The Flight from the Personal Computing Markets

  • Posted: 02 July 2012 11:54 AM

    In 2005, Microsoft was clearly the 900 pound gorilla in personal computing. They owned the desktop and notebook markets and they were dabbling in phones and tablets too. Licensing was king.

    In 2012, Apple’s integrated model owns the lion’s share of the profits in the iPod Touch, smart phone and tablet markets. It’s even possible that Apple takes home as much as 35% of the desktop/notebook market too.

    In response:

    - HP bought (and then frittered away) webOS
    - HP announced that they were getting out of the PC business (and then reneged)
    - Google bought Motorola
    - Samsung announced it was exploring other OS options
    - Microsoft announced it’s own Microsoft branded tablets
    - Google introduced their Google branded Nexus 7

    Today, Dell announced that they were acquiring Quest Software for 2.4 billion dollars.

    Apple’s success in PCs has led software operating system giants Microsoft (Windows) and Google (Android) to partially abandon licensing and to compete with their own licensees with their own brand products. In turn, I believe that this will inevitably lead the now helpless licensees to either a) abandon the market or b) try to create proprietary competing operating systems of their own. That is what I believe that Dell is doing with their move to acquire Quest.

    I wanted to create a central place to both discuss this phenomenon and to gather examples or counter-examples of its existence.

    Thoughts?

         
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    Posted: 02 July 2012 12:12 PM #1

    We are still in the first inings.

    http://www.appleinsider.com/articles/12/07/02/apples_ios_takes_65_mobile_browser_share_in_june_android_at_20.html

    We have the impressive stat of 65% the mobile iOS browsing share, but Windows still owns the regular PC share with 92%.  I am surprised the PC Windows share is that big.

    We have a long way to go to capture the personal computing market.

    I say we won’t get to a true tipping point until the tablet market surpasses the traditional PC market.  So we will see where we are in 4 years.

         
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    Posted: 02 July 2012 12:15 PM #2

    Dell’s purchase of Quest is not so much a new OS offering.  More likely they are becoming more IBM like.  Less hardware solution and more service and support.  As far as the OS battle for mobile, we have some deep pockets, (Apple, Google, Microsoft) so rather then go it alone, maybe something like TIzen backed by Intel & Samsung has a chance.  The IP theft issue will cause some OEMs to look elsewhere and if Microsoft is really trying to get $90 per Windows RT seat, they will price themselves out of the market for the white box maker and noboby wants to compete head to head with Apple because they have pretty much owned affordable luxury.

         
  • Posted: 02 July 2012 01:39 PM #3

    pats - 02 July 2012 03:15 PM

    Dell’s purchase of Quest is not so much a new OS offering.  More likely they are becoming more IBM like.

    That’s what I thought. Still, it indicates a possible exit from the market just as IBM did and HP threatened to do.

         
  • Posted: 02 July 2012 02:00 PM #4

    pats - 02 July 2012 03:15 PM

    Dell’s purchase of Quest is not so much a new OS offering.  More likely they are becoming more IBM like.  Less hardware solution and more service and support.  [...]

    This is also how I read the Quest purchase, John.  Dell is enterprise concentrated now and seems to be narrowing that focus.  Storage, consulting, software, and oh yeah computers too.

    How do you see Quest as an OS play?

    Palmisano at IBM deserves great credit for being first to see that selling PC hardware with licensed software from MS was a losers game.  At HP Hurd saw this too, but it was only after Carly had doubled down with the Compaq purchase.  Thus it is much tougher for HP to extricate itself.  Leo bungled to be sure, but he was not dealt a strong hand.  In addition to their number one market position, it is harder for HP to exit “consumer” than it is for Dell, due to their very profitable printing business.

    Microsoft holds the high ground vis-a-vis its hardware “partners” right now.  And Balmer knows it.  Sun Tzu teaches to strike at the enemy when and where it is weak.  The white box companies, HP, Nokia, HTC, Sony, Toshiba, Dell, et cetera are weak indeed.

    At least Dell has a position whereby they don’t have to go head to head with Apple as much as the others.

         
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    Posted: 02 July 2012 02:08 PM #5

    Where are you getting that 35% figure?

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  • Posted: 02 July 2012 03:01 PM #6

    Both HP and Dell are hollowing out the company (in tangible asset terms) to give the appearance of stable revenue and profit, even as their core business shrivels away. They are buying revenue.  The ever growing intangibles will have to be accounted for one day. IBM got out at the right time. seven years ago.

    HP: market cap $39B; Goodwill $45B; other intangible $10B. Showing how far this process has already gone.

    I think there’s going to be a fairly brutal collapse in branded PC’s, at which point Microsoft’s PC business model stops working.

    Lots of companies could have competed with Apple, but we’re talking about decades of work with little reward, and so far they’ve all given up as each initiative fails to deliver instant success.

         
  • Posted: 02 July 2012 03:17 PM #7

    capablanca - 02 July 2012 05:00 PM
    pats - 02 July 2012 03:15 PM

    Dell’s purchase of Quest is not so much a new OS offering.  More likely they are becoming more IBM like.  Less hardware solution and more service and support.  [...]

    This is also how I read the Quest purchase, John.  Dell is enterprise concentrated now and seems to be narrowing that focus.  Storage, consulting, software, and oh yeah computers too.

    How do you see Quest as an OS play?

    You misunderstood me (my fault, I’m sure). I listed two possible options for the increasingly disenfranchised licensees: a) Get out of personal computing; or b) get your own OS. I too see Dell’s move as being similar to that of IBM and what HP appeared to be doing under Apotheker.

    Frankly, I think attempting to create one’s own OS, especially at this late date and in light of the fierce existing competition from Apple, Google and Microsoft, to be suicidal.

         
  • Posted: 02 July 2012 04:10 PM #8

    FalKirk - 02 July 2012 06:17 PM
    capablanca - 02 July 2012 05:00 PM
    pats - 02 July 2012 03:15 PM

    Dell’s purchase of Quest is not so much a new OS offering.  More likely they are becoming more IBM like.  Less hardware solution and more service and support.  [...]

    This is also how I read the Quest purchase, John.  Dell is enterprise concentrated now and seems to be narrowing that focus.  Storage, consulting, software, and oh yeah computers too.

    How do you see Quest as an OS play?

    You misunderstood me (my fault, I’m sure). I listed two possible options for the increasingly disenfranchised licensees: a) Get out of personal computing; or b) get your own OS. I too see Dell’s move as being similar to that of IBM and what HP appeared to be doing under Apotheker.

    Frankly, I think attempting to create one’s own OS, especially at this late date and in light of the fierce existing competition from Apple, Google and Microsoft, to be suicidal.

    It’s the only viable, long term solution.  The problem is surviving long enough to market a finished product.  Without a survival plan it is either suicide or you end up stealing someone else’s work.  Apple almost died, but presented the finished product just in time.  All the others have been relying on MS for far too long.  The longer they wait, the more impossible a task it becomes.

         
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    Posted: 02 July 2012 04:13 PM #9

    This thread reminded me of the book Blue Ocean Strategy, whereby a company creates new market space (“blue ocean”), thereby making the competition irrelevant. If you continue to struggle in the existing market space (“red ocean”) you will get eaten by the sharks.

    Link to a Slideshare presentation summary of BOS.

    As more and more companies work to jump into the Apple blue ocean of simple interface, vertically integrated products and exceptional customer experience, where will Apple go next?

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  • Posted: 03 July 2012 12:11 AM #10

    I am expecting to see lot’s of examples of companies bailing on the PC market. Here’s are story about HP bailing on Microsoft but cozying up to Google. Sounds like they might be jumping from the frying pan right into the fire.

    HP said to dump Microsoft over Surface; to cozy up to Google Android for tablet efforts