The continued advance of mobile computing suggests the PC has reached its end state
With admirable aplomb, if not grammar, Michael Dell, the chief executive and founder of Dell Inc, tweeted last week: "Like Mark Twain, the reports of PC's death have been greatly exaggerated." His point (once you got past the dangling participle) being that he thinks the PC business is still alive and kicking.The trigger for his comment was Hewlett-Packard's announcement that it would explore "alternatives" for its Personal Systems Group division, which is the world's biggest seller of PCs. According to Léo Apotheker, the chief executive since September, the PSG chunk might be spun off, sold off, or (perhaps) just kept inside HP.
In a follow-up interview, Dell crowed at the prospect of HP shedding its PC business, as he thinks that will lead to more business for him in the pricier server business (which HP is hanging on to), just as happened after IBM sold its PC business to Lenovo in 2004.
For Dell, focused on selling PCs and "big iron", the billions in revenues to be soaked up from HP's likely exit from the PC business look appetising. But that doesn't alter the suspicion that Dell is looking in the wrong direction if what he's after is profitable growth.
The trouble with the Windows PC business is that while it might be growing, just (at about 2% this year), it's become commodified. Even HP can only wring $40 of profit from each $800 (on average) PC it sells. Microsoft makes about the same profit per Windows licence – ie, per PC. The Windows division is the second-most profitable in Microsoft (after the one that sells Office); PSG is HP's least profitable division.
But you don't have to sell PCs. A fascinating story last week detailed how United and Continental Airlines, the US's biggest, is replacing heavy bags full of flight plans with Apple iPads: a special app will hold the charts, and be updated wirelessly with new information. As well as the saving in weight, they're more convenient, and with a long enough battery life, they'll last all but the longest flights without charging. "The paperless flight deck represents the next generation of flying," said United's senior vice-president of flight operations, Captain Fred Abbott. Computing is becoming something that just gets done where it's needed, not in the temple of a device with a physical keyboard, Intel chip and 12-inch screen perched on a table or lap.
