Windows 8: Solving The PC Problem
The plateauing of global PC shipments and the recent decline of US shipments have caught the attention of many tech and business bloggers and some have even proclaimed it as the death of the PC. But while the decline is plain, there is some disagreement as to its cause. Some attribute the lull to cannibalization from mobile and tablet computing, while others argue the flatline is simply the result of saturated markets, mature technologies, and economic downturns.
The Rise of Mobile
The proliferation of mobile computing through smartphones and tablets has accelerated more quickly than the onset of the personal computer. The initial foothold in unit sales that took PCs twenty years to achieve was reached in just over five years by smartphones and in just two years by tablets. What’s more, the recent decline in PC shipments seems to have started just as smartphones overtook PCs in total unit sales and just as the market for tablets was first appearing. While the correlation is tempting, it’s not clear that smartphones and tablets are actually replacing the need for PCs in consumers’ lives rather than simply augmenting them. What is clear is that smartphone and tablet sales are continuing to increase impressively even as the PC slips.
Perhaps stronger than the correlation with the rise of mobile computing, is the relationship between PC shipments and the larger economic landscape. This is not the first time that PC sales have dipped and now, as before, the slowdown seems to align with corresponding events in US and World economies. The PC has experienced three previous slumps in its history. The first small dip, in the late 80s, looks to follow the Black Monday stock crash in 1987. The second, around 1990, aligns with the onset of the Gulf War. The third and most dramatic fall occurred around 2000 following the dot-com bust and the beginning of the US war on terror. Finally, this latest dip seems to align with the recent financial crises and subsequent recession. The unaffected sales of smartphones and tablets seem to suggest otherwise, but it’s possible that the solution to the PC problem will present itself, that as the economy recovers, so will the PC.
Windows of OpportunityHowever, the history of these rocky moments in PC history and the history of Windows may suggest that these lulls are more than just dumb reactions to be waited out, they are also opportunities to be seized or squandered. Following the second dip in PC sales in the early 90s, Microsoft released Windows 3, the first widely successful version of its new OS. The success represented a turning point for the adoption of the PC and the graphical user interface (GUI) and made Windows the dominant OS it’s been ever since. In contrast, following the third major drop in PC sales in 2000, Microsoft launched Windows Me. Millenium Edition was the last version of Windows to be based on MS-DOS and is probably still the most highly criticized version ever, leading to mocking names like “Mistake Edition” and “Many Errors”. As a result, the PC market did not recover for another year or so until after the release of Microsoft’s Windows XP and its new codebase, not to mention Apple’s OS X.
This latest snag in the PC story is yet another opportunity for technology providers, but it’s also daunting. Companies like Intel have held press conferences just to reassure their stakeholders that this decline does not herald the end of the PC. Intel’s answers to the problem are the super-portable PCs they call “Ultrabooks” and increased investment in low-power, high-performance chips.
Microsoft’s answer is Windows 8. Last week, Microsoft stock fell after it reported lower than expected quarterly earnings, but Steve Ballmer responded in a press release saying, “The launch of Windows 8 is the beginning of a new era at Microsoft. Investments we’ve made over a number of years are now coming together to create a future of exceptional devices and services, with tremendous opportunity for our customers, developers and partners.”
Ballmer and Microsoft are betting on Windows 8 to answer the PC problem, but it will have some major competition. Though the group is small, its members are formidable—only Apple and Google offer similar platform continuity across the consumer device ecosystem. Microsoft, Apple, and Google each offer platform-level experiences on all four major consumer device touchpoints—mobile, tablet, PC, and TV—however, only Microsoft truly sells its platform. Apple subsidizes its platform to sell hardware, and Google gives its platform away in order to sell ads, but Microsoft sells licenses of the platform itself to manufacturers who in turn pass the cost on to consumers.
Apple Sells Hardware
Apple is a familiar PC competitor for Microsoft and though its competitive position is stronger than it has been in the past, its approach remains historically consistent. Apple creates high end, tightly controlled, strongly branded products that fully integrate hardware and software experiences. Apple’s iOS has grown from a portable music player to influence their experiences at all levels. Software is central to Apple’s success, and the recent announcement of iOS 6 and updates to OS X and Apple TV show continual investment and increasing continuity in software experiences across Apple’s product line, but hardware is crucial as well. iMacs, iPods, iPhones, and iPads have all differentiated as much on hardware as on software, and the tight integration between the two has allowed Apple to make strides that others could only hope for.
“iMacs, iPods, iPhones, and iPads have all differentiated as much on hardware as on software.”
Like Apple, Microsoft has grown it’s new platform with seeds from mobile and entertainment spaces, and with the introduction of Surface, Microsoft actually developed its own hardware to showcase their Windows 8 software. Ballmer declared, “We believe that any intersection between human and machine can be made better when all aspects of the experience, hardware and software, are considered and working together.” This might sound like blasphemy coming from Microsoft, but Ballmer continued, “We believe in the strength of that ecosystem, of software and hardware companies that work together to deliver selection and choice that makes your Windows experience uniquely your own. Those partnerships are essential to the reimagination of Windows.” While Microsoft may dip its toe in the hardware game, it will never be Apple, with its long timelines and extreme secrecy, its closed approach to software and ecosystems, and its truly integrated strategy of hardware and software development.
Google Sells Ads
Google is a newer type of competitor for Microsoft. Google’s heritage is not mobile or the PC, but the web. Google offers not devices, but services, and sells not products, but advertising. Search and AdWords are Google’s golden geese and much of its subsequent efforts are simply broad explorations on how to proliferate these original money makers. At this point Google has its hands in many different areas of consumer experience, plenty of which compete with Microsoft offerings. Its heritage makes for a number of interesting overlaps with Microsoft as well as some key differences. Google’s roots in search place an emphasis on reductive simplicity, highly typographic UI, and content forward experiences, but also in data-based algorithmic decision making and continual iteration. Its web origins and advertising model mean that Google frequently releases software in beta with the intention of making updates along the way, and that it often gives away its software for free.
Google’s golden geese.”
Recently, Microsoft has made moves to Online Services and cloud functionality. In the same Surface keynote Ballmer claimed, “We’ve helped usher in a new era of cloud computing. We’ve embraced mobility. We’re redefining communications and attempting to transform entertainment.” This statement may sound more like a Google-ism, but again, Microsoft’s reliance on software sales and licensing rather than advertising sets it apart. Microsoft’s Online Services division, that most closely aligned to Google’s core offering, has been showing improvement, but is still the only division to consistently report losses in income. While Microsoft may embrace the cloud, it will never be Google, with its iterative perpetual beta development model, and its free, open, web-based approach to consumer software.
The Heart of Microsoft
Software is the lifeblood of Microsoft and it always has been. Recent years have seen Microsoft’s offering expand broadly across five business divisions including familiar territory like Windows & Windows Live, Server & Tools, and Business, but also in new domains like Online Services, and Entertainment & Devices. It’s interesting to see how these new ventures have influenced the primary business of Microsoft, but as Steve Ballmer reaffirmed in the Surface keynote, “Windows is the heart and soul of Microsoft.”
If Windows is its heart and soul, then Windows 8 is either a heart transplant or a spiritual rebirth, maybe both. And that’s what makes this release such a gamble, and its success such a necessity. You see, there’s another division at Microsoft that hasn’t gone so far as to report losses, but has shown a continual decline of late. That division is Windows. The revenue of Microsoft’s Windows division is closely aligned to the global PC market and weakness in such a central pillar must be quite unsettling for Microsoft. To continue Ballmer’s metaphor, this is heart disease.
In contrast, Apple and Google are somewhat insulated from the larger PC decline because both are so invested in smartphone and tablet markets. You might even say Apple helped create those markets, and Google is really most heavily invested in the web, which it sees as ubiquitous and device-agnostic. Microsoft is different. Microsoft is at the bottom of the market share list for smartphones and tablets, and is truly not the hardware company that Apple is, nor the online services company that Google is. And that’s why Windows 8 is a gamble that Microsoft can’t afford to lose. For Microsoft, another Windows failure (see Windows Me) is not an option.
The Windows Imperative
The PC problem is a business imperative that Microsoft can‘t afford to ignore and its stated solution is Windows 8. Microsoft is betting its future on a on a new generation of UI grown from advancements in mobile computing, and on a new middle device space—not between mobile and tablet, but between tablet and PC. It’s fascinating to consider Windows 8 as Microsoft’s solution to the larger problem of the post-PC era because the experience does seem particularly suited to address the situation. The Windows 8 UI is a paradigm shift in desktop computing and its reimagniation is particularly driven by insights drawn from mobile computing.
Punchcut is a user interface design company with a unique specialization in multi-screen experiences for consumer devices — including handsets, tablets, ultrabooks, wearables and TV. We design experiences across major and emerging platforms: iOS, Android, and increasingly Windows 8. Our clients come to us not just to deploy apps on a new platform, but because we design user experience frameworks that help them create cohesion across platforms and devices.
Read part two, Windows 8: The New Modernism where we describe Windows 8’s Modernist art historical influences and the resulting character of the experience.
Windows Needs a Restart
A Reaction Against Faux Realism
The Next Generation of UI
Principles & Philosophy
The Nuts & Bolts of Designing For Windows 8