It is known as "Moore's Law," and it has become one of the cornerstones of the modern information-technology age. Briefly, it was predicted in 1965 that the number of transistors on a microprocessor would double approximately every 18 months. The prediction has held up remarkably well, and that's music to the ears of PC users who, year in and year out, have come to rely on ever more powerful computer systems coming to market. But at the risk of sounding a sour note, is it always preferable to have a PC packed with the latest and greatest in processing power? This guide looks at whether it makes economic sense for your small business to buy new PCs, upgrade your current systems, or replace your computers with more portable machines.

In search of the new
Hardly a month goes by, it seems, without an announcement from a semiconductor maker touting another advance in microprocessor design. So it's easy to come to the conclusion that newer really is better. After all, going with a state-of-the-art system buys you some precious time against obsolescence; it more than likely gives you a boost in storage capacity; and it may well prove cost-effective if your work involves a lot of heavy-duty processing (for, say, video or graphics files).

But bear in mind that the latest processor does not always deliver the best performance. Comparison tests based on industry-standard benchmarks have found, for example, that a 1 GHz Pentium III PC can outperform a 1.5 GHz Pentium 4 machine running basic business applications. Remember: your hardware requirements will largely be determined by the kind of applications your small business is running. General office productivity software does not require the same processing horsepower that, for example, editing video clips does. So be absolutely clear about what your systems are going to be used for—both today and tomorrow. Note too that the processor is just part of the equation when it comes to evaluating a new PC. You also need to consider such key features as a PC's memory, hard disk size, sound cards, and expansion slots.

Keep in mind that many manufacturers offer systems designed specifically for the small-business environment. These PCs aren't as powerful as high-end workstations, but they are more than up to the task of running your accounting software. Consider a system that bundles basic office software and 24-hour tech support. There are also so-called "value PCs," which may forego the latest in hardware technology but can nevertheless provide plenty of computing bang for the buck.

One frequently overlooked benefit of buying a new PC is that you can lock into a multi-year deal with an Internet service provider, thanks to the marketing deals that have sprung up between some PC makers and ISPs. So read the fine print. By doing a little extra homework, you can realize some real savings.

Finally, if you buy a new PC, don't think that means the end of the road for the PC it replaces. Instead, put that older system to work as a cost-effective network file server or print server. You don't need warp speed for these chores.

Taking the upgrade plunge
Looking to trim hardware expenditures while at the same time increasing your computing power? Then upgrading your current system might be the right option for you. And with hardware prices steadily dropping over the past months, now is as good a time as ever. Be warned, however, that upgrading core items such as the processor and motherboard is not for the faint of heart—besides being notoriously difficult, such tasks may make no economic sense, given the low, low prices of today's PCs. But if you're looking to rack up some real performance gains without laying out a lot of money, consider adding the following:

• More memory. Experts agree it's cheap (prices continue to fall) and easy. A 128 MB SDRAM module, for example, can cost less than $30.
  
• Bigger disk drive. Installing a DVD or CD-RW drive for as little as $100 is a great way to add life—and storage space—to an older machine.
  
• Audio or video cards. Consider an upgrade especially if multimedia performance is important to you.

Bottom line: if a modest performance boost is your prime hardware objective, upgrading may be your best bet.

The replacement route
What will your small business look like next year—or in two years? If you expect to grow, consider the impact that additional hardware will have on your workspace. In the interests of saving space, a number of companies are replacing their so-called "tower" desktops and bulky monitors with notebook computers.

For those taking the replacement route, there are a number of factors to consider. Choices range from thin-and-light notebooks (also known as subcompacts and designed with "road warriors" in mind) to brawny multimedia machines (good for presentations) to basic business machines (which fall somewhere in between). The last option often makes the most sense for small businesses.

For the most part, a basic business notebook is intended for those who need a single computer for the office and the road that is full-featured but still comfortable to carry and use. Such machines usually weigh in at a reasonable 5 to 8 pounds. Look for notebooks equipped with Wi-Fi and Ethernet connections, medium-size screens, and full-size keyboards.

Staying ahead
Whichever option you end up choosing—new PC, upgrade, or replacement—rest assured that there has never been a better time to take action. With component prices plunging over the past months, now is the ideal time to assess your hardware needs.