Appetite for Raw Computing Power
Is Growing in Corporate Europe
By DAVID PRINGLE
Special to THE WALL STREET JOURNAL
Corporate Europe has a growing appetite for raw
computing power. Although standard desktop computers
now cost less than $1,000 (940 euros), many employees
have shiny new PCs that cost more than double that
sitting on their desks. European companies are trading in their ho-hum personal computers for souped-up
"workstations," with lightning-quick processors and
massive memory banks.
The number of workstations -- loosely defined as
computers costing more than $2,000 -- sold in Western
Europe in 1998 was 23% higher than the year before,
according to market research firm IDC. And unit
shipments are expected to grow by a further 27% this
year, to more than 870,000.
Workstations, as defined by IDC, are very powerful
machines; as a minimum, they come equipped with 128
megabytes of memory and a 450-megahertz processor.
To run Microsoft Word 97, a popular word-processing
program, a computer needs only eight megabytes of
memory and a 50-megahertz processor.
What do users do with all this computing power? "It
could be anything, from accounting to inventory
management, where you manage huge amounts of data,"
says Lars Rasmussen, a senior analyst with IDC in
Copenhagen. As information becomes an increasingly
potent competitive weapon, a growing number of
employees are being asked to spot significant trends in
company data, he says. To do this, they need powerful
computers capable of presenting complex data in
accessible ways, such as three-dimensional graphics. In
computer-industry jargon, these employees are often
referred to as "power users."
A Status Symbol
Despite the growth in workstation sales, power users
still make up a small elite -- fewer than one in 20
desktop computers sold in Europe last year could be
defined as workstations, according to IDC's figures. And some analysts are skeptical about whether large
numbers of employees really need the latest computer hardware.
"People like to consider themselves a power user," says
Rob Hailstone, research director at Bloor Research of
Milton Keynes, England. "To an extent, the PC has taken
over from the company car as the status symbol to have.
It is like having a Porsche in the car park."
And Mr. Hailstone says the fashion for buying powerful
workstations runs counter to other trends in the
information-technology industry. He points out that
business-software companies are revamping their
products so that they can be accessed remotely via the
Internet. He believes that in the near future, most
employees will need only rudimentary computers with
enough power to run a Web browser.
But Mr. Rasmussen maintains that most of these new
power users have a genuine need for a fancy computer.
He asserts that a growing number of employees now
regularly accesses enterprise-resource-planning systems
-- power-hungry software designed to store and process
all the information a company uses daily.
Additional Costs
More than one quarter of the 40,000 employees of
Hoechst Marion Roussel, the pharmaceuticals division
of German conglomerate Hoechst AG, have been given
access to the company's new ERP system. Rather than
purchasing premium machines for these users alone,
HMR finds it more cost-effective to buy powerful
computers for everyone working at a particular site.
Michael Neff, chief information officer at HMR, points
out that the cost of the hardware is a relatively small
proportion of the total cost of purchasing and running
a PC. "Once we have included all the software and
services behind it, then it could be as much as 10,000
marks ($5,351 or 5,100 euros) per machine," he says.
The Swedish division of the engineering group ABB Ltd.
spends an average of $2,000 on computer hardware for
each individual user. "In many cases we can live with
standard computers," says Mats Engstrand, chief
information officer. "But there are different categories of users -- we have quite a number of engineers who need powerful computers."
And Mr. Engstrand says that high-specification
computers should have an extended life-span. "It serves
our purpose to buy a pretty powerful PC today and live
with it for two to three years," he says, rather than buy a less-expensive computer that might be obsolete in less than two years.
Windows NT Spurs Sales
ABB Sweden, like many European companies, is also
standardizing on Microsoft Corp.'s Windows NT
operating system, which needs a relatively powerful
machine to run at full-speed. And IDC says the
popularity of Windows NT in corporate Europe is
helping to drive workstation sales.
But perhaps the most compelling explanation for the
current popularity of workstations is that buyers can now get more bang for their buck. Compaq Computer Corp., a prominent supplier of workstations, estimates that computing power that would have cost $10,000 18
months ago now sells for $2,500.
The workstation market hasn't been immune to the
cutthroat competition sweeping through the computer
industry as a whole. IDC figures show that, despite the
growth in unit shipments in Western Europe, workstation
sales in the second quarter were down 11% year-to-year
(at less than $900 million). "We have seen price
slashing of between 35% and 40% on some
configurations," Mr. Rasmussen says.
Some Recent Buyers
Manufacturing companies with large design departments,
financial companies looking for machines capable of
crunching through reams of numbers, and
telecommunications companies' multimedia divisions,
are among the biggest purchasers of workstations,
according to International Business Machines Corp.,
another leading supplier.
Compaq says Deutsche Bank AG, Philips Electronics
NV and car makers Ferrari SpA and Bayerische
Motoren Werke AG are among the European companies
to have purchased a "significant number" of workstations in the past six months.
Benetton Group SpA, which has a 300-strong design
department, has been buying more workstations as prices
have fallen. But Bruno Zuccaro, information systems
director at the Italian clothing company, says he doesn't expect this trend to continue indefinitely. "We don't need any more power on the desktop," he says. "We can use a browser interface and place all the power on central servers."
However, Benetton may find that some employees are
loath to give up their precious workstations. Mr.
Zuccaro acknowledges that the PC can be a status
symbol. "If you are a manager, it is the company car; if you are a lower-level white-collar employee, it is the personal computer," he says. "We have a problem with that -- everyone has a problem."
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