TC-Oh No

Back in the late 90’s, I worked on some of Gartner’s Total Cost of Ownership studies for PCs in the Enterprise. Back then, Gartner’s TCO numbers were the benchmark of the industry and were taken quite seriously. (Microsoft was so concerned about Gartner’s numbers as they related to Windows, they devoted a whole team to come out to Stamford to fully understand the model. At the time, I think there were only two people on the planet that really understood our model. One worked for Gartner and the other worked for Microsoft). TCO, of course, is a pretty important business issue but as with other things in this age of the “IT-ization of the consumer” things that were once the purview of only business users have now become consumer issues as well. Therefore, it didn’t surprise me to see that Microsoft has commissioned a TCO study recently on the cost of Windows vs. Macintosh. (Shockingly, the commissioned study found that PCs were less expensive to own). Let’s face it. Numbers are numbers and most of you reading this could build models that show how just about any platforms could theoretically come out ahead. I was tempted to do my own analysis of the two platforms but I think it’s more important to explode two big myths of TCO.

A vendor’s TCO numbers matter. No! Mileage varies and savvy consumers should use vendor cost models as a starting point to perform their own analyses. Don’t take someone else’s numbers as being valid for your family. It’s a good time to remind everyone that there are no standards for consumer TCO that matter, except the specific costs to you and your family. No one can tell you your costs except you. Remember that models are valid for creating assumptions, not final costs and many of the assumptions you see probably don’t apply to you.

The platform with the lowest price is always the best choice. Never! As an analyst, I am often asked what platform has the lowest TCO. My answer is always the same, “a yellow pad and a pencil.” The cost of a given platform might very well be expensive, but it needs to be balanced against the notion of return on investment. Yellow pads and pencils are cheap, but not when you need to communicate with someone on the other side of the world or create a movie or any of the things a modern PC can do. The platform with the lowest price may not be the best match for real world requirements. It’s not just about price, it’s about value and getting what you need done.

At a time when consumers are sensitive about costs, the idea of introducing the concept of TCO makes sense but only up to a point. There are no shortcuts or magic associated with numbers. Consumers who are thinking about making the change to a new or updated platform should consider their own assumptions, avoid the myths and ultimately, buy into the eco-system that best meets their needs and provides value and quality. Price alone is never the right answer.

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