THE MAGIC OF TCO
look beyond the purchase price
Understanding TCO (total cost of ownership) is essential to be able to see that rugged devices actually cost less than consumer grade devices.
Looking beyond the purchase price
When we go out shopping for a new mobile device, whether personal or for business, most people tempted to base buying decisions, solely on a product’s purchase price. But, as the purchase price does not reflect the real cost of the unit, this shopping may turn out to be a very costly mistake. To fully understand what a product truly costs, we have to calculate it’s cost over the product’s life period, this is known as product’s total cost of ownership (TCO).
Even though, many of us aren’t familiar with term TCO, we often apply this method in other aspects of our lives. When you buy a new car for example, most people will at least do some research to learn about this vehicle’s insurance cost, common problems, gas consumption etc. By purchasing a cheaper vehicle you’re risking to spend lots of money on the repairs, on the other hand, buying very expensive vehicle, will drag more expenses, like higher insurance rates etc.
The same concept applies to mobile computers, Devices taken to the field, outside of a warm and soft office environment are automatically becoming subject to rougher treatment. Drops, humidity, vibrations, water, dust, temperature and pressure changes are only some conditions a smartphone may face out in the field. to some people would seem logical not to take a delicate piece of equipment out into rough environment, but that is what happening more and more often nowadays.
Why ? Because many purchasers of mobile electronics are lured by lower initial purchase price into buying a consumer grade equipment solely because of a cheaper price tag, failing to take into consideration the higher equipment usage cost in the field. By initially failing to purchase the correct device for the job and the environment required, they will be paying a lot more in the long run that if they would of purchased the rugged device to begin with. Generally speaking, the more expensive device actually is cheaper than a cheap device.
A higher initial investment may often give you a lower total cost
TCO takes in consideration every cost incurred during product’s life cycle. TCO is combining all types of costs associated with current device, Initial costs (Purchase price, development, training and deployment costs) and life cycle usage costs (repair, replacement and downtime costs). More and more organizations become totally dependent on their mobile workforce, so downtime cost became a serious impact to organization’s revenue. For example, a field service rep broke a screen on their device at the beginning of the day, the lost revenue and customer goodwill because of missed service calls may be substantial.
Mobile terminals are often defined in one of four categories:
- Consumer (Non Rugged)
A consumer device has little or no protection against the environment. Durable devices for the most part only have rubber bumpers and perhaps a shock-mounted drives. Semi-rugged devices are tested to some MIL-STD-810F/G and IP specifications, and fully rugged units are fully tested to MIL-STD-810G and often totally resistant to both water and dust.
So what is the difference in the total cost of ownership between a consumer device and a fully rugged one in a reasonably rough environment? The Venture Development Corporation (VDC) is an independent research firm focusing on rugged computing. They have performed TCO evaluation in 4 levels of rugged computers considering a number of common mobile applications. VDC evaluated the total cost for each level of rugged terminal over a 5 year lifespan and then annualized the costs. The cost are shown in the graph below with break down to initial costs and life cycle costs.
Annualized 5 Year TCO Costs
From the above graph, we can clearly see that using a consumer or non-rugged device will cost you a lot more in the long run; about 65% more per year than using a fully rugged device.
How’s that possible?
If you think for a second about all the things that can happen to a consumer device in the field. Let’s take a replacement costs as an example. A fully rugged device will normally last 3-5 years. So, if we purchase 100 fully rugged units, at the end of year 5, most of your devices are still operational, on the other hand, you purchased 100 consumer devices and put them into a harsh environment, chances are, none of the original devices will be operational at the end of year 3, and some of the units will have to be replaced several times over the course of the 5 year period.
How many consumer devices you have to purchase before you equal the cost of a fully rugged device ? And this doesn’t even include any of the other costs that we discussed earlier, like downtime costs, new unit deployment cost, and the cost of recovering the lost data. Ultimately, you need to carefully evaluate your own working environment and determine what your own TCO is going to be. In case your mobile terminals won’t be used in rough environments, a fully rugged device might be an overkill, but buying the correct level of ruggedness for the job and the environment is guaranteed to be the most cost effective in the long run.