Tech Firms Tap Into the 'Green' Movement
Being "green" is all the rage with technology companies these days, but what's not clear is whether or not the environment-friendly approach is bringing in more greenbacks.
Tech buyers say they desire devices that are kind to the environment, but they haven't shown a strong predisposition to buy them -- except when it saves them money.
"There's high-level awareness and low-level activity," said Christopher Mines, an analyst at Forrester Research. "The goal is to feed into it ... and try to take advantage of the growing concern."
Among those able to successfully tap into those concerns are computer hardware companies like Santa Clara, Calif.-based Intel Corp., Palo Alto, Calif.-based Hewlett-Packard Co., Armonk, N.Y.-based International Business Machines Corp. and Sunnyvale, Calif.-based Advanced Micro Devices Inc., which have all been churning out servers or server components that require less power -- and thus less money to operate.
However, other green initiatives by technology companies, such as running environmentally oriented contests or planting trees, don't have a direct line to the pocketbooks of client companies' chief investment officers, making those initiatives ring a bit hollow.
"By and large, the vendors are, of course, trying to differentiate and trying to win goodwill to enhance their brand," Mines said. But, he added, "there's real, legitimate hard-dollar cost-saving to be had."
The hype surrounding being green has even spawned a new word -- greenwashing -- harkening back to the days when the buzzword was "dot-com." Just like those days, the environment presents an opportunity for technology companies, either by selling into it or using it as a marketing tool.
The proselytizing seems to be resonating. Chief investment officers polled by Forrester said they were concerned about the impact their company was having on the environment, although few were doing much about it.
The machines with the most success so far have been ones that provide a clear return on the investment, such as energy-efficient servers.
With big data centers running out of space and burdened with big energy bills, servers that draw less power have been in demand. For example, Intel and HP promise to save companies money with lower-powered servers while IBM can make sure everything works together thanks to its services arm.
HP has seen a 120 percent increase worldwide in the number of inquiries connected to the environment since the last half of 2006. In 2005, the company saw $6 billion in requests for proposals that had some environmental element.
Pat Tiernan, vice president for corporate social environmental responsibility, said that number continues to climb. Most of the inquiries are about energy conservation, with recycling a close second, Tiernan said.
IBM launched its "Project Big Green" program in early May, committing $1 billion per year to increase the level of energy efficiency in the information technologies markets, and since then has been bombarded by customer request.
While most of the activity is happening on the corporate side, consumers are starting to become a driving force in the green push. So are shareholders of public companies who want to make sure environmental polices are in place. All of these different constituencies give technology companies an opportunity to sell products and services, experts said.
"Our consumer research shows that, on both coasts, 7 percent to 11 percent of Americans consider themselves to be green," said Richard Doherty, research director at Envisoneering Group. "Of the consumers we've interviewed, they say one or more purchases is influenced by the more-green company."
In recent months, most technology companies also have been crowing about their green initiatives. Round Rock, Texas-based Dell Inc. will plant trees for customers who buy a computer, while Sunnyvale-based Yahoo Corp. recently launched a contest to find the greenest city in America. (The winner: Hastings, Neb.)
While it's nice to plant a tree, is it a reason to run out and buy a company's products?
"If the computer is up to snuff and the price is about the same, it helps" to be green, says Howard Anderson, a professor at Massachusetts Institute of Technology's Sloan School of Business, noting that technology companies seem to have different shades of green. "If Nokia and Motorola are green, then why haven't they invented phones that use less battery-charging?"