The Harvard Business Review site has a provocative short article, by James Allworth, on the implications of the recent Consumer Electronics Show [CES]. The show produced an expected flurry of tablet computer introductions, following on the success of Apple’s iPad. The main thesis of the article, originally suggested by blogger Horace Dediu, is that the product trends seen at the CES may signal the beginning of the end of the Microsoft-Intel dominance of the personal computer market. Microsoft has benefited from Intel’s continuing introduction of new, more capable microprocessors; and Intel has benefited from Microsoft’s introduction of new operating system (Windows) and productivity software (Office) versions that required more and more computing power. But this cozy arrangement may now be in jeopardy.
This year’s show, Dediu argues, marks the end of the PC-era: it’s finally being disrupted. The basic concept of disruption is that a low-end offering (in this case, tablets) emerges to displace existing solution (PCs). The reason this takes place is that the current solution has improved to such an extent that it provides more performance than a majority of users able to usefully employ.
Some recent developments add some weight to this argument. Microsoft has recently announced that the next version of Windows (after Windows 7) will be available not just on Intel processors, as usual, but also on ARM processors. This breaks the exclusive arrangement that has existed between Microsoft and Intel since the demise of Windows NT versions for some other architectures. The bad news for Microsoft is that many of its traditional OEM partners will be shipping tablet computers sometime this year — but those devices will mostly be running Android, Google’s Linux derivative for mobile devices, not Windows.
It is important to remember that, although Microsoft has a fairly broad range of products, it makes almost all of its money from just two: the Windows operating system, and the Office productivity software. Microsoft has been trying to develop a successful tablet computer product for ten years. I have written here before about Microsoft’s problems with developing a tablet product. Its fixation on using Windows as the operating system has, I think, been a definite handicap. (Since that last post, an Ars Technica review of HP’s Slate device has reinforced the view that Windows is just not suited to a touch-screen device.) Microsoft has been struggling even longer with an attempt to streamline and downsize Windows; Windows 7 seems to be an improvement over the embarrassing Vista, but is hardly svelte. This is also a handicap in a market segment where light weight and battery life are important selling points.
Intel has also, to a lesser degree perhaps, seemed to lack direction. Its Atom line of low-power processors has been only modestly successful; the current market interest seems to be focused on the ARM devices.
As the article points out, it is typically very difficult for large, established, successful companies to turn away from the products that made them successful in the first place. (Just ask IBM.) Neither Intel nor Microsoft is suddenly going to vanish, but it may be that their unquestioned dominance of the personal computing market is past its prime.