I think Microsoft just killed the simple tablet with the introduction of the Surface RT and Windows 8 Tablet PCs. Both of these devices combine the touch tablet and the ease of use that makes it fun to use with the work environment that a desktop PC (or Mac for that matter) provide. Now that you can buy both in one device. Why would anyone buy two and at multiples of the cost. Devoted Apple buyers will, but most people will not. For 90% plus of the world’s computing population, “The Tablet is Dead, Long Live the [new] Tablet PC (Mac?).”
Apple and Google are working to become significant software platform companies, like Microsoft has been for a long time. Recently they’ve had some remarkable success: Apple in iPods, iPhones and now iPads; and Google in smartphones. However, there is no platform that Apple and Google can produce, that Microsoft cannot also produce. After all, Microsoft has created the still dominant Windows, Office and Xbox platforms. Windows Phone 7.5 and its “metro” touch interface is recent testament to the ability to develop excellent new platforms. With the forthcoming Windows 8, Microsoft is doing the hard work of integrating the touch interface with its traditional windows desktop. The result is clearly a win/win scenario since the customer will get a 2 in 1 tablet PC product for less than half the price of the comparable, but separate tablet and microcomputer products like the iPad and Macbook. While Apple ostensibly could do a similar integration, it seems to prefer instead to have people buy both products separately, at considerable extra cost. As for Google, it can’t compete in this arena, because it has no desktop platform.
By this time next year, what is already clear to keen observers today will also be clear to everyone: the Windows PC will be extending its domination of computing from the PC market to the tablet market. Given Microsoft’s dominant market position with Windows, this is all but inevitable. The new machine will be called the Windows PC tablet or the Windows tablet PC. With time, it will most likely again simply be called the Windows PC.
For investors, Windows will again be a growth story along side its other major growth businesses (i.e.: Microsoft Business Division/Office, Server and Tools). Given Microsoft’s low valuation on the stock market, one should reasonably expect new growth to drive up its stock market value even as its earnings grow more rapidly. You heard it here: it is reasonable to expect the stock price to double over a few years.
P.S. For a sampling of the new Tablet PCs launching this fall, see: http://www.microsoft.com/en-us/news/presskits/oem/imagegallery.aspx
I learned earlier this year at the annual Consumer Electronics Show (CES) that the Windows PC is dead. Computing, I was told, was shifting wholesale to the iPads, Android tablets and smartphones. This prediction had an all too familiar ring for me. Three or four years ago, again at CES, predictions were that netbooks, running on every operating system but Windows, would kill the PC and Windows. Before that, it was Linux. Before that, some variant of Unix. Interestingly, before that – about 2001 — smart devices and clouds where predicted to take over computing (hey, that one is back!). Sometime before that, it was OS/2, and before that, it was the Mac interface the would kill the PC. It should have. The only competition was line command based MS-DOS. But it did not even come close, even then.
I may have missed some PC killers, but you get the picture. Yes, someday the Windows naysayers will be right. The PC, as we know it, will be dead. But with Microsoft’s new innovative Windows 8 software now making it possible to have both touch-enabled tablet and a mouse operated PC desktop in one integrated, sleek, lightweight hardware device costing perhaps 1/3 of comparable offerings, I doubt a PC killer is here. Not just yet anyway. Indeed, after Windows 8 ships, I expect that Apple will soon see its market share in tablets drop from plus 60% toward sub 10% levels (where, incidentally, Macs have been for decades and toward which the iPhone, now at 20%, has been rapidly falling). Why? For the same reason most people and businesses have stayed away from Apple products. Most will opt for the greater value and capability offered by a Windows 8 Tablet PC. For this reason, we are soon likely to find that the new Tablet PCs will increase sales rapidly in this new category, soon approaching the dominant market share of over 80% already enjoyed by PCs. Incidentally, this success should create a “halo effect” for the Windows Phone 8 market as well, and help them surpass Apple’s world-wide phone market share. Android could be expected to dominate in the phone market for some time to come, but it is vulnerable at points as phone market shares shift very quickly. The death of the PC has again been greatly exaggerated. The PC is (NOT) dead, long live the PC!