Is That Really Necessary?

Having trouble figuring out what technology you need amongst all the useless fluff, add-ons and upgrades? We got you covered.
Magazine Contributor
13 min read

This story appears in the April 2002 issue of Entrepreneur. Subscribe »

Bill Gates and Joseph Schumpeter were right on target--arming entrepreneurs with innovative technology is the shortest route between anywhere and prosperity.

A Harvard economist, Schumpeter preached entrepreneurship when America was an over-regulated group of corporate fiefdoms, passed on about the time Microsoft's chairman was born and never saw his theories become validated by the entrepreneurial boom of the '80s and '90s. Gates, who was central to that effort, assures us that the recent business slump is just a breather, and that even greater productivity will flow from office product investments over the next decade.

Blatant self-interest on Gates' part? Sure. But when he's right, he's right. The recession can be traced directly to the slowdown in capital spending after interest rates rocketed sky-high. Now it's about time to start shopping again--but cautiously. Technology enthusiasts like Gates are good at forecasting visions of improved efficiency, reduced costs and more dollars to the bottom line. But it's you who has the power to make them come true.

Between the promise and the bottom line stand installation and implementation issues, employee training and support costs, bugs and other product shortcomings. Sometimes, the real benefits aren't scheduled for delivery until the third or fourth version of a product comes out. It all works out eventually, but they don't call it the bleeding edge for nothing.

To make your technology investments generate more savings than costs is tricky. Only you know how a product will suit your company's needs. But here are some buying guidelines for the product categories that are changing the most this year.


Let's start with desktop PCs because they're the cornerstone of office productivity and because its buying guidelines have broad applicability. You want to strike a balance between a PC's efficiency--that is, its ability to run current software at near-optimal levels--and the inevitable costs associated with shopping, buying and installing new hardware, training and supporting employees, wiping out the data and software from old hardware, then physically removing, storing and eventually disposing of it.

The good news on that front is that the life of the average midrange Windows desktop is getting much longer. This isn't about hardware reliability, which is already top-notch even among so-called white boxes, says Mark Margevicius, a Gartner senior research director.

You can also hold on to your desktop longer because its processing capabilities are staying one step ahead of the demands that are placed on them by popular software. And if you do it right, you can conceivably squeeze four years of life out of a 1GHz to 2GHz Pentium 4 or equivalent AMD processor (high-end Athlons or entry-level Athlon XPs). It sounds like a lot of computer, but Microsoft's new Windows XP needs at least a 500MHz processor and 128MB RAM if your PC is going to boot up the same day you turn it on. Even if you never install Windows XP, expect all other software developers to seize upon the XP footprint for their minimum desktop requirements--with the emphasis on "minimum."

Ultimately, you need room to grow, so it really won't pay in the long run to buy while you're one step behind the standard. Future software versions will end up bogging down your desktops, wasting worker time and forcing you to swallow the unpleasant costs of a premature upgrade.

How do we know? That's the way it's been for the past 20 years.


Your choice of Random Access Memory is of particular importance this year. But let the buyer beware: Don't be dazzled by high speeds. The fastest memory available, RDRAM (Rambus DRAM), is one to avoid. Offered by a single supplier, its high price tag was one of the factors that slowed the adoption of early Pentium 4s, and nothing has really changed.

The relatively new Double Data Rate (DDR) SDRAM, however, will ultimately prove to be the sweet spot for your high-performance Pentium 4 and Athlon systems when motherboards and supporting chipsets become more widely available and therefore cheaper.

Even then, traditional SDRAM will continue to be the best buy for most workers' desktops--it will have enough data transfer headroom for all but the most rigorous 3D applications for quite a while, according to technology analysts. If most of your company's desktops run SDRAM, sticking with that memory flavor will save you future hassle because it will simplify inventory, upgrades and tech support.

When you do migrate toward DDR, the cheapest way to buy it will be wrapped inside a new system. This way, you can avoid the cost of audits, installation and worker downtime. But of course, you may need to add more memory to some systems to keep them at near-optimal levels in the interim.

Gartner recommends a minimum of 256MB for a midrange system, and 512MB wouldn't go to waste. Memory is like duct tape--there's hardly anything that a little more of it can't help.

Operating System

Yes, you need an operating system, but don't feel compelled to get the one that Microsoft is pushing you to buy. Windows XP is definitely one to skip or, at the very least, wait on for two or three years until Microsoft quits supporting your current Windows version according to its newly accelerated obsolescence schedule. XP is all about exercising what financial analysts lovingly refer to as "Microsoft's pricing power" and turning the knob on your upgrade treadmill up a notch to "Forced March."

The best thing Redmond has been able to say about its last three operating systems is that the new one is more stable and secure than the last one they sold you. That eventually turns out to be false--it took exactly two months for XP vulnerabilities to be unmasked. But, of course, the bad news always seems to arrive after the magazine reviews.

Reviewers are raving about the fact that Windows XP has multimedia player enhancements and Instant Messaging, along with a couple of other ideas that were "subsumed" (a Microsoft word) from those who invented them. No one ever asks about the economy of building fast-evolving applications right into the footings of our desktops and then interleaving tons of spaghetti code with Internet access.

If you use Windows 98, Windows Millennium or Windows 2000, you have an OK OS and should stick with it. An OS upgrade is the classic example of how the costs of system audits, installation, training and support can drown out advertised productivity benefits. Gartner puts the total cost of upgrading a desktop at about $10,000, and the total cost of ownership on a typical system at anywhere between $4,500 to $11,000.

How long would it take your company to recover that? More important, we as consumers need to be wary of a technology partner who sells us an operating system it plans to retire in a year (Windows Me) to 18 months (Windows 2000) when thinking about buying an OS upgrade.

And let's not forget about Linux. It's been stable because it's an ongoing volunteer coding project that's focused on excellence rather than on revenue stream. With IBM pumping in distribution and marketing cash, Linux has now become a widely used alternative for LAN and Internet servers.

It's far less popular on front-office desktops because of limited hardware drivers and productivity applications--although there is a new version of Sun Microsystems' StarOffice out in the market. You can also get popular Windows applications to run under Linux if you work at it. Bottom line: This good back-office alternative may move upfront someday.


Because of its low cost and stability, a 10/100Mbps Ethernet network earns its place as the backbone of any collaborative enterprise. The real networking question is: Should you hook one of the versions of 802.11x (Wi-Fi) wireless networks to your wired network? The answer is yes, although this is one of those bleeding-edge technologies that requires careful deployment and usage.

With more than 200 interoperable brands in the marketplace, cheap Wi-Fi access points and client adapters are everywhere. But because native security is anemic and unauthorized connections are quite difficult to detect, either a 11Mbps 802.11b or 54Mbps 802.11a network will likely represent a significant security risk for your company.

The solution to this potential problem is to purchase more expensive products with proprietary security protocols, like those from Cisco, 3Com or Proxim, or to deploy a virtual private network. That adds significant cost and administrative complexity. But Wi-Fi isn't going away anytime soon, and you don't want employees using their own unsecured transceivers.

Mobile workers also need Bluetooth, which, according to some pundits, can be supplanted by Wi-Fi. Not so. Bluetooth is a short-range, low-power protocol for wireless data synching, not communications. It lets mobile workers select from an array of incompatible portable devices--from a cell phone to a laptop or whatever the business situation demands--and synchronize contact and other data among them without any hassle. Bluetooth is easy and cheap. Wi-Fi is relatively inexpensive, although it might require various usage guidelines, an list of approved products and an aggressive program to buy secured products for anyone who wants them.

But first, let's think about this no-brainer for a moment: If your enthusiastic, go-getter employees want more opportunities to get more work done at home or on the road, you'd be crazy to stand in their way. Networking will definitely pay off in this situation.


The CRT is history. Move on to LCDs as the opportunity presents itself. If you're buying new PCs, make sure they come with flat panels, or buy CPUs only and LCDs in the aftermarket. Since LCDs save significant amounts of power and space, it might even make sense to upgrade current desktops with budget-price, high-quality flat screens. For example, ViewSonic's 15- and 17-inch VE150m and VE170 ViewPanels sell for $399 and $749, respectively--about half the price they were a year ago. They'll outlive your CPUs and can be easily moved to new desktops later.

In any case, it's time to retire those good and faithful CRTs that have been heating up your office for the past several decades to the Salvation Army or wherever folks can still squeeze a little utility out of them. You can't just throw them away, because they're chock full of harmful chemicals. If you don't go the charitable route, IBM and Hewlett-Packard are fronting the CRT recycling effort.


Ah, rewritable DVD combination drives--what a mess. Drive-makers need to settle on a single recordable standard, and soon. But of course, they won't, which, ironically, removes the problem of product obsolescence from this category. You'll be buying your second rewritable DVD by the time the market winner emerges, and it will probably be much cheaper, faster and better.

What the diverse recording standards will do, however, is force you to choose the drive features that best fit your primary application--DVD-RAM for random access data storage and backup, DVD-RW for training film mastering with version control, and DVD+RW for mastering with wider reader compatibility. Buy one or more portable drives for use with different desktops.

A DVD-ROM/CD-RW combination drive is a no-brainer, and if you've bought a desktop lately, one of these was probably built into it. This gives you the ability to burn rewritable CD-ROMs and play DVD-ROM and write-once DVD-R discs.

Digital Cameras

Digital cameras are amazing products. But it won't pay to rush into a purchase unless you're a professional photographer, a real estate agent, a Web page designer or can otherwise anticipate a good return on the investment.

These are relatively expensive cameras with complex features, and their prime buying criteria, image resolution, has morphed from 1 to 5 megapixels--for now. The residual value of just about any model will be undercut by more fully featured cameras that follow at lower prices. Yes, that's true of most technologies, but this is ridiculous.


Everything I said about Windows XP goes double for Office XP. Microsoft's Office Suite delivered everything you'll ever need in a word processor, spreadsheet, database and so on several versions ago. Microsoft just needs a little revenue bump every now and then--which it has every right to seek.

But you should have the right not to open your wallet until you're ready. Without going into detail, the single most innovative feature of Office XP is the way it forces you to buy more copies more often. Its other features are incredibly granular, which makes a weak cover story for that strategic goal. Your productivity gains are not very likely to completely cover your deployment and support costs.

But that's not always true of new releases. There are various reasons for frequently upgrading security, tax, multimedia, Web and communication programs. For example, right now, some college kid is out there creating an innovative little piece of code that will add one more wrinkle to the rapidly growing blob of viruses that threaten your PC.

But desktop productivity software? In most markets, the only real competitive threats to Microsoft's new software versions are its old software versions. Still, more than half of Microsoft's customers are choosing not to use the latest Office version because they don't want to give up familiar features and because upgrading can be a real hassle.

Recommendation: If it ain't broke, don't fix it--that is, until Microsoft makes you.

Why (and What) to Buy

It's About Timing
Why should you buy technology? To make more money by enhancing your productivity. For that to happen, you will have to do better than just recoup a product's deployment costs before it's replaced by a successor.

Some products, like Windows Millennium or digital cameras, return so little on the investment and are replaced so quickly that you can't get your money back. Others, on the other hand, with even shorter life cycles, such as cell phones and 802.11b networks, offer so many advantages that it pays to get on them early despite the costs. Eventually, you'll have to refresh each of your technologies or be nibbled to death by lost worker efficiency.

It's up to you to figure out the right timing for each investment-unfortunately, there's no neat rule of thumb that applies to all product life cycles. But we tend to agree with experienced IT managers and analysts who advise against being the first on your block with the latest version of anything. Then, take a hard, skeptical squint at the potential for return on each investment. That's the approach that guided these product judgments.


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