Gates and Ortellini Defend the PC 2006/05/16
Monday’s WSJ featured an editorial by Microsoft founder Bill Gates and Intel CEO Paul Ortellini laying out their case against some recent predictions (specifically in WSJ marketplace articles) that the dominance of the PC may be declining. As WSJ columnists (and others) have observed, there’s a lot to support the notion that the PC (as we know it), and component business model that has driven its success all these years, may yet succumb to the top down model (championed by Apple) as consumers turn to more advanced portable devices to accomplish routine tasks, previously reserved for the PC. Read more about their comments from CNN.com.
The editorial itself was nonsense - words like “Peripheral Devices” besides sounding more dated than ever, ring almost like racial slurs when applied to the iPod and BlackBerry - and the notion of the PC as the digital hub for all these gadgets making our lives better, the same line Microsoft has been spouting for ten years now, seemed more hollow than ever. By asking where people turn when they want to download music to their iPod or upload pictures from their digital camera to Flickr (to their PC of course!) - Gates and Ortellini completely missed the point.
What about when the next generation of these devices are WiFi enabled - iPod can talk to iTunes directly - your digital camera comes pre-loaded with Flickr software eliminating the need for bulky storage and allowing you to browse your photo album on your TV? How about when you use your Nokia 770 to access not only Google Talk but GMail and the entire Google Office Suite - the only thing missing from that picture right now is a spread sheet companion for Writely.
But remember this - Bill Gates didn’t become the world’s richest man by falling off a log - this is the man who predicted SAS and almost every other aspect of the two revolutions we’re talking about years ago - the only problem is he underestimated two things: the pace of the shifts - and the importance of search in building an advertising platform. Office Live will be free - but only after MS builds the ad network to support it. And when you find yourself in second or third place - not a position Gates has found himself in very often - stalling can actually become a pretty sound strategy element.
As for Intel, the business of taking Moore’s Law to the bank - a model that, true or not, never took demand into account, could become increasingly difficult. In the old days, doubling your processor speed often meant doubling your productivity, as even the most basic applications could be painfully slow. These days, probably the number one motivation to upgrade comes from the need to keep up with demanding 3D games. As gamers migrate to consoles, and office applications slim down and move on to the web and portable devices - demand for the latest Pentium powered desktop PC could degenerate pretty rapidly. The Apple deal, X-Box, and other contracts, however, are good indications of Intel’s resolve to weather the shift.