Life Cycle of Buying New Computers Extended from Three Years to Four and a Half Years

The three-year cycle theory seems to no longer work in the computer industry.

In a recent report, Gartner Group, a marketing research firm, predicted, "Customers and corporations hesitate to buy new computers. Computer makers will feel more pressure of the piling-up stock."

What Garner Group mean by computers refers to desktops, laptops, servers, etc., each of which costs less than $25,000. According to Gartner, computer makers have produced 127,3 million computers this year, approximately 1.8% increase from last year. For the year of 2003, the market will be a little better, making it possible to predict a 7% development. Nonetheless, the prediction is not so sanguine, considering the two-digit developments made so far.

Traditionally, corporations and individuals have bought new computers every three years. Recently, however, the cycle has been elongated for various reasons. For example, customers do not feel the need to buy new computers. In addition, they hesitate to open up their wallets due to the unpromising future economy.

On top of that, they are likely to spend their money, if any, on applications other than computers such as game players, digital cameras, DVD players, to name just a few. Corporations also focus more on upgrading their computers centered around replacement of software and parts.

The industry considers the concept of computers has been changed from the "high-speed computing tool" to a "tool providing Internet access." Computers produced 3-4 years ago are equipped with a CPU of 700∼800㎒, a memory of 128MB and a hard drive of 10GB. With these options, a customer feels no problem surfing on the Internet.

More and more computer makers are getting aware of the need to market computers like other electronic goods such refrigerators, depending no more on the cycle theory.

Park Shi-bum, marketing director of LGIBM, "I don`t think there will be a wide boom for upgrading unless the home networking becomes widespread. We believe it takes about four and a half years for a customer to buy a new computer. But it is also subject to many variables."

Seong-Yub Ra cpu@donga.com