(iTers News) – The International Consumer Electronic Show (CES) is renowned as the annual signature event for the electronic industry. New products and announcements are being heralded here. That’s why it attracted over 150,000 technologists, buyers and visitors from every part of the world. They wish to see what is new and the trend of the industry.
The first IBM personal computer (PC) was introduced in 1981. Microsoft’s Windows had been preloaded and dominated the operating system (OS) in PC for 30 years. Will this situation continue? Our correspondence in USA visited the CES 2014 and filed this report.
“WinTel”
The popularity of the Microsoft Windows operating systems (OS) relies on two key factors, namely hardware and applications. The marriage between Microsoft and the largest Central Processing Unit (CPU) manufacturer-Intel was well known as “Wintel” (Windows + Intel). Together with hardware upgrading, Microsoft has introduced a new version of Windows every 2 to 3 years. Most of the improvements are not noticeable, nor is there a revolutionary change from the predecessors.
Microsoft took advantage of controlling the OS which paved the way for its own applications such as Microsoft Office Suite to defeat strong competition from Lotus 123 and Wordperfect. The document formats of Microsoft Office are being revised so frequently that the compatibility between legacy systems is becoming doubtful and confusing. The latest DOCX format was incompatible with earlier formats.
The cost of a PC was US$2,500 in 1985 and has recently dropped to US$640. Windows OS, on the other hand, has risen from US$100 to US$190. Meanwhile, the ratio of software to hardware was 4% in 1985 and 30% in 2013. It is obvious that the hardware cost is going down turn while the software cost is going opposite direction.
Impact of Cloud Computing
In simple term, Cloud Computing is moving the processing of data from the client side to the server side via the Internet. The charges will be according to usage of computing resources.
Cloud Computing is a disruptive technology to Microsoft’s business. She did not like it and discourage the adoption of Cloud Computing since 2008. The development of Cloud Computing is faster and more mature year by year. Thanks to the Internet coverage and over million Android mobile Apps. Users can easily download Apps onto mobile smart phones or tablet. The user experience hard hit the traditional Microsoft mouse and keyboard operations. Wintel PC becomes too much.
Market reaction
Due to the ever-increasing software cost and its lack of innovation, Microsoft is losing its charm. Vista, Windows 7 and the recent Windows 8 have all faced a cold reaction from both home and business users. The main reason is that not all old applications such as Microsoft Office Suite can run on Windows 8 smoothly. Despite pouring money into advertising, Windows 8 is facing an uphill battle which it has not seen before in its 30 year history. A recent analysis suggests that nobody wants to touch Windows 8. The poor sales of this unwanted OS have dragged Microsoft’s profit and share price down.
PC supply chain is shaken
PC manufacturers enjoyed 30 years of ever-increasing business environment, had never thought of prolonged down turn. Even many analysts predicted PC market would come back in 2013.
The poor business result is not only giving trouble to the top management of Microsoft but has also affected PC manufacturers and the entire supply chain. The total PC shipment has dropped 13.9% compared to a year ago. Acer’s sales have dipped more than 31% in 2013.
Lenovo N308
What is causing the faith of PC market?
There are 10 key reasons for the rise and fall of Microsoft.
1. When demand is bigger than supply, PC users simply listen to words of mouth. It allows Microsoft to dominate the market for 30 years.
2. Information Technology (IT) managers have to play safe to purchase internationally branded products. In case it fails, it is not the responsibility of the IT managers. When more Open Source products and price pressure, the story is different.
3. Microsoft upgrades the OS every 2 to 3 years. She gives the chance to rivals to penetrate the market at the turn of the OS.
4. The Windows OS was horizontally and vertically expanding. It is so powerful which 80% of PC users are using less than 20% of the functions. They mostly used PC for office automation (word processing, spread sheet and presentation), email and Internet browsing.
5. At the Cloud era, a Wintel desktop PC or Notebook becomes a luxury and unnecessary.
6. The popularity of smart mobile phones and tablets created an opportunity for PC users shifting to the new and innovative devices while Microsoft did not come with a better replacement.
7. The new OS is not fully backward compatible to the previous versions. Last year, Microsoft announced to stop supporting the most popular Windows XP on 1 April, 2014. Users don’t mind to pay money to upgrade to Windows 7 or Windows 8 but all the associated applications did not full work on the new OS. It is not just causing money but introduced big trouble to IT managers and business owners. Many companies planned to get rid of all Microsoft products within 5 years.
8. The Open Source Software such as Linux and Android is replacing a lot of Microsoft’s applications. Linux took over the web server and file server market. Android took over the smart phone and tablet market within 3 years. In the Cloud environment, Microsoft only has a tiny faction of the market due to not 100% support Linux.
9. In this uncertain economic situation, low costing is essential. There are many proven choices which are better than Microsoft in features and total cost of ownership.
10. The OS was not tidy. Over 68,000 known bugs found in Windows 98 were not being fixed. Some of the bugs just carried forward to the next generation. Security and integrity are doubtful.
At CES 2014, almost all new products are not adopting Microsoft Windows OS. Majority of the buyers are looking for the new Android gadgets such as Android smart phone, Android tablets, Android PC and Android wearable devices. Microsoft has no chance at all.
Post-PC Era
Bobo Nano Three-in-One PC
The Post-PC era exhibits a trend of declining demand of PC in favour of alternative devices such as smartphones and tablets. These mobile devices emphasize portability and connectivity, including the use of cloud-based services, and focus on tiny applications called "apps" to perform tasks. Data can be synchronized between multiple devices seamlessly.
Outlook for 2014 and beyond
Post PC Era just begins. People are tempted by the low price and dare to try other new products.
More and more unsatisfied users realized that Microsoft Windows OS is not irreplaceable. Microsoft’s most profitable product is the Office Suite which can be replaced by OpenOffice, LibreOffice, KingOffice and QuickOffice. Format compatibility is no more a concern. The Internet Explorer (IE) is being taken over by Chrome and Firefox. The email client Outlook is being replaced by Thunderbird. The Microsoft SQL is being replaced by mySQL.
The time of Microsoft products selling like hot cakes is gone. The contraction of PC market will be faster and deeper this year. Microsoft and the PC supply chain will not be happy about this outcome. Based on the above observation, the total PC shipment should be reduced for more than 20% in volume for 2014. This will be a long and endless winter for the PC manufacturers.
A Sinking Aircraft Carrier
HP Slate All-in-one
When The Titanic set off for the first voyage, nobody believed that it was sunk in the virgin sail. The software supremacy is similar to an aircraft carrier. When she starts to sink, there is no way to rescue or improve the situation. The impact and damage will be astronomical. At this moment, it is too little can be done and too late. The only way is to minimize the damage and the casualty.
Android beyond smart phone
While Microsoft products are selling like hot cakes, conventional PC manufacturers enjoyed sales growth and received handsome discount for bundling Microsoft products. Manufacturers who tasted the benefits, were loyal to the giant.
When the situation is reversed, manufacturers would have another thought. They all learned a bitter lesson that Nokia abandoned the Meego platform and switched to Windows 7 Phone. The sales of Nokia dropped 70%.
After experiencing two consecutive years of shrinking business, will Spring knocks at the door? Manufacturers had to find their own way for survival.
Android was originally developed for smart phones. Other products such as set top box, tablets, TV dongles, TV sets are adopting Android.
Change of taste
Most of the people did not like to change. The only thing that is constant, is change. The campaign slogan of Barrack Obama was a single word “Change”. This brings him two term of presidency.
PC users had been using Windows for 30 year. They are at the crossroad but seriously are looking for something new and change. Microsoft made a lot of change on Windows 8. However, those changes did not welcome by the end users and the analysts.
At CES 2014, the largest PC manufacturers such as Lenovo, HP, Asus are introducing Android all-in-one PC. Those PC manufacturers probably went through serious analysis and market research before the move. It was found that PC users’ attitude on Android OS for PC was changed from objection to acceptable in a few years time.
Shift of business model
PC is always sold like as a consumer product. Pay in a lump sum. Many businesses are moving from lump sum payment to monthly payment. All telephone operators are subsidizing the smartphone and tide a 2 years contract for cell phone services.
There are hardware, software, content and services. The new business model will be any of the above 3 combination or all 4. In this way, enterprises will have long tail effect on business. It will be more predictable and stable.
What is the next generation PC?
Many PC manufacturers and users believed that PC would never dead. Microsoft will be always there. Many other OS were introduced in the last 30 years to challenge Microsoft but all of them were failed.
This year, the story is totally different. At the CES 2014, there was a Next Generation PC called BoBo Nano PC. It was equipped with ARM A9 Cortex Quad Core at 1.6 GHz with 2GB RAM and 8 GB Flash plus TF extension card up to 32 GB. The multiple resizable windows makes the device perform like a PC. You can play Youtube, internet browsing and prepare document with the bundled Kingsoft Office. There are HDMI and VGA simultaneous output. It is cool.
Android seems to be the possible OS for the next generation PC.
The way to move on
As discussed earlier, there will be endless winter for PC manufacturers. It is too little too late can be done now. PC manufacturers have to minimize the damage so that they can survive and recover. They must find new product trend.
Following HP, Lenovo and Asus, there will be more and more Android PC flooding the market. Android seems to be the only way out for the PC market at this turmoil. The software hegemony will face tough time year.
Conclusion
Many PC users and buyers are holding back the order for Microsoft PC. They are expecting the replacement of Wintel. Android is the right choice for the replacement. Being low cost and new user experience, Android PC will be welcome by end users.
The fall of Microsoft Windows as the OS for PC is inevitable. It is the “River of No Return”. Conventional PC manufacturers should consider to jump ship to the Android camp. The sooner the better before it is too late. The entire supply chain will benefit from the Android OS for new hardware, accessories, software, solutions and applications.
PC manufacturers should consider the new business model by bundling hardware, software, content and services to avoid strong competition and price war.