How Apple is Causing the Death and Rebirth of the PC: Page 2

Posted August 12, 2009

Rob Enderle

Rob Enderle

(Page 2 of 2)

The Microsoft Store

In the Microsoft Store, Microsoft will use the same process of selecting hardware and software that Apple does. In other words they will specify the hardware and software that goes on each machine and take ownership of the user experience that results.

The end result should be much more reliable machines and a much tighter feedback loop, through the stores, from consumers with regard to what is (and is not) working.

The store layout came out of advanced work originating in the most advanced retail lab focused on PC purchasing that exists in the world. This lab was created by Microsoft to help retailers’ better lay out stores but evolved into a template for this Microsoft store concept.

Location of the stores will largely be next to or near Apple stores because Apple did an excellent job in site selection. And a lot of retail stores are in trouble making it comparatively easy for Microsoft to buy out leases.

I do expect Apple will move to block as much of this as they can however by threatening to remove their own stores or even buying in to Mall ownership if it looks like things aren’t going to go their way.

The PC OEMs Become PC ODMs

The impact on the eco system over time should be pronounced. Increasingly Microsoft will own the solution and the OEMs will have to build what Microsoft wants or lose the related market share to a more cooperative competitor.

In effect they become ODMS [original design manufacturers, which both design and build, unlike the classic OEM, which only builds]. But since ODMS often make the hardware that OEMs sell into consumer and small business markets, it isn’t hard to imagine that at some future point that Microsoft will choose to eliminate the OEMs and contract with the ODMs directly and create store brands.

While I certainly don’t expect this to happen quickly, more on the 5 to 10 year timeframe, still the path is clear and the choices the OEMs have to mitigate the related risks increasingly difficult to implement. Once fully on this path it will be difficult if not impossible to change the course. And while consumer will be first, the advantages are pronounced enough to suggest that corporate would follow.

Corporate Impact

At the core of the Microsoft software load and hardware selection criteria will be the massive amount of information Microsoft now collects on what products, hardware and software, are breaking their platform. That same information when applied to a corporate build could substantially reduce the breakage there as well.

While this wouldn’t apply to custom products those products could be contained in virtual OS layers so that when they did break they would only break the portion of the OS related to them.

This would suggest a service where Microsoft, who likely already has a relationship with IT, serves as an agent acquiring the hardware that IT wants, preloads it, delivers and owns the result in a way that the PC OEM currently cannot. And the result should be both less expensive (Microsoft would be able to aggregate bids to get even lower prices) and more reliable. This last is because there would be no OEM middleman to slow down the problem identification and resolution process.

Wrapping Up

As Microsoft takes control over both the hardware and software we get to buy, the end result will be a better product because one company will own the solution not a graphics company, a processor company, a hardware company, and a software company.

That should result in a better solution but it will reduce substantially the amount of control each of the players will have in that future market. This could, for instance, benefit AMD, which has enjoyed a closer relationship to Microsoft. It might hurt Intel, for instance, and Microsoft will also increasingly have the major vote over which hardware OEM is the market leader.

I expect it will take 10 to 20 years for this trend to fully mature and there still is a chance for the PC OEMs to step up, stop their insane pursuit of who can survive on the lowest margin, and create premium experiences at affordable prices. But, if this change does come about, it will be because Apple triggered it – though I doubt if Apple will like the result any better than the other PC companies do at the end.

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Tags: Windows, Microsoft, Apple, Vista

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