Why I think WINTEL is under pressure

For last many years, Microsoft and Intel have sort of monopoly in the PC (laptop and desktop) despite markets being allowed freely competitive. This kind of monopoly in a consumer industry is rarely seen. Few years back, Unix was gaining popularity, Java-based applications were on a roll and it seemed that Microsoft is under attack. Hard-core developers are still fans of Unix OS. But over last couple of years, I have experienced that Microsoft has come up with large integrated suite of applications with tons of features that makes it easier to work with its operating system. I am not considering iOS as it caters to niche segment and has its own share of limited supporters. In micro-processor space, Intel hardly faced any challenge from any chip manufacturer. In terms of performance, AMD is way behind Intel. Market leadership and monopoly of these two leading companies is popularly known as WINTEL.

So what can go wrong? There is no indication of any competition surfacing even in distant future for these two companies. So why I feel that they would soon be under threat or they would be under fire soon? In my view, they are under pressure from a category which was not perceived as a threat initially and that can change the complexion of the game. Tablet and Smartphones are getting popular day-by-day. The sales are increasing exponentially for these products while for PCs (laptop and desktop), it has been negative in 2013. It is expected that in 2014, the sales for smartphones and tablets will be more than PCs. According to a research report by IDC, by 2017 87% of the connected devices will be smartphones and tablets with only 13% accounted by PCs.

The latest report by Cisco mentioned that there will be more than 3.6 billion internet users by 2017. A couple of years back, most of this traffic was expected to be routed through PCs. In addition, most of this growth was expected to be in emerging markets like India, China. So why PC manufacturers under pressure? Probably the experience or expectation that emerging economies will follow developed world. When smartphones were launched in Europe or US, the PC market was more or less matured and most of the users brought these as add-on devices. Even then users were still comfortable with PCs and there were limitations with iPhone or Blackberry. But things changed drastically with launch of iPad in early 2010. It brought in portability that was not experienced earlier. With launch of Nexus series using Android OS in 2010 and then series of launches by different manufacturers using Android OS, devices became affordable too. Cloud computing has also taken care of the big limitation of storage capacity on smartphones and tablets.

What this all mean that now you do not need a $1000 instrument to just stay connected with your friends or to store your data like music or pictures. Though PC sales are heavily impacted in developed world, it is going to hit PC manufacturers more in emerging countries as it is considered big market. The ‘junta’ is more than happy with the connectivity provided by 2G and 3G data connection. A single sub-Rs 15000 or $300 price tag for a device that does most of the functions you need. Besides the flexibility of carrying it in your pocket and you do not need to run around searching for internet connection wherever you go. For those who need slightly bigger screens, Phablets do the trick. And in this space, we have large number of OS and chip manufacturers and WINTEL has not even started to capture the ground. Even the Ultrabooks are not catching fascination as was expected.

So where does this leave WINTEL? The sales of PC will still continue in corporate world. I will still need MS office to do my work faster and better on a laptop. But instead of buying a personal laptop outside the one which office will give, I would probably buy a Phablet. There have been launch of OS for mobile by Microsoft but it is to create a space for itself and to garner some market share from iOS and Android. Similarly Intel has started focusing on mobile microprocessor but Qualcomm or ARM has already occupied the market share. Both have missed the bus, especially Microsoft and I believe that the days of WINTEL supremacy are numbered. I do not see any trick up their sleeve, and many laptop manufacturers have already started selling smartphones (like Lenovo, Dell etc). I think it is going to meet fate like Blackberry. Just as smartphones killed camera, it is also going to deliver similar blows to PCs. Till then, Wintel can just hope to make as much money as they can.

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One thought on “Why I think WINTEL is under pressure

  1. Good write-up.
    As a business strategy, WinTel might decide not “live” together in near future. So, not “living” together, the risks also gets split by around 50%, and with that comes new opportunities of learning and growing. Lots of stuff on the shelves; Nokia strategy and hardware, branching out of Surface tablet, and considering the loads of bucket pumped into R&D means deviating into something completely new, while picking up and joining the lego pieces of all the technology on shelves.
    SaaS and Cloud, joins up to put more emphasis on need and use, making technology more accessible and cheap utilizing powerful bandwidth availability.

    And, like everything else old dies and the new is born. And Microsoft has enough equity to dole and learn from its mistakes and R&D, to be in the game somewhere at the top.

    Cheers!

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