Yesterday's Wall Street Journal featured an op-ed piece jointly written by Bill Gates, "chairman and "chief software architect of Microsoft," and Paul Otellini, president and CEO of Intel.
Their letter was apparently a rejoinder to a piece in the WSJ's technology column, written by Walt Mossberg, extolling Apple's 'closed system' approach as now edging out the older, Wintel 'open system' in terms of popularity.
What I find very telling is the authors' confusion between the continued usage of PCs, and their ability to command premium value anymore. It's not so much the "end of the PC era," anymore than the influx of Japanese imports marked the "end of the automobile" era.
As I've written previously in my blog, both Microsoft and Intel are at the end of long periods of having dominanted their respective product spaces. By virtue of their dominances, they have changed the environment within which their firms, and their products, operate.
I don't think anyone seriously believes PCs and laptops are going away anytime soon. However, just like modern automobiles, though, they will probably last longer, offer more features for less money, and, in general, work better with other devices than they have in the past. The pace of replacement of boxes and operating systems is certainly slowing now, in comparison to the past.
If these trends were not occurring, then the PC probably would become obsolete, due to its having walled itself off from the need for customers to connect various devices and media across the internet and their own systems. As it is, the value-adding damage has already been done to PC systems and their software and hardware components.
See the chart at the top of this piece for the visual confirmation. It shows Apple pulling away from Microsoft, Intel and the S&P500 beginning in 2004.
It would be fun to speculate on the discussions leading up to the WSJ letter by Gates and Otellini. Better still, to listen in on their conversations and see the drafts. Clearly, they felt a gauntlet had been thrown down, challenging their companies' relevance as being at the heart of today's digitalization trends. It's noteworthy that all it took was a guy who writes a weekly technology column in a business newspaper to spark this reaction from the two company leaders.
Gates' and Otellini's protestations notwithstanding, there is far more activity in application-specific digital devices (digital music players, cellphones, PDAs, etc) and internet connectivity than there is in necessary, but basic, PC systems. Rather than, as their piece asserted, it being the "end of the beginning" for the PC, it may simply now mark the arrival of the device as a low-priced electronic appliance with little more capacity for functionality growth that is not due to some other devices produced by other companies.
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