HP and Microsoft PCs, The PC Evolved, Android + Windows and Avoiding Platform Disruption

I tweeted yesterday a chart I love to show, and always gets great reaction on Twitter, with the statement “the PC is alive and well and it comes in many shapes and sizes.”

I could spend a good hour or more talking about why understanding the various roles personal computers play in humans lives and why vast swathes of people have different needs and desires and therefore their needs vary and sometimes a small computer is all they need, and sometimes they can’t do their job without a large screen PC. The point is, the market is so mature at this point that consumers fully understand what they need and what they don’t. They are wise enough to know what things they value and what things they don’t. This is why we see a great deal of hardware, software, and overall feature differentiation. The landscape of personal computing has broken wide open into many slices of a big pie. Everyone is competing for their slice, and some slices are larger than others.

In light of that point, we see the broad evidence of extreme market maturity in both HPs and Microsofts hardware launch events from this week. HP launched a new laptop that is bound in leather and looks, as well as I assume feels, extremely nice. Microsoft continues to evolve the Surface strategy by making impressive upgrades to previous products and launching new premium colors and finishes to Surface hardware. These are classic examples of designing hardware with specific segments of the market in mind and not the entire notebook/desktop market as a whole. This is an important distinction of how the market has evolved and how the players are looking to compete.

In the good old days or the PC market, PC companies were making notebooks and desktops with the entire market in mind. Effectively, they were trying to compete for the whole pie, not just a slice. Interestingly, this was never true of Apple who always had their eye on a specific market and customer type. That strategy and laser focus from Apple paid off once the market segmented but it took much longer than they expected. Now, everyone is designing with specific segments of the market in mind, and we should expect that to continue for the foreseeable future.

This is how the personal computer is evolving. And it is important to know it is a constant and continual evolution. Touch and pen are the newest features of the PCs evolution, and neither has fully reached its full potential as a part of humans everyday productivity and creativity workflows. What companies like HP, Microsoft, and Apple are up against in the consumer space and commercial to a degree is the simple fact of behavioral debt. While much of this new hardware is capable of new and amazing things with the use of touch and pen, the reality is old habits (workflows) die hard, and it takes some serious effort to get people to embrace new ones. So while there is optimism humans will be empowered to do new things with these new tools, or existing things quicker and more efficient, it is simply going to be a slow process.

Android + Windows
Something else I find interesting as a strategy for Microsoft is how they have embraced Android in a way that they position Google’s platform as best companion to a Windows PC. Now, it is worth noting that if Apple’s iOS platform was as flexible and customizable as Google’s, Microsoft would try the same thing and deepen their hooks for Windows to iOS in the same way they are with Android. But Apple’s platform is much more tightly controlled and thus limits the depth Microsoft can create software hooks for Windows customers.

While a significant portion of Windows users are iPhone owners, I find Microsoft catering to Android customers interesting strategically. While Microsoft was, and in some cases still is, hostile toward Google a strategy they should have integrated long ago was to use Android’s openness to their advantage and attempt to usurp the platform for their benefit. This is essentially what they are now doing with Android and had they done this long ago, instead of buying Nokia, I think their position as a services player on mobile devices would be much farther along than it is today. Hindsight is 20/20 I know, but the nature of Android being more open should have been viewed more as an opportunity than a threat by Microsoft even back then.

What I’m getting at here is actually a fascinating point about the nature of open systems which threaten to displace or disrupt incumbents. Microsoft used to have 97% share of all computers sold every year. That number is now less than 10% mostly because of the ~1.3 billion Android smartphones sold every year. You could argue Microsoft was displaced in mobile because of Android and you are likely correct. But it is worth pointing out that only an open platform had a chance to displace the previous open platform. This is because an open platform enables a vast array of hardware companies to run their software. Which means, if I’m an open platform like Windows, and I get the sense another open platform is about to displace me, I should embrace that open platform as soon as possible and attempt to usurp it for my own gains. I know this goes counter to a lot of business theory and I understand why Microsoft did what they did. However, in this case, the nature of the threat from an open platform meant that they had and still have every opportunity to leverage the very thing that makes it possible for them to be displaced, which is the fact the threatening platform is indeed open.

This movie will play out again, and I’ll be fascinated to see how quickly the incumbents learn from history.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

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