Ballmer's Defense Of The PC Supported By Facts

Microsoft (NASDAQ: MSFT) CEO Steve Ballmer says the future of the Windows operating system for PCs is bright. History is on his side, but is Wall St.’s perception of the future? Windows runs on as many as 90% of the world’s personal computers. Windows 7 is the most successful software launch in Microsoft’s history. The software giant sold 70 million copies through March.Microsoft rivals, led by Google (NASDAQ: GOOG), have argued that operating systems will no longer run on computers using the processing and storage power of the machines. Rather, the software will run on the cloud, supported by huge numbers of servers that will store data and run the features and functions like word processing, the used to be loaded on PCs.

Ballmer defended his company’s model after Apple (NASDAQ: AAPL) called it antiquated. “The PC as we know it will continue to morph,” Mr Ballmer said. In other words, machines can evolve enough to be useful to hundreds of millions of people.

Microsoft is competing in a world in which “computing” devices are getting smaller and less complex. Smartphones such as the Research-in-Motion (NASDAQ: RIMM) Blackberry are an example. The other new and perhaps powerful competitor to PCs is the Apple iPad tablet which runs Apple’s OS, and a number of new devices that run the Google Android open source operating system.

But, PC sales are exploding. Gartner expects them to be up 23% this year.  The increase is due to the replacement of old computers and a desire of consumers and businesses  to upgrade to Windows 7.  Small, inexpensive netbooks  are also bolstering PC sales.

Ballmer is gambling, perhaps intelligently, that small and underpowered portable devices cannot do many of the things that PCs can, particularly running a number of functions and “windows” simultaneously. Even the Apple Mac Leopard OS does those things. Mac sales would likely be tiny without those features.

Ballmer can claim to have consumer behavior, perhaps more than two decades of it, on his side. And, he has a PC sales trend that supports the ongoing claim that Windows, not matter how ancient, will be critical to the future of computing.

Douglas A. McIntyre

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