SAN FRANCISCO (02/04/2000) - "You've got to know when to hold 'em, know when to fold 'em." Kenny Rogers was talking about gambling, but he could have been talking about PCs. Choosing when to ditch a PC and buy a new one can seem like quite a gamble.

And it's not getting easier. While any recent PC does a good job browsing and handling basic office or home productivity tasks, industry analysts tell us we are dropping them quicker than ever. Or we would, if we knew what was good for us.

Ten years ago, you could buy a PC and expect to get at least five years of good quality work out of it. In 1990, the average lifespan of a typical PC for use in a home or office was between five and five and a half years, according to a study done by Carnegie Mellon University.

But that lifespan is shrinking.

"In 1997, the average person buying a computer would hold on to it for three and a half years," says Scott Matthews, the assistant head of Engineering and Public Policy at Carnegie Mellon. "Today, that figure's down to about two to two and a half years. It keeps decreasing. Computers are becoming obsolete faster."

Data from PC World's most recent reliability and service surveys support that opinion. Although the information is not conclusive, it does show that the average age of a PC is dropping slightly. Between January 1999 and August 1999, the average age of a home desktop PC owned by PC World readers dropped by more than a month, while the age of a work desktop PC dropped almost two months.

Nature of the Business

While Carnegie Mellon's data had consumers and businesses holding onto PCs for about the same amount of time, companies are more likely to re-use the machines internally. In the same amount of time that one consumer holds on to a PC, that same computer may have had two or three different users in the same company.

A recent study from International Data Corp. (IDC) reinforces this message for businesses. The study found that the economic lifecycle of a PC is down to two years. That means that after a business buys a PC, it only holds its measurable value for two years. After that point, the costs of getting rid of the PC exceed its value, according to IDC.

And it seems that many businesses may agree and are willing to replace their PCs that often. While statistics are hard to come by because of the way companies tend to trickle computers down through an organization, one major computer manufacturer confirms that the lifespan of a PC is shrinking and that many companies replace their PCs within two and a half years. Small businesses may wait longer, holding onto PCs for anywhere from three to five years, according to the manufacturer.

Business Economics 101

Rather than purchase new systems for everyone, many companies will simply upgrade the "power users" who need the faster systems and cascade the old machines down through the organization, says Kevin Burden, a senior analyst with IDC's Asset Management Services.

And companies that aren't willing to accept the shortened lifespan of a PC will be losing money, Burden says.

"There are costs associated with every means of disposing of a PC. And companies will end up spending more to get rid of it, whether they sell it back to a wholesaler, sell it to an employee, or donate it to charity," Burden says.

Costs can be based on anything from the man hours used to "clean out" the machine's hard drive to the physical labor associated with disconnecting and moving the machine when it is sold to an employee or donated to charity. Other costs are incurred when a devalued machine is sold to a wholesaler for far less than it cost.

"Companies need to cover these costs with timing strategies," Burden says.