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Reader Reactions: Microsoft and 'Peak PC'

  • Read Scott's original column here.

There was a lot of response to my column, posted yesterday, posing the question of whether the precipitous declines in PC shipments mean we've passed Peak PC or we're at some sort of PC Pause.

Check out the article itself for some insightful commentary in the discussion session at the bottom. I've also gotten a few thoughtful e-mails. From the mailbag, Bill argues for option 2:

We are at "PC Pause."

Tablets and phones just do not have enough power or screen real-estate to get my tasks done.

Maybe my grandma would be happy with only a tablet.

When I am at home, or at work, I simply need LOTS more power and disk space than any tablet can give.

Reader "W.T.W." argues the Peak PC case:

Four things make me think that we are at -- or already beyond -- "Peak PC."

1. People who just played Solitaire on their PC and used the Web for e-mail: These users were a huge portion of the build-up of the PC (and Windows) customer base beyond businesses, when Macs were more expensive and had little advantage in those areas. PCs and Windows are now much less attractive (more cumbersome, more expensive) in these environments than tablets and smartphones.

2. Applications that are moving to other platforms and form factors from PCs, as those platforms become more powerful (home accounting, photos, etc.): Beyond those users in #1, the main reason most people bought PCs was because of the breadth of applications available for it, from Quicken/QuickBooks to Photoshop to Word. With the Apple and Android app stores, the requirement to use PCs for these applications no longer exists. This has been due to Microsoft alienating huge swaths of developers as much as the growing ubiquity of those other platforms. Outside of .NET, Microsoft has failed to modernize its OS APIs; and then .NET evolution seemed to splinter into more and more obtuse and abstruse directions, negatively impacting performance and developer adoption. And then the Windows 8 freeze/abandonment of .NET/C# debacle hit. Developers moved on. Most people I know no longer use MS Word or Quicken.

3. Microsoft's ongoing effort to turn Windows and PCs into "consumer" items, and failing miserably: In the tradition of Microsoft Bob, continuing through Vista/Windows 7, and now fully realized with Windows 8, many of Windows' most obnoxious traits are due to Microsoft trying to make Windows into "systems for dummies" rather than productivity tools, and never getting it right. Where, despite the hassles of using Macs, Apple was able to maintain an aura of things "just working," Microsoft never has. Everything from the form factors to the interface designs to the computing power required argue that "consumer" and "productivity" arenas are disparate scenarios with very different requirements. And mistakes such as limited Windows Phone functionality/programmability and the flat Metro/Modern (actually, retro 1920s-1950s-era sparse/minimalist) design -- with that design philosophy taking precedence over usability and functionality -- haven't helped.

4. Local storage is no longer necessary for holding your files, photos, even videos. The ongoing adoption of cloud-based storage means users don't have to have a local hard drive to hold all that stuff -- and therefore don't need a PC on a desk to hold or access it. The increased use of OTT video over the Internet -- which now just about dominates TV viewing, vs. over-the-air or even direct cable -- means that the PC is not only no longer needed for these uses, but its use becomes awkward in these contexts.

In short, I think Microsoft has grossly misjudged its market, and the market for PCs in general -- not only in terms of numbers but in its very nature. Its emphasis on maintaining a "dumb consumer" as a Windows customer -- when that is a hopeless task, given market conditions today -- is also costing it its real (potential) market in the areas of increased productivity, whether in the home or in business. And that means that usage of PCs, and Windows, will NOT continue to grow, but will start to shrink, as other options take up the slack that Microsoft itself has created.

Richard goes with more of a "Pause" argument, and makes things political:

Having been in this industry since well BM (Before Microsoft), I have seen a lot of trends. Most are actually driven by politics, strange though it may seem. Your point about the additional devices (tablets and phones) is interesting, but in my opinion they will simply provide additional points of access to the data rather than replacing the PC. I now use laptops, as well as an iPhone and iPad. But I keep my laptop with me even when I travel!

Sales cycles in this industry follow perceived economic trends. Businesses buy when the economy is going up or going down. They do not buy when the economy is stagnant (either at the top or at the bottom). Business will prepare for the boom or the bust but when they cannot determine what is happening, they will pause. 

This also applies to that period from June to November every four years when we elect a new president and, to a lesser, extent during the Congressional elections in between. Businesses halt investments, waiting to see who is elected. Generally (with some recent exceptions), no matter who is elected, after the election, business increases.

The current period happens to be one of those exceptional times when businesses are now waiting to find out how many employees they will need to terminate to be able to afford "Affordable Health Care." To a business, survival of the business is the primary focus, not the employment of the masses. 

Microsoft is, in my opinion, protecting their presence by pushing businesses to "The Cloud." This new push into an old paradigm is simply repeating an old paradigm (yes, before PCs there were remote servers shared by many firms, like SaaS providers) designed to make it easier for small businesses to get entangled in the Microsoft solution stack. But that's OK. We still need a portal device, and the PC -- with it's tactile keyboard and separate mouse and monitor -- is still the leader.

As for the PC, since the inception of computers, businesses needed access to their data. Since the advent of the desktop system, that system has been the leading port (replacing paper reports from mainframes). Again, iPads and iPhones provide additional portals but I do not see them replacing the PC. I do, however, believe the PC will continue getting stronger and smaller at the same time.

P.S. My first desktop system cost $2,500 retail and contained 32 K of RAM and two floppy disks. We have come a long way so far.

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Posted by Scott Bekker on May 30, 2013 at 11:58 AM


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