Judging Wintel on the eve of a new era

Count on the chattering classes to get it wrong. If I had a nickel for each time some expert or another weighed in over the years with a prediction of doom for Microsoft or Intel, I'd be kicking it in the Bahamas right about now.

There has been no shortage of upstarts, touted at one time or another, as can't-miss candidates to upset the computing world's constellation of forces over the past 30 years. All got bloodied for their trouble.

But have you noticed? As 2009 gets under way, it just seems the new year's outlook for the Wintel duopoly looks more unsettled than I can recall.

And not just because of the lousy economy or the concomitant stock market crash. Every technology company is feeling the pain. At some point, though, it's reasonable to assume that the economy will regain its footing and businesses will return to hiring. What's different this time around is that a rebound is not guaranteed to spell boom times for Microsoft or for Intel.

Intel built its business model around the need for constantly increasing performance. But here's what's new: more people than ever do their computing on the Internet. Up until now, Intel has dismissed concerns that the Atom processor, which powers Netbook devices, will cannibalize full-power notebooks or desktops. But we're still too early into the Netbook phenomenon to know how this is going to play out. Intel may wind up selling tons of Atom chips but the part fetches much lower profit margins than do the company's more full-featured processors. How much processing performance do you really need anyway? What about this checklist? Word processor, instant message client, Web browser. For most of us, that's more than enough. Intel wants the Atom to become a success. I'm not sure it can afford Atom to turn into a smash success.

I'm not sure whether a world populated by ultra-small, low-cost notebook computers is all that great for Microsoft, either. The company won't be able to exact the same licensing fee for a $300 computer that it does for a $1,200 PC. And with more people engaging in Internet-centric computing all the time, there are more free software alternatives.

None of this is to suggest that either Microsoft or Intel are even close to calamity. But they've each got a lot to consider as the year gets under way. The proliferation of Netbooks and the emergence of Internet-based computing raise myriad questions for Microsoft and Intel-and there are no easy answers on the horizon. The great 20th century economist Joseph Schumpeter wrote clairvoyantly about a process he termed creative destruction. I wonder if we're about to see its manifestation.

[Super2online]

As with every other fad, people will get tired of small screens, cramped keyboards, and slow processors, and small hard drives. I can see having one of these around to sit in the living room to roam the net while catching a show or football game, but its usefulness is limited and thats what drives everyone back to something that has enough horsepower and stamina to go the distance.

[philoking]

Super2Online: I agree, I have and use a netbook, and it's a very cool device, but it's not by any means a replacement for a laptop or could be anyone's only computer. I actually responded to this article on my blog:

http://www.philoking.com/2009/01/13/net-books-are-not-a-threat-i-repeat-net-books-are-not-a-threat/

JB

[Penguinisto]

Calamity? No. I also posit that their fates are far from intertwined. Indeed - from my POV, "Wintel" as an entity is dead.

Here's how I got there:

Microsoft is arguably losing marketshare in the one space they cannot afford to - the OS. While they will not die tomorrow, the drop is certainly happening, and at an accelerating rate. I'm not so sure Windows 7 will save it - this downward curve began during the good times, not during the bad, and there are enough Mac users now to begin spreading word and accelerating things in Apple's favor. There is a large enough slice of the market owned by Apple now to credibly demand (and get) cross-platform products by most major app makers. I mention Apple because they've managed to do far better than Linux in the consumer space - at least visibly. OTOH, I believe that the majority of netbooks sold today still run Linux... which presents yet another problem for MSFT's long-term survival.

Whether MSFT continues its fall or not, or whether their marketshare curve continues to move downward remains to be seen, but there is no doubt that it is losing.

--

Intel OTOH is only feeling the economy, and as an entity more sensitive to it, the swings show a bit more when it comes to their fiscal performance... that said, no matter who is winning or losing the OS race, Intel still makes the chips that power them. Yes AMD is still around, but they have become a mere shadow of their former selves. This is a far cry from 2005, when AMD Opterons threatened a moribund Intel, which in turn had a Netburst-architectured albatross around its neck...

IOW, the two companies are certainly not sharing the same fate.


Wintel as a term should die, and here's why: They can't even be called the partnership they once were anymore. Intel publicly and visibly rejected Windows Vista in their shops - hard. Most of their embedded groups straight-up moved their app development away from WinCE/Mobile, and went all-in with Linux. If it comes down to it, Intel would go all-Apple if that's what it took to stay fiscally healthy, and would happily cast Microsoft to the wolves entirely if it ever came up. I suspect that Microsoft would do the same with Intel hardware if faced with the opportunity/choice...

The two are going down different paths now. MSFT is faltering, and hoping that Windows 7 might stop the bleeding. Intel is seeing an internal revolution of sorts, seeing x86 CPUs become netbook CPUs, Notebook CPUs, Desktop CPUs, Server CPUs, and embedded CPUs.

One shows diversity and promise, while the other shows decay and failure.

/P

[ewsachse]

ZZZZZ......

[stuxstu]

@ ewsachse - Agreed.

The continuous claims of CNET bloggers (not really journalists anymore) that Microsoft is dying is old. Yes, Microsoft lost 3-5% of the market because of bad press and performance issues of Vista. Please repeat that to your self until it sinks in... 3-5%. Considering the commercials, bad press and issues involved, you'd think Apple would have gained 10-20% of the market... Didn't happen, consumers don't care. They just want email, internet and to not spend $2000 on a computer, like they did in 1995.

Microsoft still has an install base of millions of PCs and those will begin to be upgraded when the economy bounces back (expected around Win7 release dates 12/09 ~ 05/10). Apple on the other hand is much more expensive compared to a PC. Bad times do equal cost savings at the consumer level. The Microsoft monopoly will survive, whether we like it or not... Google is their enemy/worry, not Apple.

Microsoft and Intel do have long term issues, but they also have massive war chests and thousands of employees to help solve the issues. Until access is everywhere, there is no lag time and performance of the web based app's equals that of the desktop, the MS monopoly lives. That gives a decade or more before MS has to worry.

Get a grip and join reality, it is an interesting place "Coop".

[tm_anon]

@stuxstu

The reason Apple didn't gain every percentage that MS lost is because IT'S NOT THE ONLY OPTION. Lots of people who stopped using Windows switched to Linux, lots of other switched to Apple. I'd mention AmigaOS but it requires its own hardware at the moment. When it doesn't anymore, you'll see people switch to that as well. In other words, that 3-5% that MS dropped was picked up by more than just one company and your argument obviously doesn't take that fact into account. As for the "upgrades" you're looking for, some might happen and I wish them the best of luck, but it won't be in the numbers of millions. If a person bought a retail copy of Vista and can't get his money back, he'll keep it and do his best to make it work, flawed as it may be. People kept copies of ME for the same reason. Many people will keep XP until it is no longer viable and many of those people will switch to Macs, I've seen several posts pointing to that. Many others will switch to Linux where they will be welcomed and taught by the community, it's what we do. Regardless of your claim, MS won't own the world forever and there are already two very capable opponents.

[CCmanyfjhgfjyghj]

Well, I guess you'll just not pay attention to the fact that the internet is still run on servers which use WIntel. Sure just disregard that whole high margin category, why not, need to get a story out on time.

[Penguinisto]

According to Netcraft and nearly every other source, the majority of web servers are Linux-based.

Care to try again?

[teh_chrizzle]

the trouble with these predictions is that they use the past as a constraint. the market will change not because the current one will go in another direction, but because the market will grow and the established players like intel probably won't grow with it.

microsoft and intel are always going to move x million units a year. when the market was north america, the UK, and the EU, x million units was the extent of the market. when the market grows to include the rest of the [less developed] world, the market grows to billions if not tens of billions of units.

so, the road warriors of the world are not going to dump their thinkpads for EEE's, so that market will probably remain mostly unchanged. the developers, engineers, and PC gamers of the world will always need top end desktops with the latest and greatest from intel or amd, so that market will probably remain mostly unchanged. datacenters will continue to use virtualization to pack more and more into multi core multi processor machines, so the atom won't see much penetration there, but linux is growing in that space for certain.

what about students and home users? you know, the bestbuy crowd? they are all about price and almost never about performance, and have never heard of TCO. at $300 for a desktop and $400 for a laptop, that means that mom, dad, and each of the 2.3 kids can have their own computer for a little more than they paid for that compaq presario they bought 6 years ago. i bought my netbook because my wife went to grad school, taking my "regular" laptop with her.

what about the bestbuy crowd in the developing world? hi tech outsourcing is creating a middle class in these places and they are going to want tech toys as well. these toys will have to be affordable.

i go to college with kids who bounce between mom and dad's computer at home, and the school's lab and library computers. they live on social networking and webmail sites and store data on thumb drives and make up the connectivity difference with their phones. they are twice as mobile as any toshiba wielding field sales rep and my netbook a lot of them say that it would be great to use until they can afford a macbook.

what about the college kids in the developing world? they're never going to afford a macbook, but a netbook would be perfect for them.

so don't be so quick to dismiss the cloud or the webfarm just yet. a new batch of facebookies graduates from college every year, they conduct all sorts of business using gmail and/or AIM and they are the new blood that is entering the workforce open to change and ready to be more mobile than the baby boomers they are replacing.

[kd4nuh]

" by Penguinisto January 13, 2009 11:10 AM PST
According to Netcraft and nearly every other source, the majority of web servers are Linux-based.

Care to try again?"


SORRY, YOU LOSE! LINUX HAS ~13% SERVER MARKET SHARE.

http://www.techspot.com/news/31405-linux-server-market-exceeds-13.html
http://www.idc.com/getdoc.jsp?containerId=prUS21399008
http://www.eweek.com/c/a/Linux-and-Open-Source/Linux-Losing-Market-Share-to-Windows-Server/
http://news.cnet.com/8301-13505_3-10027925-16.html

[eddified]

@kd4nuh

Your "13%" is market share by revenue. Of course linux doesn't make much revenue in the server market. Penguinisto, on the other hand, is talking about market share by number of servers. I believe you are both right.....

see this image: http://news.netcraft.com/archives/2008/12/overallc.gif which is embedded in this page: http://news.netcraft.com/archives/2008/12/24/december_2008_web_server_survey.html
Which reports market share by number of servers.

[eddified]

@everyone, but mainly @kd4nuh,

let's stop spreading FUD. let's start spreading truth.... the truth being you are both correct. Please don't point out only your side of things while screaming "YOU LOSE" in a childish way when in fact you are both correct.