In recent months, I’ve written a number of posts detailing the ongoing decline of the PC. Most of these articles have solicited a flurry of negative responses from incredulous techies, skeptical that their precious PCs could ever become obsolete.
Despite the fact that the traditional PC remains an indispensable tool right now, powerful trends are increasingly threatening the classic PC paradigm. But don’t take my word for it — here are how some big PC-related companies are dealing with the shift.
Perhaps there is no greater symbol of the traditional PC’s decline than Microsoft Corporation (NASDAQ:MSFT)’s decision to radically alter its Windows operating system. Windows 8 is the most significant redesign of the operating system since 1995.
Of course, Microsoft Corporation (NASDAQ:MSFT)’s decision seems to have backfired — Windows 8 has been widely panned by the media, drawing comparisons to such famed business debacles as New Coke.
Windows has long had a near monopoly in the PC operating system business — Mac devices remain too expensive for most consumers, while Linux remains too daunting. Chrome OS might make Google Inc (NASDAQ:GOOG) a threat some day, but that seems to be in the far distant future.
So why shake it up? Why mess with a good thing? What possessed Microsoft Corporation (NASDAQ:MSFT) to take Windows — a piece of software with no legitimate competitors — and reinvent it to such a great degree?
The short answer is that (contrary to popular belief) Microsoft’s top management isn’t stupid. They know that the PC is dying (or as Steve Ballmer would prefer to say, shifting in form factor).
Windows 8 wasn’t designed with desktops in mind. It wasn’t even meant for laptops. Windows 8, with its touch-focused Metro interface, was designed for hybrid devices like the Surface Pro. Devices that combine the power of a laptop with the mobility and form factor of a tablet.
Microsoft Corporation (NASDAQ:MSFT) believes these hybrid devices are the future, and has bet its Windows division on this vision.
Dell Inc. (NASDAQ:DELL) wants to go private and become a mini IBM
Dell Inc. (NASDAQ:DELL) remains one of the world’s largest makers of PCs. But the company realizes that won’t cut it for much longer.
The founder, Michael Dell, has partnered with Silver Lake Partners in an attempt to take his company private. If Dell Inc. (NASDAQ:DELL) is successful, he will do some significant remodeling. Specifically, Dell aims to make the company a mini IBM — a provider of IT services to small and medium-sized businesses.
(Private equity firm Blackstone Group was mulling its own offer for Dell Inc. (NASDAQ:DELL), but backed out after data showed that PC shipments had fallen 14% — the worst drop on record).
Competitor Hewlett-Packard Company (NYSE:HPQ) has been slowly moving in that direction as well. In fact, before his departure, former CEO Leo Apotheker wanted to spin the company’s PC-making operation off entirely.
Current CEO Meg Whitman nixed those plans after Apotheker’s exit. Regardless, the fact that both Dell Inc. (NASDAQ:DELL) and Hewlett-Packard Company (NYSE:HPQ) are moving away from the PC business shows that all is not well.
Intel Corporation (NASDAQ:INTC) has made power consumption, not raw power, its primary focus
Intel Corporation (NASDAQ:INTC) makes the majority of the processors that power traditional PCs. For years, the company had battled rival Advanced Micro Devices, Inc. (NYSE:AMD) over which company could produce the more powerful chips.
But recently, processing power has been trumped by other concerns — power consumption and heat dissipation have taken center stage.
More specifically, Haswell, the company’s latest chip architecture, was designed with mobility in mind. Future hybrid tablets (like Microsoft’s Surface Pro) and Ultrabook laptops with Haswell inside should weigh less while boasting better battery life.
Thus, Haswell-powered hybrid tablets should be more competitive with traditional tablets like Apple Inc. (NASDAQ:AAPL)’s iPad. Of course, if mobile devices were no threat to traditional PCs, why would Intel even bother?
Valve is making its own console
Many investors probably aren’t aware of Valve — it isn’t a publicly traded company. But most gamers are, and that’s a significant group when it comes to the PC market. In aggregate, PC gamers tend to spend more on their machines than any other group of buyers, save perhaps graphic designers.
In addition to making some of its own games, Valve runs a virtual PC game store called Steam — think iTunes but for PC games. And as dominant as iTunes is for music, Steam is equally dominant when it comes to PC games, with an estimated 50-70% of the digital market.
But, despite its dominance of PC game sales, Valve is moving on: the company is currently working on a console — The Steam Box. Although it will feature PC hardware, Steam Box will compete against Sony’s PlayStation and Microsoft’s Xbox.
If Valve wasn’t concerned about the health of the PC market, why would it be designing a console?
Facebook Inc (NASDAQ:FB) and Yahoo! Inc. (NASDAQ:YHOO) have shifted their focus to mobile
On the web front, both Yahoo! Inc. (NASDAQ:YHOO) and Facebook Inc (NASDAQ:FB) have shifted their focus — away from traditional PCs and towards mobile devices.
Facebook’s founder and CEO Mark Zuckerberg called his company a “mobile company” last year, one that is focused more on the Facebook mobile app than the desktop website. Evidence of that can be seen in Facebook’s recent updates.
The Facebook mobile app is now more featured than the website; both chat heads and stickers aren’t available on the desktop side, while Facebook Home was a completely mobile-focused endeavor.
Instragam, a company Facebook bought ahead of its IPO, started as a mobile app and predominantly remains one.
Yahoo’s new CEO Marissa Mayer has taken her company in a similar direction. In an interview earlier this year, she said she hopes to make Yahoo! the go-to destination for everything people do on their smart phones.
Under Mayer, Yahoo! has been buying startups like crazy — mobile app startups, to be more specific. Recently, Yahoo! bought Loki Studios (a mobile game developer) and before that, Astrid, a mobile productivity app.
Yahoo! and Facebook are just two consumer-focused websites, but they are two of the biggest. Both believe the future lies with mobile devices — not traditional PCs.
The PC is dying
Whether one considers it a death, or just a change in form factor, the traditional PC paradigm is going away. It won’t happen overnight, but it might just happen faster than people think.
Although investors and consumers may be skeptical, PC companies are clearly shifting their strategies – a necessary reaction, if they are to survive.
The article Yes, the PC Is Dying originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.
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