Monday, August 22, 2011

HP, Windows 8, and the Forbidden Fruit

Today's posting is about double my usual size.  Stick with me, though, because it's worth it!

If you pay attention to the hot news in technology you have probably heard two big announcements over the past several weeks.  The first is the tectonic splash HP made last week where they announced that they were getting out of the personal computer business.  Wow.  Wasn't it almost 10 years ago when HP, under the "leadership" of then CEO Carly Fiorina, staked its entire future on the PC business when it acquired Compaq?  Guess that hasn't worked out so well.  The second, maybe quieter, announcement was by Microsoft as they began the beta testing of their newest operating system - Windows 8.

Both of these moves were heavily influenced by that "Forbidden Fruit" referenced in the title of this post. (Any ideas what fruit we're talking about??)

Microsoft's last OS, Windows 7, has been out for about two years now.  In terms of product life cycles, the pending advent of Windows 8 might seem a little bit early.  So why the hurry and what could possibly be so influential to several of the most mammoth tech companies in the world?

To figure out the mystery, we have to take a look at the core purpose of Microsoft and HP.  When we strip away all of the strategies, products, etc., we see two companies focused on making profit and dominating their industries.  In the case of Microsoft, they have owned the personal desktop experience for well over 20 years.  If you bought a PC, laptop, or some other computing device you almost certainly purchased a Microsoft OS as well.  In the case of HP, they have had a major strategic relationship with Microsoft because every computer they sold to a consumer has had a Microsoft Windows OS on it.  In the world of operating systems, Microsoft has held a virtual monopoly on the PC market. (Even Intel has some competition from AMD!)  But yesterday's successes do not always predict the course of future events.

At this point we have to discuss the "Forbidden Fruit".  Of course, we are talking about Apple.  For the longest time the most valuable company in the United States has been Exxon.  In this instance, value is measured by the total market capitalization of the company, or the total worth of all the outstanding shares of stock.  As of August 2011, both companies were approaching of value of US$350 BILLION.  In the last four years marking the emergence of the iPhone and iPad, Apple has created products that are almost singlehandedly driving the personal computing market.

As you might expect, Microsoft is no fool.  It realizes that without an operating system that can function as effectively as Apple's iOS, it will not be able to create a product or user experience that could compete with Apple.  Also, with so many consumers, world-wide, switching from PCs to tablets and smart phones, the sun is quickly setting on the era of the personal computer.  Proving this true is the essence of Windows 8.  This new OS is clearly designed for the tablet environment.  Take a look at some of the early emergent features of Windows 8:
  • The display is optimized for a viewing aspect of 16:9.  In layman's terms, this aspect is the same one used by modern HD televisions AND is the aspect used by the iPad.
  • The interface is designed to easy support touch-screen computing.  (A trend is developing)
  • The time to complete a boot-up cycle is greatly reduced from that of Windows 7 and earlier Microsoft OS platforms.  (How long does it take an iPad to come online versus a PC?)
  • There is a heavy emphasis on HTML 5.  This part might be the most important competitive advantage for Microsoft.  In short, if you view online video, you are probably viewing it through one of three applets - Flash (the most popular; made by Adobe), Windows Media Viewer (native Microsoft), or Quicktime (Apple's product).  One frustration shared be most Apple product owners is the fact that they are blocked from viewing anything online that is enabled by Flash or WMV.  By focusing on HTML 5, Microsoft has a chance to reinvent itself as the primary enabler of online content.
Microsoft can see the writing on the wall.  If they don't become a viable player in the tablet hardware and software environment in short order, they may be in for a nasty fall.

In HP's defense, it was highly unlikely that they could have predicted in the early part of the last decade how quickly Apple would change the entire landscape of personal computing.  From their perspective, it was probably an easy bet to assume that the PC market would not change radically for at least another 20 years.  But now that Apple has made PCs "so yesterday" in a little less than two years coupled with its own complete failure to compete in the smartphone or tablet space, HP is in huge trouble.  It has been forced, quite literally, to bet on a future that does not include a computer manufacturing component.  Quite a risk indeed to pull the plug on an 11-figure (dozens of billions of $$$) gamble it made not 10 years ago.

So you can imagine the fearful curses from Microsoft and HP,  directed toward that "Forbidden Fruit" company in Northern California.  Apple has the entire old-guard of the tech sector on the ropes and is moving in for the kill...

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