Will Windows 7 Spur PC Refresh Cycle? Resellers Say No

By Jessica Davis  |  Posted 2009-10-07 Email Print this article Print

PC vendors, IT distributors and chip makers have all been talking about the promise of a PC refresh cycle in 2010 as pent-up demand meets new software and hardware products in a perfect storm of IT buying. Now, as the industry awaits the launch of Microsoft's Windows 7 operating system, resellers say that the industry is different now and new products don't spur sales in the same way.

What if the big PC refresh cycle that vendors are expecting in 2010 turns out to be a myth?

Technology vendors are eagerly awaiting the launch of Microsoft Windows 7 in two weeks on Oct. 22 the way small children wait for Christmas.

PC vendors, distributors and Intel have said that they expect the OS launch, plus new products from Intel, to spur a broad PC refresh cycle that corporations have delayed for more than a year now.

But what if the software’s launch doesn’t deliver on everyone’s hopes? Hopes that range from higher revenues for the whole of the technology industry to a recovery from the recession?

Sure, there’s plenty of interest from everyone. Resellers crowded into a standing room-only session on Microsoft Windows 7 at D&H Distributing’s MidAtlantic Show in Hershey, Pa., this week, looking to learn more about Microsoft’s new operating system—from its capabilities to how to optimize it to how to sell it.

D&H officials say resellers can order Windows 7 today for delivery on Oct. 13.

Everyone agrees that Windows 7 resolves a problem that thwarted Vista—Windows 7 offers the XP Mode so that older applications can still run on Windows 7, even if they didn't run on Vista.

But for the most part, while enthusiastic about the OS, resellers aren’t optimistic about that single product significantly boosting sales—something that many big PC vendors have been banking on. And resellers may not care so much about those product sales anyway.

"It won’t get us many sales," says George Worthington, owner and president of Warminster, Pa.-based Computer Force. He says he has just about a dozen orders for new computer systems from customers who have been waiting for Microsoft Windows 7.

"People will wait until they need the hardware," he says. "People were happy with Windows XP." And he says that 75 percent of the customers who call him still say they want XP.

No, resellers don’t think that Microsoft Windows 7’s launch will spur a big refresh cycle.

Rather, resellers say, the industry has changed. Instead of the companywide PC refreshes of the past, businesses are holding onto machines for longer periods of time and replacing them one at a time rather than all at once.

"The hardware cycle used to be a lot faster," says Ryan Bowman, network services manager for ESH Computer Center based near Lancaster, Pa. But today’s processors and systems can handle new applications for many more years, extending the lives of those systems that were deployed several years ago, he adds. And not a lot of users are passionate about OS upgrades.

"We don’t typically see a lot of people rush to upgrade their operating systems," he says. And these days customers typically only buy a few new PCs at a time.

And that’s OK with him because hardware is a commodity and services are what really drive profitability.

Worthington says 10 percent of his profits come from hardware and software sales, while 90 percent come from services.

That means his company makes more money when customers hold onto their PCs longer rather than upgrade them. And he says most customers would rather spend $100 to get another year out of an existing PC than invest in a new one.

"My sales haven’t dropped a penny during the recession," he says.



Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com


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