Are iPads and Androids Pushing PCs to the Enterprise Margins?

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As Apple fans queue up in long lines to get their hands on the iPad 2, the contrast with the last big PC-related release – Windows 7 – couldn’t be more stark.

PCs and new operating systems just don’t create a lot of excitement anymore.

You could chalk this up as a fad, or you could argue that scarcity is driving up demand. You could even point out that the PC market is a mature one and not likely to spawn the excitement that gets triggered by novelty. All are reasonable points, but a closer look at the underlying numbers indicates that a serious computing shift is well underway.

Analysts expect Apple to ship 30 million iPads in 2011, double what it shipped in 2010. Android, meanwhile, has been taking the smartphone market by storm. The latest feather in its cap is in Europe, with Android’s market share surging from 4 percent to over 30 percent in less than a year.

Even Microsoft, which stands to lose the most in this computing shift, is banking heavily on cloud computing. As Microsoft touts Windows 7’s cloud functionality in a slew of commercial and product-placement deals, it’s also tacitly admitting that a device’s form factor will soon be far less important than the services it taps into.

How do PCs fit into the cloud computing landscape?

To put it bluntly: they don’t. Okay, that’s probably an overstatement; however, the gains in efficiency, agility and cost that organizations now seek through virtual and cloud-based infrastructures can be undermined by large deployments of PCs.

“In a typical enterprise, as much as 80 percent of IT’s budget is spent on maintenance, which makes it very hard for any IT organization to add value to the business,” said Jeff McNaught, Chief Marketing and Strategy Officer for Wyse, a provider of cloud client computing solutions.

“Even in cloud-enabled organizations, the maintenance problem does not disappear, since PCs are far more difficult to manage than servers. Data loss, intellectual property theft, viruses, targeted phishing attacks and more plague the PC, which is why end points must evolve in order to unlock the cloud’s true potential.”

Tablets and smartphones are getting all the hype, but many business users are more excited about thin or cloud clients. Unlike PCs, cloud clients can be configured so that they have little or no onboard storage or processing, virtually eliminating client-side attacks.

Moreover, since maintenance, management, patches and updates are all centralized, IT overhead is vastly reduced.

A case in point is Amerisure Mutual Insurance Company. As is common with enterprises of all sizes in all industries, Amerisure had a regular PC replacement cycle. Every three years, the company would write a $2 million check for updated equipment. The $2 million price tag was just the tip of the iceberg cost-wise, however. Productivity was disrupted with each upgrade, and, of course, management and maintenance were ongoing cost centers.

In 2009, Amerisure decided to go in a different direction. Instead of dropping $2 million on new PCs, the company ditched them in favor of a virtualized infrastructure and cloud clients.

Even though the dollar signs are eye catching, the switch wasn’t primarily about money. Rather, it was a strategic business decision. Amerisure sought an agile infrastructure that would deliver ubiquitous access to systems and data from anywhere, at any time and on any device.

The solution Amerisure chose was a Citrix XenApp infrastructure with Wyse cloud client end points.
Amerisure estimates that its total savings over five years will be more than $8.5 million.

“Our virtualization implementation was critical for us to lower costs while improving service,” said Jack Wilson, Enterprise Architect at Amerisure. “Amerisure IT now runs like a utility, particularly in the way that our computing infrastructure is now part of the business fabric, like heat or electricity.”

What does the enterprise really want?

The enterprise as a whole hasn’t made up its mind. It’s growing weary of PCs, but is not ready to crown a successor.

Most enterprises are still wary of smartphones, due to IT’s inability to control and secure them. Cloud clients are catching on, offering improved security and lower IT overhead, but most of those clients are still tethered to the desktop.

Tablets represent the middle ground, delivering mobility combined with a scaled-down operating environment. Security, management and maintenance are still question marks, but the enterprise seems to be nearly as excited about tablets as consumers are, which is unusual this early in an adoption cycle.

According to a recent Frost & Sullivan report, tablets had the highest growth rate of all IT hardware sectors worldwide in 2010. Only 5 percent of the 18.3 million tablets shipped last year went to businesses, but the research firm predicts that businesses will snatch up 30 percent of those shipped by 2015.

RBC Capital Markets is more bullish, believing that tablet revenues will balloon from $11 billion in 2010 to $70 billion in 2014, representing 185 million units shipped. RBC believes that part of the tablet’s appeal will be that it can function as a mobile thin client for cloud computing environments.

Finally, RBC believes that Android tablets will soon surpass iPads to grab the market-share lead.

“Tablets have been in the market for a long time, from early Windows-based tablets to the iPad,” said Mayur Kamat, Product Manager, Enterprise Mobility for Google. “We looked at the tablet device from a completely different angle. It’s not just about a larger screen on a mobile device, but about enabling new usage scenarios.”

Does Motorola’s Atrix 4G represent the way forward?

When I asked Kamat whether Android would end up inspiring other device form factors in the near future, he argued that it already has. “The openness of the Android operating system allows developers to create a number of different devices,” he said.

As an example, he pointed to Motorola’s Atrix 4G, a dual-core smartphone, featuring special docks that extend the device’s functionality. Atrix 4G’s optional docks transform the phone into a laptop, a media hub or an in-vehicle GPS.

What the enterprise could end up seeing in the near future is form truly following function. Just as apps emerge to tackle specific business challenges – with many larger business suites now losing out to more task-specific applications – purpose-specific apps wrapped in the most appropriate hardware package could soon become a reality.

Thus, you could see traveling service technicians with small tablets loaded up with schematics, scheduling and customer service apps, along with an in-vehicle dock that pulls up the device’s GPS and links it to the next appointment. You could see marketing teams with tablets that come with built-in projectors for multimedia presentations. And you will definitely see a number of social-media inspired devices that target consumers and networking-savvy professionals alike.

Will the PC go away? I doubt it. The PC will have a place in both the enterprise and homes for many years to come. However, its status as the go-to computing device for most people is coming to an end. Other devices will take over more and more of the PC’s functionality, and those devices will additionally benefit from having more rapid replacement cycles. Everyone wants the latest and greatest mobile device, after all.

With the PC, most of us will make do until it pretty much stops working – and when it does, more and more people will ask themselves whether they really need a new PC when they already spend most of their computing time on their tablets and phones.

That day is not here yet, but it’s closer than you think.