The decline of Microsoft and Intel in Internet-centric Smartphone-supplemented era

An article on how the internet-centric era supplemented by smartphones is giving tough time to Intel and Microsoft and why the two giants of Desktop-centric computing era are not able to retain their stronghold in the consumer market anymore.

A bit of past,

  1. SUN Microsystems
    Sun Microsystems was the maker of SPARC architecture based servers and Java which is one of the most popular IT application platform. Oracle acquired Sun Microsystems after the latter failed severely to maintain its lead in the server market. The prime reason for failure is believed to be its inability to adapt to the emerging market of X86 based servers which proved to be much more cheaper than its SPARC based high-end servers.
  2. IBM
    IBM used to be a big player in the world of computers, still has one of the most prominent research centers, T J Watson, develops massive super-computers, holds the record for world’s fastest processor, in terms of frequency. Thanks to vendor lock-in, it still earns a considerable revenue from technology but has lost the limelight. After selling its laptop division to Lenovo, its impact on innovation especially in the consumer market took a nosedive.

A bit of the recent past,

  1. Intel
    Intel became famous from its Pentium processors. The complicated and proprietary X86 architecture, along with the vast amount of code written for X86 became another form of vendor lock-in for desktop, both PC and enterprise, computer market. Intel tried hard not only to ensure X86 monopoly but also to keep AMD out. The OLPC incident is also a good read on that.
  2. Microsoft
    Microsoft is the maker of the most popular operating system, windows and Office productivity suite. Thanks to Intel-Microsoft partnership, popularly known as Wintel, and the PC-centric era, which transformed to smartphones era somewhere in the middle of the first decade of 21st century, Microsoft earned huge revenues, and it was a big player which everyone feared, especially after the first browser war which almost killed Netscape.

And the present,

With the emergence of Blogger, YouTube, Facebook and a plethora of other online communities, people are now spending more time online than on desktop applications. This not only includes leisure time but also a lot of productive time is being spent on the Internet or cloud-based applications, this fact is quite evident from the rise of applications like Google apps, Zoho office suite, and Salesforce CRM. This has hit hard on Microsoft whose primary business is selling desktop applications, and the anger is quite visible indeed. Secondly, since the cloud management is in the hand of these big companies, the Intel’s primary product, the processor, and the chipset become irrelevant to most users as well. Relatively inexpensive hardware turns out to be sufficient for most consumers [while crucial data being managed by Google/Zoho/Salesforce which specializes in providing reliability over cheap hardware]
And then something big happened on Jan 9, 2007, the first iPhone was introduced, this followed by first Android phone in the following year, this further followed by Nokia bought Symbian, and then HP bought PalmOS, the era of smartphones had just begun. Most of these smartphones run on AMD based hardware [including AMD based processor chips by Qualcomm and TI]. Another significant aspect of these new applications is that rather than being natively compiled which leads to hardware lock-in, they are interpreted [HTML5, javascript] or compiled for a virtual machine[Objective-C, Java (Dalvik Virtual Machine)], this further prevents vendor lock-in.

And what is Microsoft doing about this, after Microsoft Kin got discontinued due to poor sales in just three months, windows mobile continuously lost market share for another year and HP canceled Windows Mobile-based tablet, Microsoft is being hit hard both in the field of smartphones and cloud computing. Yes, the Office and Windows will keep generating revenues, sales might plummet a bit but unlike Microsoft does some magic [just like it did with XBox], it is bound to become IBM of the smartphone-supplemented Internet-centric era. At the least, rather than baffling and calling Online Office apps as fake offerings, they have to acknowledge that the era of purchasing desktop applications is over and they have to find out other ways of making revenues.

What about Intel, Intel is trying hard to become a key vendor for smartphone processors but a quick comparison shows that unlike PC era, where Intel is ~90% of the market, no one apart from Windows Mobile and Palm[Palm will probably use Qualcomm Snapdragon after its inquisition by HP] embraces Intel. Intel ported Android to Intel’s low power X86 based Atom processor to convince smartphone makers to move to Atom, but I believe the only thing which kept a more complex design like X86 into power is the legacy code. Now since the legacy applications are being given away in favor of Internet-centric apps [thankfully which are not compiled to native code], ARM which is a much simpler and (almost) RISC architecture is preferable over X86. Also, unlike Intel’s closed architecture, ARM’s IP core is available for licensing which allows more flexibility for smartphone vendors to cater to a market which is much more diverse than the PC market. Just like SUN missed the X86 revolution while focusing on their high-margin SPARC servers, Intel while concentrating at its relatively high-margin X86 business is on the verge of missing a transition to the smartphone-supplemented-Internet-centric era. The Intel has to realize a few things, first, leave the X86 beast for the PCs and come up with a simple RISC based processor for smartphones, second, given the market requirements, it is preferable to give more flexibility to smartphone vendors by licensing out IP core [like ARM] rather than making processors of their own.

The world has moved on from PC-centric desktop era to smartphone-supplemented Internet-centric era, and it seems that the giants of the previous era are unable to catch on marching towards a slow death.

Disclaimer: This is my personal blog. The views expressed on these pages are mine alone and not those of my employer.

17 Replies to “The decline of Microsoft and Intel in Internet-centric Smartphone-supplemented era”

  1. Wow…awesome blog dude…..i learnt a lot 😛
    keep expressing yourself 🙂

  2. Thanks Guru.
    Thanks for motivating me to write more.

  3. An excellent write up. I esp. liked the disclaimer 😀

  4. @Divyanshu, In a profession, one has to act in a professional manner.

  5. I think, however, that some years down the line, when the smartfone industry will look for processors in the range of ~2GHz, they’ll have to go back to Intel.. if arm based procs don’t catch up!

  6. @Ananya,

    I beg to differ here.
    1) I doubt 2 GHz will actually run in absence of a PC like cooling system
    2) Fastest ARM today is 1 GHz, I think it will be able to scale a bit but beyond that cooling is going to be a major issue rather than processor technology.

  7. Your well-analysed and well-written article is a great source of information and yet a tool of simplified explanation especially for non-technos like me..;p
    but must say, the ”Disclaimer” is the absolute cherry-cream icing of the cake….!!…:)

  8. What’s so special about this Disclaimer. I think its more or less a very standard thing for those who blog and also have a job [different from writing blogs].

  9. Agree with the post above.
    But a little more into future – Facebook will start shifting ad-dollars away Google. Advertisers will pay for targetted advertising and no one has a more holistic view of user profiles than FB with it getting highest user minutes(, integration with 3rd party websites and (soon to occur) foray in location based(mobile) advertising.

  10. @Mudit: Tell me honestly, do people really use facebook for anything except for leisure. People might spend more time on Facebook but when it comes to finding information [specially productive info] and productivity apps[Gmail, Calendar], they always come to Google. Please comment if you think this trend can change.
    Another interesting read on Facebook

  11. Well people talk about items they bought, places they went to, share links that interest them, “Like” groups, sites, products that they like, ask for suggestions from friends and to top it all always do this non-anonymously. This seems like a more complete source of info about user preferences than just 1 web search. And my point was only about ad-dollars, not about money from google apps subscriptions.
    Interesting read about scamville – However now FB has its own currency, which is out of game developers’ control and hence should be “clean”.

  12. @Mudit:
    Another good read –
    Anyways, I think I am not an expert to comment on what will happen in future. I wrote what I felt about present. The future is mystery and it is upto to everyone what belief they wish to hold for it.

  13. true, I just based it on the assumption that other things would be taken care of… something revolutionary in the area of processor power management might also happen!

  14. @ananya:
    Well, the area is actively researched for past 15 years and AFAIK nothing revolutionary came out. That does not discount the possibility of that in future though.
    [I believe, ARM power management is sufficient for most people]
    Have a look

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  17. very nice

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