include nontechnical resources required for the desktop and notebook platforms. Notebook users have higher administrative costs for a variety of reasons, including increased security threats, theft, asset management and connectivity costs. Administrative cost comparisons can be seen in Table September

5 Table 4 Administrative Costs Administration Finance and administration Supervisory management $59 $62 $62 IS administrative assistance Asset management Budgeting and chargeback Audit Purchasing, procurement and contract management Vendor management Disposal IS training IS course development $10 $28 $28 IS training and delivery $60 $81 $81 End-user training End-user course development $17 $28 $28 End-user training and delivery $155 $152 $152 $422 $488 $495 End-User Operations and Downtime End-user operational costs range anywhere between 26 percent and 48 percent for desktops and notebooks, respectively (see Table 5). Notebook users typically have more locally stored applications and data, have various connection options (such as wireless, dial-up and broadband), and often have to deal with system problems without the benefit of service desk support. Hence, mobile workers tend to have high self-support costs. Traveling workers' greater time out of the office tends to make their self-support time (and cost) higher than that of day extenders. In addition, notebooks take a great deal of physical abuse from being carried around on a regular basis. The result is a higher failure rate (and more downtime) than desktop systems. Table 5 End-User Operational and Downtime Costs End-User IS Costs Peer support $972 $1,469 $1,194 Casual learning and self-support $743 $1,019 $2,545 Formal learning $336 $340 $408 File and data management $130 $153 $214 Application development $138 $138 $138 $2,320 $3,118 $4,499 Downtime $103 $249 $324 In addition, it is important to recognize that, under most circumstances, notebook users are knowledge workers with a higher salary rate than that of desktop users, the majority of whom tend to be administrative support or task workers. The salary differences are heavily reflected in end-user operations and downtime costs and lead to the greatest variability of costs within the TCO model. Enterprises are encouraged to run their own numbers to establish true metrics. 11 September

6 The TCO for desktops and notebooks is calculated by average end-user proportion of each platform. The desktop TCO is calculated with the following assumptions: 1 percent high-performance worker 20 percent knowledge worker 74 percent structured-task worker 5 percent data entry worker Bottom Line: total cost of ownership is lower than that of notebooks. Enterprises are encouraged, however, to select the right client device based on business requirements. TCO measures costs, and not the return on investment or value derived from the investment. Enterprises need to calculate benefits and costs and ensure that notebook allocations are being done for the right users. 11 September