In January, IBM made an announcement that probably wouldn’t have garnered much attention on even the slowest news day. The company signed a $5 billion deal with Sanmina-SCI Corp. to outsource the manufacture of its NetVista PC line.

With the industry’s margins almost nonexistent and worldwide PC sales declining outright last year for the first time ever, such an outsourcing deal seems sensible and even inevitable. But the move has symbolic significance, because it comes 20 years after IBM transformed the personal computer from a hobbyist’s fixation to, well, Corporate America’s fixation. In the past two decades IBM has sold tens of millions of PCs, and while it hasn’t been the market leader for some time, the company has remained synonymous with desktop technology. That IBM would leave it to another company to build the boxes that have become the virtual appendages of knowledge workers everywhere certainly says something about the state of the corporate desktop today.

But what exactly? Steve Jobs’s indefatigable efforts to make the PC a sexy consumer item notwithstanding, corporate employees are usually more attached to their mouse pads than their PCs. And those PCs are getting older: analysts say that the economic slump, combined with a move toward Web-centric computing, which requires no particular boost in desktop horsepower, is now prompting companies to replace PCs every four years rather than every three. “Historically, new software drove the demand for faster PCs,” says Gartner analyst Mark Margevicius. “But now we all use the same basic programs–E-mail, word processing, spreadsheets–and there hasn’t been any new ‘killer app’ for some time.”

But today’s knowledge worker is not, despite appearances, a wretched scrivener forced to toil at an ancient machine while using the same basic software programs he or she has used for years. The Internet has, of course, brought an entirely new dimension to corporate computing, but there are a number of other, less-conspicuous trends that promise to reshape the corporate desktop.

Freed of manufacturing concerns, IBM plans to push PC enhancements on several fronts, all of them valuable if not glamorous. The company’s “four-pillars” strategy is intended to provide a number of behind-the-scenes improvements that make PCs more secure, more flexible, and simpler to manage, all while holding costs down. “We want to be on the cutting edge of cost-competitiveness,” says IBM’s Clain Anderson, a wish that is not as oxymoronic as it may sound. Anderson, IBM’s director of market development and alliances for its personal computer division, says PC vendors can still distinguish themselves on features, they just can’t get more money for them.

Helping customers save money on the after-purchase costs of PCs, in fact, is one way that IBM hopes to stay competitive. In January, Kodak signed a deal with IBM to buy 40,000 desktop and notebook computers over several years. Kodak cited lower total cost of ownership (TCO) as the key factor behind its choice, and in particular the ability to manage the software “image” on each machine, a chore that can account for half of the total hardware support budget. IBM has developed ImageUltra, special software that maintains a single “superimage” of PCs on a network and helps ensure that despite different operating systems, applications, drivers, and other features, the PCs interoperate smoothly. That may sound arcane, but IDC Corp. analyst Roger Kay says such chores can occupy up to one-third of a company’s PC support staff, and IBM says the software can lower TCO by $100 per PC per year.

Other under-the-hood initiatives include increased security (by the third quarter, all of its PCs will include a special security chip, one that is on the way to becoming an industry standard) and support for wireless technology, primarily networks. While these enhancements do hit the bottom line, they’re far more likely to be noticed by a company’s technical staff than its finance department or legions of computer users. Other desktop innovations, however, have far greater visibility and can be classified in two broad categories: ease of use and collaboration.

Not Just Window Dressing

The oft-cited “Moore’s Law” (the number of transistors per square inch on integrated circuits–that is, processor speed–doubles every 18 months) nicely encapsulates the steady increase in the PC’s number-crunching ability, but there is no corollary on the usability side. Such breakthroughs as the computer mouse, iconic interfaces, and browser-based interfaces come along unpredictably, with long periods of teeth-gnashing in between.

Although not quite as revolutionary, the advent of the employee portal will prove just as important, say analysts. By aggregating all the applications and sources of information an employee needs to do his or her job into a single onscreen environment, companies not only empower an employee to be productive individually, but also make it simpler for that employee to interact with others, whether within a company or without.

At office-furniture maker Herman Miller Inc., approximately 300 employees who spend most of their days in contact with suppliers use a customizable portal that gives them fast access to news and information, which lets them deal with business partners more effectively, because they don’t have to hunt for or combine various bits of data. E-commerce team leader Mike Brunsting says the company was originally attracted to the technology from Top Tier Software (which was acquired by SAP in March 2000) because it provided a way for suppliers to interact with Herman Miller’s enterprise resource planning system. “But once we saw how effective a portal interface could make our employees,” he says, “we began to roll it out for internal use as well.” Today the company has several separate portals for various types of employees, but it is considering evolving its Web site into a sort of “superportal” that will then lead customers, suppliers, and employees to different subportals, depending on their needs.

“The benefits for collaboration are amazing,” says Brunsting. For example, employees can decide what kind of alerts they want to have fed to their screens (“supplier X is three days late with a delivery”) and then drill into data to identify the cause of the problem and the potential ramifications.

The system has not been a panacea, however. Brunsting says that while the technology he’s using is very good at sifting through structured data such as that contained in databases, it is far less good at handling unstructured data, such as correspondence, computer-aided design drawings, and the like. SAP recently combined its portals division with another business unit that dealt with online marketplaces, where unstructured data predominates, and Brunsting is optimistic that over time, all that functionality can be brought to bear in a single product.

While portals have the look and feel of Web sites, Kurt Schlegel, an analyst at research firm Meta Group, points out that they are much more than that. “It really is the next generation of the desktop,” he says, “because when you can bring the staggering amount of information within an organization into a single environment and make it easy to search, easy to use, you create a single system in which an employee will spend 70 or 80 percent of his or her time.”

Some of that time will be spent on individual tasks–the report-writing, financial analysis, and sundry other chores of the solitary knowledge worker. But increasingly, the prospect of being deskbound is far less bleak than it once was. A number of collaborative tools have come to the desktop–often accessed within a portal, of course–that enable employees to reach out and interact with far-flung co-workers, clients, and other parties in new, more productive ways.

A Room with Views

Designers at Columbus, Ohio-based Chute Gerdeman Inc., a firm that helps Eddie Bauer and other retailers develop their stores, use technology from eRoom Inc. to create a Web-based collaborative space where they can show clients three-dimensional renderings, computer-animated tours, and other demonstrations of their design development process. Wendy Johnson, the company’s executive vice president of finance and operations, says the technology has a direct impact on the bottom line, because “we pass the costs of the eRoom sessions through to clients, and since the technology lets us reduce travel costs and out-of-office time, our own fees can stay more competitive.”

An “eRoom” is a virtual workspace in which multiple parties can view and work with almost any form of unstructured data, such as the renderings and presentations that Chute Gerdeman develops for clients. “These files are far too big to E-mail,” says Johnson, “but once we place them in an eRoom, we simply teleconference with the client and walk them through our ideas. They see everything on their desktop, just as we do.” Johnson says reduced travel time and expenses are not the only advantages. “We go from initial meeting to installation very quickly,” she says, “so collaborative technologies such as this really help expedite projects. Sometimes we just trade comments within eRoom with no phone contact at all. Since the room is always there, it works for everyone’s schedule.”

Hewlett-Packard uses the same technology to create “communities of interest,” some of which involve only its own employees, others a mix of HP staff and outside partners. “We wanted to get beyond one-to-one communication,” says Chris Rand, who helps run the desktop infrastructure for HP’s North American supply-chain division. “We don’t want to have knowledge workers isolated. The ROI of all our technology spending goes up when we have people collaborating on decisions and projects. We can react quicker and understand changes more fully that way.”

Web conferencing to the desktop, instant messaging, and other forms of what Schlegel calls “teamware” are making strong inroads on the desktop. Meta Group believes that eventually collaborative technology will permeate every facet of corporate activity.

All of this collaboration doesn’t come cheap. At large companies such as MCI and Xerox, hundreds of servers and enough storage equipment to hold several terabytes of data are required to bring all relevant data to employees’ desktops via portals or intranets (which are essentially the same). That equipment costs a significant amount of money, and also poses a management challenge, since often these systems aren’t the sole domain of the IT department but are spread throughout the organization. Even at Herman Miller, where a plan to centralize around a single Web site is under consideration, Brunsting says departments have had leeway to develop their own portal strategies, which “means no one feels held back, although when we try to bring them all together we may face difficulties.”

Whatever challenges may loom behind the scenes, from their desktops employees can now be more productive and enjoy entirely new forms of contact with co-workers and business partners everywhere. Now if someone could just design a coffeeproof keyboard.

Scott Leibs is a senior editor at CFO.

Big Blue Space

At IBM, the future is on display. Make that displays. Working with Grand Rapids, Michigan-based office-furniture maker Steelcase Inc., IBM has developed BlueSpace, a working prototype of what it describes as the office of the future. In this vision, the typical knowledge worker won’t rely on just one computer monitor but several, including touch-screen displays that will allow him or her to dim the lights or turn up the heat, as well as others that act as message boards, alerting passing co-workers about an employee’s schedule or whereabouts.

These displays will coalesce into an efficient workspace by being embedded into furniture and walls. Steelcase has designed a moving rail and rotating monitor arms that allow the displays to be positioned almost anywhere within a work area. And any surface that doesn’t already have a display can act as one, thanks to a projection system known as the Everywhere Display that can, for example, turn the surface of a desk into a large display so a group of employees can work together.

The need for employees to collaborate has heavily influenced BlueSpace. Marisa Viveros, IBM’s senior manager for pervasive computing solutions, says that despite the presence of powerful PCs, today’s office hasn’t changed much since the introduction of the typewriter. “You still have this one heavy but fragile device at the center of the space,” she says, “one that’s hard to share and hard for groups to work with.”

To make the systems easier to use, IBM is hoping to reduce or eliminate the need for keyboards. Not only are some of the screens touch-sensitive, but the Everywhere Display can project a virtual keyboard and then rely on a camera to see which keys a user taps. When the need for that particular interaction has passed, the keyboard vanishes.

Viveros admits that some of the underlying technology is either in the early stages of development or, at the least, expensive, but says that more than 100 companies have already been treated to a preview at IBM. “You’ll see some of this begin to find its way into offices in 12 to 18 months,” she predicts. Not quite close enough to touch, but definitely within view. –S.L.