Once again, Microsoft is sounding the clarion call for the PC.
Last week, the company’s PR head Frank Shaw rebutted IBM’s Mark Dean, who said that the PC was dead.
Today, in the wake of HP’s announcement that it might sell its PC business (like IBM did six years ago), Shaw threw up another post in which he claimed that the PC is still relevant, for two reasons:
- The PC is still the best computing tool for content creation.
- The PC is also getting dramatically better at content consumption and communications — the two things that tablets are good at.
He’s right. Personal computers are still a great and often necessary tool for end-users, both at home and at work.
PCs are a fantastic business for Microsoft: in the year ended June 30, the Windows group made more than $12 billion on $19 billion in sales. And a lot of the Business Division’s profits ($14 billion) and sales ($22 billion) come from Office and other software that runs on PCs as well.
Those are operating margins of about 65%.
But PCs are not such a good business for the companies that actually build PCs. As HP’s Leo Apotheker said on HP’s conference call yesterday:
First, there are circular trends impacting our PSG business as consumers are changing the use of the PC. The tablet effect is real and sales of the TouchPad are not meeting our expectations.
In other words, consumers are going for tablets — or really, one tablet, the iPad — and HP’s own tablet competitor wasn’t able to buck that trend.
The PC business has had tough margins for years — analysts have been calling on HP to discard it for almost a decade. As the iPad has begun to replace PC sales at the low end of the market, particularly among consumers, it’s gotten even harder.
So HP, Dell, and other PC makers would have every right to respond to Microsoft by saying “You think PCs are a great business? Then YOU build them.”
It’s also worth remembering that when Steve Jobs coined the phrase “post-PC,” he was not saying that the personal computer itself is dead. He was talking about an approach to personal computing that will no longer work. Here’s the quote:
It’s in Apple’s DNA that technology alone is not enough. That it’s technology married with liberal arts, married with the humanities, that yields us the result that makes our hearts sing.
And nowhere is that more true than in these post-PC devices.
And a lot of folks in this tablet market are rushing in and they’re looking at this as the next PC. The hardware and the software are done by different companies. And they’re talking about speeds and feeds just like they did with PCs.
Gizmodo’s hilarious rant to the contrary, Microsoft actually seems to be getting this point lately — Windows Phone and Kinect are two examples of Microsoft products that not only “just work,” but are satisfying and (dare I say it?) occasionally delightful to use. (Just check out how Windows Phone automatically imports and consolidates all your contact information from all your email accounts and social networks…it makes the iPhone’s contact management look primitive.)
But even if Microsoft makes Windows 8 a delight to use, it’s still going to depend on PC makers to invest in the R&D necessary to create equally beautiful and functional hardware, and then market and sell it effectively — competing against Apple’s retail juggernaut.
That’s a big ask when the PC business has basically been a commodity business for the last two decades.
Of course, Microsoft could always take on the challenge directly. I hear there might be a PC company for sale.