Can PC Remain “Device of Choice”?

September 20, 2013 by Douglas A. McIntyre

Windows logo (cyan)Looking back on Microsoft Corp. (NASDAQ: MSFT) CEO Steve Ballmer’s last presentation to Wall Street analysts, the most controversial, and likely to be most remembered, comment he made was that “We must do the work to ensure that the PC stays the device of choice when they’re trying to be productive in life.” Ballmer staked his career on this belief, and it is not too late in the evolution of technology to ignore the goal.

Most research firms assume that personal computer sales hit their highest level two or three years ago, when global shipments reached well above 300 million. The conventional wisdom is that the number will fall steadily toward 200 million at the end of the decade. White hot sales of tablets and smartphones will smother any chance for PC growth.

However, if there is any device that has reinvented itself over and over, it is the PC. The most important advances were from desktop to laptop, and the diversification of the PC universe from one controlled by Windows-based machines to Apple Inc. (NASDAQ: AAPL) Macs. PC makers also tested several other alterations that did not work out. The “netbook” is the best example. It was underpowered, and the tablet buried it.

The prediction that the PC will die has several flaws. The first is that much of the world’s population continues to need large-sized devices with superior processors, computing and graphics capability. This is particularly true among businesses and enterprises, where tablets and smartphones may never take the place of PCs. Among consumers, PCs still perform certain tasks tablets cannot. If the newcomer tablets want to stay light and thin, some PC advantages will not change soon.

The PC’s future could be at the lowest end of the market, however. There have been several efforts to bring sub-$100 PCs to the third world. Dell Inc.’s (NASDAQ: DELL) mini-PC Project Ophelia machine is a template for these devices, although it does not have the third world as its primary target. The Dell project does show that a processor can be married with Google Inc.’s (NASDAQ: GOOG) free Android OS, and together these allow a low retail price. There have been more specific programs for the third world, including One Laptop per Child (OLPC), which was launched with great fanfare in 2008. It has not been successful, but related initiatives are announced often. Plans to “empower the world’s poor” via the PC continue to be hatched. The market, if it can be fully tapped, runs into the hundreds of millions of PCs.

The ultra-cheap PC, oddly enough, may not benefit the companies that are the founding fathers of the PC age — primarily Microsoft and Intel Corp. (NASDAQ: INTC). Their components may be too expensive, so those from other companies will be used. Ballmer may still see his forecast turn out to be true. Whether Microsoft and its relatively pricey Windows OS will benefit is much less certain.

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