Gates, Otellini take aim at PC skeptics

Microsoft chairman Bill Gates and Intel CEO Paul Otellini said reports of the demise of personal computer are premature as PCs find new functions in the growing market for digital devices, including cell phones and music players.

Gates, co-founder and chairman of Microsoft and Otellini, chief executive of microchip maker Intel, wrote in an opinion piece in Monday's Wall Street Journal that the personal computer is entering a new era, becoming the hub for a variety of digital devices.

Their comments come as worldwide PC shipment growth slowed to 12.9 percent in the first quarter from 15.9 percent a year earlier, according to market researcher IDC.

Both companies have stirred concern over a slowdown in PC sales growth this year, with Microsoft last month predicting that PC and server computer sales growth would decelerate in its fiscal year starting July 1.

Analysts expect PC demand to soften in the coming quarters as buyers delay purchases ahead of Microsoft's Vista operating system upgrade, the first major overhaul of the company's Window's operating system, which sits on 90 percent of the world's computers.

The company in March pushed back the release of Vista's consumer edition to January 2007, from a prior target of the second half of this year.

Otellini last month said PC growth rates had "moderated over the course of the past few quarters, leading to slower chip-level inventory reductions at our customers."

Their comments were the latest salvo in a long-standing debate over the future of the PC, with skeptics saying the growing popularity of devices such as Apple Computer's iPod music player, digital cameras and video recorders could make the traditional home computer obsolete.

Intel, which makes microprocessors used in about 80 percent of PCs, is facing tough competition from Advanced Micro Devices, while Microsoft is investing more money in its business to compete with the likes of Google, Yahoo and Salesforce.com, which can deliver software over the Internet.

"The PC has expanded far beyond its original use to become much more than just a sophisticated tool for creating documents and spreadsheets," Gates and Otellini wrote.

"Today, we use it as a communication device, a radio, a TV, a movie theater and a photo album."

Gates and Otellini said that, last year, laptop computers based on Intel's Centrino mobile processors and Microsoft's Windows XP operating system outsold the popular iPod.

They asked rhetorically where people go to share pictures from digital cameras, download music and videos, synchronise contacts, calendars and e-mail on wireless devices or "search for that episode of 'Lost' you missed last week."

"You sit down at your PC, of course," Gates and Otellini wrote.

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