Although Bill Gates and Michael Dell used their keynote speeches to argue that the PC is still dominant, evidence of an industry shift was all around them. The trade show this year moved away from its traditional PC focus, with exhibits ranging from networking and information appliances to wireless devices and e-commerce.
While admitting the market for PCs was slowing, Microsoft CEO Steve Ballmer pointed to Europe as the next target. “The penetration of PCs for white-collar workers in Europe is only two-thirds of what it is in the US,” he argued. “I think there is plenty of upside. If the US is saturated, Europe is not and I’m not sure the US is saturated.”
Michael Dell, CEO of Dell Computers, acknowledged a “slowdown” in the market, but said that concentrating on its core PC and laptop business was keeping the company strong.
He predicted wireless connectivity would have “a huge effect on the future of our industry”, saying it would become standard for all Dell notebooks. He also argued that businesses would soon shift to wireless networks.
Old sparring partners Oracle and Microsoft again exchanged barbs, with Microsoft’s vision of “smart” devices like PCs linked by servers in contrast to Oracle’s version, in which simplified devices are linked to large servers and databases.
Microsoft was clearly trying to move into the newer mobile market, while maintaining the use of the Windows operating system. In his keynote speech, Gates previewed the Tablet PC, a pen-driven, fully functional mobile PC. He later described the Tablet PC as “an opportunity to both grow the portable PC market and become a significant part of the portable PC market”.
Oracle CEO Larry Ellison used his own speech to dismiss the software produced by Microsoft as “too complex” and deride the PC as becoming a mere “appliance”.
Ellison announced a joint venture in which Oracle would pre-install software on Compaq servers, aiming for all-in-one product simplicity. “If the appliance model makes sense on the desktop, it makes even more sense on servers,” Ellison argued.
Oracle predicts server application sales will generate several billion dollars for it next year, which represents about half its revenue. This will place Oracle in direct competition with Microsoft’s Windows NT platform, with Oracle claiming the pre-installed software will make its product cheaper, faster and quicker to install.
Ellison said that Oracle and Compaq would release an appliance in December for its new application server. The software runs transactions for e-commerce. Ellison added that Sun Microsystems and Hewlett-Packard would soon announce their own appliances for Oracle’s application server.
Hewlett-Packard CEO Carly Fiorina had to face the Comdex crowd right after the news of HP’s failure to make expected financial results. She acknowledged the results but moved straight on to her prepared speech, advocating a “digital renaissance” in which all computers, software and services would be linked to the Internet and available to all.
While Fiorina’s speech was very much about the future, HP’s abandonment of its bid for the consulting arm of PricewaterhouseCoopers (PwC) in the light of its surprising fourth quarter cast a shadow over HP’s own future direction.
Fiorina said the company still wanted to move into the services market, although its failure to acquire the PwC assets was a blow. Fiorina took “full responsibility” for the results and told analysts after her speech that she had “let the PwC opportunity linger for too long”.
Dick Brown, chief executive of computer services and consulting giant EDS, said this year’s dot com bust was a lesson to the industry to return to the “basic fundamentals” of business. He advocated a “digital economy” in which workers used mobile devices and wireless technology and businesses offered “relationships, not just transactions”.
Brown argued that companies needed to establish trust with their customers, partners and suppliers, “collaborate in new ways” through partnerships with other firms and “seek improvement” by thinking ahead of the competition and being ready to change strategy quickly.