Moore’s law for the downturn – the cost of the same number of transistors halves approximately every 18 months
The Downturn Makes Us Think About Using – Rather Than Buying – Computers
In a recession we tend to think a lot more about how we use rather than buy things. ‘Scrimp and save’, ‘recycle and reuse’ are now more important to individuals and families than before. Over the last year the world economy bares witness, with parking lots full of unsold cars, factories closing for months. We can see similar changes in the way ITC is seen in businesses. As in previous recessions the fall in suppliers business has been frightening in many areas, despite a few clear signs of recovery.
‘Cash For Clunkers’ Schemes Helped The Car Industry – Not Consumers Or The Environment
Governments around the world have been very active in stimulating growth, initially by bailing out banks caught out by the credit crunch, in regeneration projects (such as the ARRA in the US) and in consumer activities, such as ‘Cash for Clunkers’. The latter offered government discounts on new cars for trading in and scrapping old ones – a direct assault on ‘scrimp and save’ intentions. This is one area where governments – egged on by car producers I’m sure – have forgotten (or chosen to ignore) the environmental positives of the recession. ‘But new cars have much lower emissions’, I hear you say. True, but with c.50% of lifetime emissions tied up with manufacturing, ‘not buying new cars’ for a bit and stretching out the use of older ones would have had a more positive effect. Even worse than car schemes perhaps is Sony’s trade-in offer on televisions, which seemed to ignore the up to five-times greater electricity use of flat-screen as opposed to Cathode Ray Tube (CRT) technology. There’s no question I my mind that these schemes concern employers, employment, taxation and GDP rather than either the needs of consumers in hard times or the environment.
Like the car industry ITC also is very dependent on sales of new equipment to keep it successful. In a sense a downturn is a time to discover the ‘elasticity of replacement’. Suspending capital expenditure budgets for computers has been easier for businesses in this downturn because the market is more mature than in 2001 or 1992. Servicing and maintenance vendors have been doing a little better perhaps, but by and large the drop in new sales has cut a massive hole from most suppliers’ revenues.
The ITC Disposal Channel Extends The After-Life Of New Equipment
When looking at ways in which CIOs could do something to help with climate change (please read my ‘don’t walk on the grass’ analogy), we looked at the development of a ‘disposal channel’ for computer equipment. It takes up the right hand side of Figure 1.
The development of the disposal channel for ITC is particularly important because – as Moore’s and other similar ‘laws’ describe – continuous technological development reduces the active lifespan of equipment. For general-purpose applications there comes a point at which the cost of maintaining older systems out-strips the annualised cost of newer ones. For instance, since the cost of maintaining a rack of storage will remain far more constant than the ever-increasing disk capacity it contains, after a few years CIOs can replace two with one at a lower annualised cost. I say ‘general-purpose’ applications, because there is always specialist equipment needed to run legacy processes and occasional products which do not need to be constantly refreshed and upgraded.
However ‘scrimp and save’ also applies in the ITC market. Not only has capital expenditure been cut to a trickle, but the reduction in transactions and business (described by the lowering GDP figures) means a drop in the need for processing, however temporary and a consequent rise in the value of second user products. Perhaps we should restate Moore’s law for the downturn as ‘the cost of the same number of transistors halves approximately every 18 months’.In addition legislation such as the Reduction of Hazardous Substances (RoHS) and the EU’s Waste Electrical and Electronic Equipment (WEEE) laws have formalised the disposal channel, forcing suppliers to control the materials used in their products and to take back end-of-life products. The existence of a formal disposal channel also makes reselling second, third, or nth hand computer equipment easier.
As part of my research into the recession I’m looking for vendors and others actively involved with the refurbishment, recycling and repurposing of second user equipment. My first investigation is going to be IBM’s activities in Endicott, New York State. If you have an interesting story to tell. Please contact me by commenting on this article.