Corporate IT upgrade cycles can lead to boom times for technology companies, but they can also result in significant sales droughts. When times are tough and CFOs are looking for savings, companies have a tendency to hold on to their hardware for an extra year or two and patch their systems rather than upgrade to the latest and greatest software.
Sometimes upgrade momentum slows for strategic reasons — equipment and software deployed in high-security environments often requires extensive testing and certification, extending the upgrade cycle.
The White House would appear to be an extreme example of a delayed computer upgrade cycle, as well as a perfect illustration of what the costs of delaying for too long can be. According to Computerworld, when Brook Colangelo began his job as CIO with the Obama administration in 2009, White House IT assets were in rough shape with seriously dated computers, lack of data center redundancy, and poor reliability.
A 21-hour e-mail outage within six days of President Obama taking office turned out to an all-too-common occurrence — in the first 40 days, e-mail systems suffered a 23% downtime. And while President Obama was equipped with a BlackBerry, White House desktop computers were so old they had floppy-disk drives (most manufacturers had stopped including them in their PCs by 2003).
An upgrade paradox
While most organizations don’t delay replacing their IT assets to the same extent that the White House did, any move to put things off for a few years can have an impact on the revenue of companies that depend on regular technology upgrades for revenue. Think IBM (NYSE:IBM), Microsoft (NASDAQ:MSFT), Cisco (NASAQ:CSCO), and Dell (NASDAQ:DELL), for example.
On the other hand, there is one company in particular that could benefit from extended delays in upgrading: Apple (NASDAQ:AAPL). One of the biggest obstacles to Apple when it comes to widespread corporate adoption is the existing IT infrastructure built around Windows; there’s a tendency to stick with the status quo. But if equipment and software is so outdated that it has to be replaced outright, then a move to a completely new platform — Apple — is less of a barrier.
Another possibility (and potential threat to the IT upgrade cycle business model) is a company that faces a large IT replacement project turning to cloud computing as a cost-saving alternative.
And yes, the White House is still using Windows, although if the screenshots of White House PC screen savers analyzed by Neowin are any indication, desktops are still running Windows XP — an operating system that Microsoft stopped selling in 2008.