Is it me or are computers getting much cheaper these days?

A side effect of consumer doom and gloom is very keen prices for all the technological paraphernalia that we can't live without. Despite our weak Sterling we can buy a lot of computing power and techno-gadgets for not a lot of dosh.

Consumer electronics retailer EBuyer forms a good baseline for a makeshift techno-consumer Retail Price Index - it reveals that a laptop PC can be procured for less than a business return fare to London Heathrow. A hard disk big enough for all the movies you will ever watch costs about the same as the return train from Edinburgh to Aberdeen.

Whilst the current global financial stramash may have lowered many vendors predictions of device shipments for 2009, the appetite of the IPhone generation for technology seems undiminished. However, the way consumers are willing to pay for it is changing – low, predictable costs with no long-term commitment are key in the credit crunch era.

Consumer psychology

Consumers are familiar with "Pay as You Go" models which make ongoing costs predictable and transparent. The psychology is that when the one-off investment is covered by beer money, no agonising over costs vs benefits is neccessary. It may seem an obvious point, but when people are generally unsure they will have a job next year, significant capital expenditure is deferred till "better times", whilst lower cost items will still make it under the fiscal threshold.

This is one factor in the rise and rise of the NetBook. According to Gartner, these mini-notebooks built to ship at the lowest possible price point, will account for 8% of all PC sales in 2009. These are credible mobile devices, capable of running most of what a grown-up laptop can do, and cost as little as £150.

Although the innovation the NetBook form factor has unleashed is great news for the consumer, things may get tricky for PC manufacturers selling lower-margin devices during the crunch. The profit may be in the value added services: Most mobile telecom networks, extending the "free phone with a contract" model, now offer free NetBooks with a £25-a-month data deal. This is a predictable cost which the UK consumer,  weaned on a £30/month SKY TV subscription, will barely give a second thought.

Companies going cheap?

This has parallels in the business world. Generally the IT manager has discretion to fund small projects out of his "Keep the Show on the Road" budget. However, as soon as he needs the larger capital funding he needs to speak to the Financial Director, who is far too worried about keeping the company solvent to find the funds.

Over the last decade IT projects with 2/3 year Return on Investment would be considered for funding, but today these will just not fly. PREDICTABILITY of costs have never been more important than now - IT projects which can be funded out of Opex are more likely to get the go-ahead.

For some companies, a move to least-cost subscription-based licensing of software - paying per user/device/processor per month – will be an increasingly attractive option. These allow software costs to be funded out of Opex and, crucially, costs to be reduced in the event of consolidation.

Increasingly there are options for "pay as you go" models around the installation, delivery and ongoing support of software services - with cloud-based delivery or traditional co-located hosting becoming a realistic and feasible option for a greater percentage of users and a broader proportion of the software services employees use.

Smarter, faster, cheaper...

Ever since Mr. Moore noted that the number of transistors on a semiconductor doubled every few years, we have taken for granted exponential growth in computing performance, data storage, and pixel count. PC OEMs of the last decade have become lazy - its easier to make devices ever more powerful and feature-packed and avoid the investment true innovation requires.

However, the PC industry could learn from the current malaise of the US auto industry, where "bulkier is better" has driven designs which are a poor fit to customers requirements in a recession.

It is in this austere environment that Windows 7 emerged in public Beta this January.  Improved performance and power management are high priority design goals for Windows 7, and the Blogosphere consensus is that Steven Sinofsky, the Microsoft General Manager in charge of Win 7 development, has a winner.

Low memory usage, fast boot times, reworked I/O and graphics processing are all qualities which lead to speedy operation on limited NetBook hardware. Likewise, lowered power consumption will squeeze more out of their cheaper, lower capacity batteries. Interestingly, its improved efficiency means most NetBook hardware is capable of running it well, and make Windows 7 beta the NetBook OS of the cognoscenti over Windows XP, Windows Vista and any Linux distribution.

Get Cheap

Throughout the last 15 years companies have taken a heavyweight approach to employee productivity devices: a laptop for home working and mobile days, a work desktop PC, a mobile phone or Blackberry for the jacket pocket, and an expensive desk phone at work.

It all mounts up. All of these devices incur capital and revenue costs. Clearly there is room for consolidation, and new technology opens the door for IT penny pinching in today's Austerity Britain. Here are my suggestions for companies who want the IT department to "get cheap":

  • Implement employee self-selection and support for PCs and mobile devices: Companies such as BP give employees an allowance to buy their own devices, saving significant sums in desktop engineering, hardware, maintenance and support. This approach may not suit every industry, but drives an efficient approach minimising hardware procurement costs.

  • Don't give employees a desk phone: Its not uncommon for a business IP Phone to cost £200 and require costly extra network infrastructure. By implementing Unified Communications VOIP technologies employees can make calls from their desktop PCs, reducing capital cost and potentially call charges.

  • Outsource your email: Consider having basic IT services such as the provision of Email hosted by a 3rd party - Although this may not be the most flexible approach, it will almost certainly be cheaper. Microsoft offer BPOS for standard collaboration requirements whilst hosting companies like Edinburgh's Lumison offer more customised email and collaboration solutions

Clearly the above are bold steps and not for the faint-hearted IT Manager. There are challenges in terms of security, management and meeting service level with these approaches. Companies deferring management of PCs, applications, and IT staff to 3rd parties and end users must plan and build strategies to address these real concerns.

But one things for sure, if and when we finally emerge from the recession, IT is going to look a lot cheaper than it does now