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TC-TS Economics

September 9th, 2002 · No Comments

I’ve put together some thoughts on the Thin Client-Thick Server solution from a pricing and total cost of ownership point of view, as a precursor to identifying the early markets (will be posting thoughts on this shortly).

First, a quick recap on the Strengths and Weaknesses of our TC-TS Solution.

Strengths

– reduces cost of hardware needed on desktop / can use old PCs
– reduces cost of software by leveraging open source
– Windows-like GUI reduces learning time
– provides base set of apps (email, browser, unified IM client, word processor, spreadsheet, presentation, PDF reader)
– can read/write most MS-Office documents
– can co-exist in a Windows world; this is not an either-or solution (either Windows or Linux TCs)
– centralised administration can provide IT staff easier and greater control on desktops
– can control the client desktop entirely from the server
– centralised storage of data makes backups easier

Weaknesses

– need a minimum of 10 users (ideally, 25) to amortise cost of Thick Server
– LAN speed of 100 Mbps needed due to high data transfer
– Limited support for Windows applications
– Non real-time situations (since the TC can occasionally crash – we are working to fix this)
– No multimedia support on desktop (this is actually possible – not a technical issue, just one of TC cost)
– needs an admin with some basic knowledge of Linux – and an open mind (because we are not Windows!)

Costs

An old PC working as a TC is available for USD 150 (Rs 7.5K). These would be typically low-end Pentiums of mid-to-late 1990s-vintage. Newer stripped-down PCs based on Via or AMD processors can be available for USD 200 (Rs 10K), with an additional USD 100 (Rs 5K) for a new keyboard-mouse-monitor.

The TS investment would be about USD 1,200 (Rs 60K) for a dual-CPU PIII 1 Ghz server, with software RAID on 2 80 GB disks and 1 GB RAM. Such a server can support a minimum of 30 TCs.

Our software should be priced at no more than USD 40 (Rs 2K) per user per annum, or USD 4 (Rs 200) per month. The monthly/annual subscription fee ensures regular updates of the software applications.

So, if we assume that companies / institutions get their own TCs, we can think of a rental model on the TS and software. Assuming 10% p.a. interest on the server pricing and our need to recover the cost in 2 years, this implies a monthly cost of USD 60 (Rs 3K).

So, if we consider the 3 options of 10, 20 and 30 users in an enterprise, the TS and software rental costs on a per month basis would be as follows:
– 10 users: USD 60 + 10*4 = USD 100, or USD 10 (Rs 500) ppm (per person-month)
– 20 users: USD 60 + 20*4 = USD 140, or USD 7 (Rs 350) ppm
– 30 users: USD 60 + 30*4 = USD 180, or USD 6 (Rs 300) ppm

This does not include support or training costs.

Thus, an organisation can now provide hardware and software (a full computing solution) for a one-time cost of USD 150 (Rs 7.5K) for the TC and an annual cost of no more than USD 120 (Rs 6K).

As a comparison, a Thick Windows desktop would cost USD 600 (Rs 30K) with an additional USD 500 (Rs 25K) for software [Windows XP, MS Office and Anti-Virus].

3-year TCO

Taken over a 3-year period, the Total Cost of Ownership, assuming a 10% hardware AMC, is as follows:
– TC-TS Solutions: USD 150 + 15 + 15 + 3*120 = USD 540 (Rs 27K)
– Thick Windows Desktop: USD 600 + 60 + 60 + 500 = USD 1220 (Rs 60K)

The TC-TS option could be even lower if one assumes 30 users (the above assumes 10 users). For 30 users, the 3-year TCO is USD 150+15+15+(3*72) = USD 396 (Rs 20K).

Thus, the TC-TS solution can bring down total cost of ownership over a 3-year period by 55-67%.

Tags: Thin Client-Thick Server

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