Microsoft and Intel Play Defense
New surveys on user satisfaction with Microsoft Corp. software and software piracy validate trends seen elsewhere in the PC and mobile market spaces. Elsewhere, Intel Corp. is scared of the potential fallout from Windows 8 RT on ARM on its PC market stranglehold. Finally, American Micro Devices Inc. (AMD) is developing processors to compete with Intel's Ultrabook specification and new memory offers gains in speed and power consumption.
- · This year's survey of PC software user satisfaction shows that Microsoft has slipped in 2011. The software behemoth was not alone in its satisfaction drop as vendors including Adobe Systems, Inc. and Symantec Corp., also dropped in ranking from past years. Customer feedback is not pointing to quality or performance issues, rather, respondents are using terms like "cumbersome," "difficult," and "expensive" to describe traditional applications in part due to the success of lighter weight, inexpensive mobile apps. Though application dissatisfaction was not cited as a reason for piracy in the Business Software Alliance's (BSA) ninth edition of its Global Software Piracy Study, the 2011 edition noted an eight percent increase from last year. The trade group claims that the underground economy for pirated software now stands at $63.4 billion and that 57 percent of survey respondents reported using illegally-obtained software within the last year. One potential reason for the rise is the take rate for PCs in emerging markets, which accounted for 56 percent of global shipments last year. The BSA believes that piracy in emerging markets is rampant at 68 percent compared with 24 percent elsewhere.
- · Intel is none-too-happy with Microsoft's move to allow its forthcoming Windows 8 RT tablet platform to run atop ARM-based devices. CEO Paul Otellini has been publically critical of Windows 8 RT's ability to only run the Windows 8's Metro interface (the tablet-esque touch interface and associated apps). As a specialized version of Office 10 will be bundled with Windows 8 RT, future ARM tablets will potentially have a credible competitor to the traditional Wintel PC model for the first time. Apple Inc., whose iOS platform is based on the OS X for Mac and is working to further converge the operating systems design and application compatibility, sells four times more iPads than Mac PCs. Google Inc. and Mozilla Foundation have both complained that only Internet Explorer will effectively be able to run on Windows 8 RT as competitive browsers are prohibited access to the operating system's classic environment. The companies claim this restricts competition and hinders innovation.
- · Competition is heating up in the "thin-and-light" notebook PC category. Currently dominated by the year-old Intel Ultrabook specification, AMD is designing new A-series processors, codenamed Trinity, and intends to release new chips one month ahead of Intel's refresh of its updated Ivy Bridge Ultrabook chips. AMD says Trinity will achieve mainstream notebook pricing starting around $500 and offer eight or more hours of battery life. Notebooks powered by Trinity processors can be as thin as 22 millimeters (mm) (Ultrabooks are a hair thinner at 21 mm) and have the support of five PC vendors. Elsewhere, the Joint Electronic Devices Engineering Council (JEDEC) reportedly expects to approve the Double Data Rate 4 (DDR4) memory specification before the end of summer. DDR4 will be twice as fast as DDR3 memory and use 20 to 40 percent less power. This important coupling will allow mainstream DDR memory to effectively be used for the first time in mobile devices like tablets where low power DDR (LPDDR) is currently employed. The forthcoming version of LPDDR will also receive an upgrade design shortly; however, it will likely cost 40 percent more than DDR4 due to manufacturing complexities and economies.
Experton Group POV: The traditional PC is far from dead and will maintain its role as the primary computing device in the enterprise for the foreseeable future. That said, major changes to the PC's design and users' preferred application choices will transition over the next three years to solutions that are both touch-based and more app than application in nature. Apple and Microsoft are both working to merge their disparate platforms into a unified model employing more consumer-friendly features and access to their respective ecosystems. Given the current design of Windows 8 (and Windows 8 RT) and its previous missteps in the mobile computing space, the company will need to endure several iterative steps with Windows 8. The experience will ultimately need to be more seamless across hardware platforms and the company must build out the ecosystem with compelling applications and use cases.
IT executives should understand that Windows 8 in its current form is more the manifestation of Microsoft moving along its mobile computing than a monumental paradigm shift that will drastically alter enterprise computing. Apple is several years ahead of Microsoft in the realization of this blended dream. Microsoft's move to allow ARM-based devices to run Windows 8 RT is necessary given Intel's difficulties in producing processors with the right mix of power and performance for tablets and smartphones. Nonetheless, this move is a break in the strong Microsoft/Intel bond and could have reverberations that threaten Intel's ability to leverage its dominance in PCs to more consumerized products. The presence of a full version of Office on Windows 8 RT makes the intellectual argument for forgoing some degree of PC acquisitions with tablets and Intel is not fully prepared to capitalize on changing market tastes. Likewise, Google and Mozilla are threatened by their inability to effectively access important vital operating system resources on Windows 8 RT. The result of which will mean only lightweight browsers capabilities and a threat to their browsers' market positions should Windows 8 RT see significant take rates.
IT executives should expect this Microsoft decision to undergo close scrutiny, particularly by the EU, which has previously ruled against several Microsoft decisions as anticompetitive. Lastly, AMD could become a major player in the thin-and-light notebook market if its Trinity chips live up to the company's hype. AMD has long been relegated as a footnote in PC sales and a price/performance play in ultrathin and mobile is needed if the company is going to radically alter its fate. IT executives should pilot Trinity-based ultrathin offerings once available to determine if products stack up to enterprise requirements. Lastly, IT executives should expect huge gains in memory performance and battery life on PCs and mobile devices once DDR4 goes mainstream.