Can Microsoft revitalise the PC sector?

The PC industry undoubtedly needs a saviour! Will Microsoft ultimately step up or is this a lost cause, or beyond the company’s changing realm? Declining sales numbers in a currently shaky economy are not the only reasons for grave concern. Hurting the industry most, are ever advancing smartphones and tablets, and the increasing use of cloud computing all of which are usurping traditional PC usage. Is the PC revolution finally devouring its own children as it endangers PC manufacturers and software developers alike? Observing the trouble Hewlett-Packard and Dell experience today suggests this is exactly what is happening.

The market research firm, Gartner, recently predicted that smartphone sales will double over the next three years, tablet sales will triple, and PC sales might stay flat at best. This does not mean the PC is dead, but by 2016 tablet sales will exceed PC sales. Obviously, you would expect that Microsoft, which mainly lives and dies with PC software sales, should be the most interested party in revitalizing the industry. From 1987 to 2000, I led one of its divisions and was responsible for selling Windows to PC manufacturers. During this formidable time in Microsoft’s history, its frontrunner status was nearly unshakable and software and hardware partners supporting its ecosystem were rewarded with impressive return-on-investments and growth opportunities. After the company lost its antitrust trial in 2002, its fortunes changed profoundly. Since then, its leadership team has struggled to cope with new market realities. Most stunningly it missed the social media and mobile computing revolution, and arrived painfully late in  the cloud services market.

Its recent launch of Windows 8 would seem like a major step forward in reversing some of the failures and curing the misfortunes of the last decade: It’s a robust platform that extends a visually stunning, uniform interface across desktop PCs, smartphones, tablets, notebooks, and even servers. With this design coup, the company changed the rules on competitors, and simultaneously broadened the hardware base for its operating systems. Long overdue, this new platform definitely has the potential to invigorate the ailing industry and eventually entice the Facebook generation to rediscover PCs.

During its glory days, the company understood how profoundly indebted it was to its ecosystem, and the launch of Windows 8 should have benefitted first and foremost Microsoft’s hardware and software partners. Instead, many of them now feel betrayed because the company continues to move away from the partnership model that has served the industry so well for so many years.  In mimicking Apple it designed its own tablet, Surface Windows RT, which will soon be followed by the more powerful Surface Windows 8 Pro. For me, this is a clear sign that Microsoft continues to grapple with its destiny to the detriment of its partners. The two billion dollar loan in regard to the Dell buyout further underlines how arbitarily Microsoft picks winners and losers.

At this critical juncture I expected the company to remember its roots, and once again lead in collaboration with its partners through innovative software DNA to energize and transform the industry.

Instead the portents coming from Redmond suggests the company still hasn’t learnt.  Disturbed and disappointed by Microsoft’s shift of direction, I agree with Rob Enderle, founder and principle analyst of the Enderle Group, that a rebirth of the PC will require a clever “better together” hardware design, working seamlessly with post-PC era mobile devices. Can Microsoft still change course and rise to the occasion or does the industry have to patiently wait for the long-overdue, pundit-predicted earthquake, which will eventually shake up its executive suite?
Joachim Kempin is the former senior vice president of OEM sales at Microsoft.