What's in store for the PC industry

Microsoft's move into the games scene is a sure sign of decline in the PC market. Professor Martin Healey on the next five years

Microsoft's move into the games scene is a sure sign of decline in the PC market. Professor Martin Healey on the next five years

Microsoft's move into the consumer industry with their Xbox games machine is the most significant pointer that the PC phenomenon of the '90s is on the serious decline. To some extent Microsoft already has consumer marketing experience, because that is how it won the PC software battle. Rather than the 'best of breeds' approach which suited the early PC software, the users choosing the combination of word processor, spreadsheet, etc. which best suited them, Microsoft bought Word, Excel, etc. and sold them as a 'package'. Since there were no standards, and in fact still aren't, the package seemed a good idea. Indeed, if it weren't for the Microsoft monopoly, it probably would have been.

But Microsoft only won because it was much better at 'commoditising' IT software than were the competition, e.g. IBM, Lotus, WordStar, Borland, etc. But now it has to compete with past masters at manipulation of the retail sector in Sony and Nintendo. This is a necessary move for Microsoft, which can only be contemplated because they are so cash rich, but what about the rest of the PC industry? Here then are some thoughts on what might happen in the next five years or so.

The other major PC player besides Microsoft, is Intel. It has fought off threats from Motorola (PowerPC) and AMD, et al making clones of the Intel processors, and it has stayed ahead. A key factor behind its success is the speed at which it is able to introduce new products, always staying one jump ahead of the competition. This of course assumes that there is a constant and growing demand for more powerful computers. The 'what Intel giveth, Microsoft taketh away' philosophy has worked so far. This will not continue in the PC sector as new connected products begin to dominate, but the new products all need more and more processing power, and lower power consumption, particularly to accommodate multi-media applications. Thus Intel will simply continue as before, but with non-PC products. The threat to Intel, however, may come from another source, IBM. IBM is one of, if not the biggest, manufacturers of silicon components. It has very advanced technology now, with variants other than silicon, which focus on low power consumption, coupled with a clear marketing strategy to develop the market for embedded devices, pervasive computing as it calls it.

The big PC manufacturers, Dell, Compaq, et al, will have some very severe problems. They will have difficulty in breaking into the domestic product market, because as with Microsoft's Xbox, these are integrated hardware/software systems. The 'clone' concept which created the PC manufacturers was based on making hardware to run the Microsoft software. One only has to look at the explosive growth of the sale of mobile phones to see how difficult it is for the PC manufacturers to find a new market. The conclusion is that most of them will fade away, the exception being Compaq. Compaq has made strategic moves over the last five or more years, buying the likes of Digital and Tandem, which, while not being a smooth ride, has by now moved it beyond the 'PC manufacturer' bracket into a systems company. It still has a lot to do to compete with HP and Sun, not to mention IBM, but it has a chance. The other PC manufacturers must fight over a diminishing market, with worsening margins. Perhaps their best hope is that Linux will make it to the desktop and keep the market going for a while longer. They must learn to package Linux in the near future.

PC software houses will also suffer, both due to the decline of Windows and the growth of Open Source Systems (OSS) with their low margins. In any case the growth lies in application development based around Java, and that means component technology, which in turn means new companies. Those immersed in Windows and VisualBasic will have no chance of changing direction. With OSS and components, application software will become more a construction exercise, which favours system houses, not software houses. Component developments will affect the whole software industry, not just the PC sector.

The other key PC sector is retailers. Most corporates purchase from manufacturers, but the domestic market is serviced by retail stores or internet selling. These organisations won't be particularly affected, they will just sell whatever there is a demand for, which will be any and all of the new generation client devices, instead of PCs.

Martin Healey

Read more on Business applications

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.

-ADS BY GOOGLE

SearchCIO

SearchSecurity

SearchNetworking

SearchDataCenter

SearchDataManagement

Close