The Post-PC Wintel: Striving To Remain Relevant

Not many companies can say they've defined an era of computing, but Intel and Microsoft are among the few that have those bragging rights.

As early as the 1980s, Intel and Microsoft -- an alliance so deeply rooted and influential it became known as "Wintel" -- dominated the computing industry. For more than 20 years, PC makers almost unanimously turned to Microsoft's Windows software and Intel's CPUs to power their desktops and laptops. By 1998, Microsoft's Windows platform was so prevalent on Intel-powered PCs, the software giant was accused by the U.S. Department of Justice of being a monopoly.

Even today, the Wintel duo still rules the PC market. Intel and Microsoft accounted for approximately 70 percent of the worldwide PC space as of August 2012, according to analyst firm Canalys. But as laptop and desktop sales continue to slide, some question whether that market will even remain relevant over the next decade. According to Gartner, worldwide PC shipments in the third quarter of 2012 were down 8.3 percent compared to the same quarter in 2011. Looking ahead, those sales don't look any rosier.

[Related: Intel's Mobile Play: Just Warming Up ]

That drop, of course, is somewhat attributed to a sluggish global economy. But it's also largely because of the explosion of tablets and smartphones, their soaring popularity among consumers and trends such as the consumerization of IT, which are catapulting these ultra-mobile devices into the enterprise space.

While desktop and laptop sales decelerate, tablet and smartphone sales continue to skyrocket. Research firm IDC projected global smartphone shipments will grow 45.1 percent year-over-year in 2012, reaching 717.5 million units. IDC also upped its tablet sales forecast for 2012 from 117.1 million units to 122.3 million units, and expects that number to reach 282.7 million units by 2016.

Cognizant of this, Wintel is starting to dig up its PC roots and head to where the action is. Both Intel and Microsoft came to market this year with new smartphone- and tablet-specific technologies they hope can go toe-to-toe -- or at least hold their weight -- against mobile giants Apple and Google. But some analysts and solution providers question whether Wintel -- and particularly the Microsoft half of that duo -- has what it takes to compete.

At the same time, Wintel is far from the tight partnership it once was as the technology giants each try to stay relevant in a post-PC world. A less exclusive relationship was inevitable given the industry's push toward mobility, said Linley Gwennap, president and principal analyst at The Linley Group, a microprocessor-focused analyst firm. Microsoft and Intel will continue to work together, he said, but it's no longer feasible for them to solely rely on one another if they want to succeed in the smartphone and tablet space.

"I think it's a relationship where they have agreed to date other people. They are obviously still going to be partners and be working together, but, at the same time, that exclusivity is gone and it's just the reality of the world," Gwennap told CRN. "The whole 'Wintel' thing ... worked for a while in the PC market, but it's just not something that's well-suited to the current reality."

MICROSOFT'S WINDOWS 8 WOES

For Microsoft, Oct. 26 was a day of reckoning for its mobile ambitions: After hunkering down for more than three years in its R&D labs, the company launched Windows 8, its next-generation operating system. The software comes in two flavors: Windows RT, a version built on ARM architectures that's targeted at tablets, and Windows 8, a version built on Microsoft's go-to architecture -- Intel x86 -- that's aimed at more power-hungry devices, such as laptops and desktops.

Both versions tout a revamped user interface that departs drastically from prior Windows releases. Users interact with a tile-based UI that's optimized for touch, and can move from app to app not just with a mouse and keyboard -- although that is still an option -- but with those swiping and tapping gestures they've grown so accustomed to with the rise of the smartphone and tablet. OEMs and industry analysts both widely regarded Windows 8 as a product that would revive PC sales and breathe new life into the market.

According to Microsoft, 40 million Windows 8 licenses sold during the first month of its availability. The software giant hasn't, however, broken out that number to reveal how many of those copies were sold on new PCs, and how many were sold as upgrades for older Windows-based systems.

But industry reactions to the software have been decidedly mixed. According to some solution providers, Microsoft's decision to design Windows 8 so differently from earlier Windows releases could be one that that it grows to regret. In addition to its tiled UI, Windows 8 is devoid of Microsoft's flagship Start Menu button, a change that seems small but is expected by some Microsoft partners to be a major roadblock to Windows 8 adoption in the enterprise.

"Windows 8 would and could have been and even can be the best software Microsoft has ever put out -- if they included a Start [Menu] button on the desktop [mode]," said Allan Walters, senior vice president at Saratoga Technologies, a Johnson City, Tenn.-based solution provider and Microsoft partner. Walters noted that hardware vendors like Samsung have even started rolling out their own applications mimicking that popular Start Menu button, in response to some users -- particularly those in the enterprise -- simply wanting that choice.

Randy Copeland, CEO of Velocity Micro, a Richmond, Va.-based system builder and Microsoft partner, agreed that Microsoft's decision to nix the Start Menu button in Windows 8 could hurt enterprise adoption.

NEXT: The Start Menu Stop

"I think [removing the Start button] is going to be a brick wall, not even a roadblock," Copeland told CRN. "And, again, this is my opinion, but I believe that Microsoft is so worried about becoming hip and cool that they have forgotten the average Windows user is doing their job, and they're doing Word, and they're doing Excel ... they don't need tiles and they don't need to try to figure out where the new folders are and they don't want to have a learning curve. They just want to go to work."

What's more, some partners feel the success of Windows 8 is too closely tethered to the success of new touch-enabled convertible PCs and Ultrabooks, the super-thin notebook form factor Intel ushered in in 2011. To take full advantage of the software, touch is a must-have, which means some enterprises will want to refresh their hardware -- assuming they don't already have touch-enabled devices in-house -- before even considering a move to Windows 8.

"Windows 8 and Ultrabooks have to go hand in hand," said Joseph Awe, president of Exton, Pa.-based solution provider and Microsoft partner TechBldrs. "Without Ultrabooks and their [touch] technology, Windows 8 is dead in the water."

For this reason and others, most analysts project it will take several years for the enterprise to embrace Windows 8. Gartner projected in October that 90 percent of businesses will bypass broad-scale adoption of the software until at least 2014.

But Microsoft remains confident that its new OS will succeed in the enterprise space. The company did not make an executive available for an interview but in an email, a spokesperson told CRN it worked closely with "hundreds of business customers" to discuss its Windows 8 design plans before going to market with the product.

"From large to small businesses, customers said that they are planning to adopt Windows 8 for many different reasons -- some are eager to deploy devices that give their employees the convenience of a tablet with the productivity of a PC," the Microsoft spokesperson said.

While some Microsoft partners doubt Windows 8 will ever take off in the enterprise, others have faith it will succeed. According to Douglas Grosfield, president and CEO of Xylotek Solutions, an Ontario-based Microsoft partner, Windows 8 will at least be welcomed by IT teams grappling with the bring-your-own-device trend, since devices running the software will integrate more easily into existing Windows-based IT infrastructures than competing devices like Apple's iPad or Android-based tablets.

"There's continuity with the systems you are running in your office," Grosfield told CRN. "You've got the same tools, the same look and feel. That has to have a positive impact on your productivity."

Spencer Ferguson, president and CEO of Wasatch I.T., a Microsoft partner and Salt Lake City-based solution provider, believes Windows 8's revamped design was a necessary move for Microsoft to appeal to consumers, while prepping its enterprise users for the future of Windows. Like Grosfield, he also believes Windows 8 could have a leg up in the enterprise because of its compatibility with legacy Windows apps and infrastructures.

"We'll see a bit of an uptick based on refreshes over the next 12 to18 months. I believe in Windows 8," Ferguson said.

NEXT: Microsoft Courts Consumers

MICROSOFT COURTS CONSUMERS

Of course, Microsoft also is hoping Windows 8 will be a hit in the consumer market, a space where it's facing steep competition from tablet leaders Apple and Google. According to IDC, Windows has a 2.9 percent share of the worldwide tablet market, a number that pales in comparison to Apple iOS' 53.8 percent and Google Android's 42.7 percent.

But some analysts question whether Windows 8, with its revamped interface and multiple versions, will leave some consumers overwhelmed with choice.

Even Surface, Microsoft's first homegrown tablet, is a product clouded by confusion, argued Gartner analyst Mike Silver. The device launched in October running Windows RT and is slated to launch again in January running Windows 8 Pro. On top of these two models, consumers have various storage options, and can also choose to buy the product with or without two different types of covers, the "Touch Cover" or the "Type Cover."

Silver contrasted the Surface portfolio with that of Apple's iPad, which has risen to fame, he said, largely because of its simplicity.

"The [Windows 8] story is really confusing. The Surface announcement sort of confused people on what Windows 8 was, and what was shipping, and when it was shipping," Silver said. "There's so much complexity there and Apple's hallmark is simplicity. You walk out of the Microsoft store with a whole bunch of things to figure out. You walk into the Apple store and you have three choices of tablets: large, medium and small."

Microsoft has not disclosed how many Surface tablets it has sold so far. But some partners fear its decision not to sell the tablet through its channel partners could hurt its chances of succeeding with Microsoft's bread-and-butter enterprise customers. While Surface, like other Windows-based tablets, can more seamlessly integrate into Windows environments, Microsoft channel partners don't even have a chance to communicate this advantage, said Saratoga Technologies' Walters.

"Selling [Surface] direct isn't the way to go because people may not realize the benefits of going with the Windows platform because all they know is Apple iPad," Walters told CRN.

Gartner's Silver said part of the confusion surrounding Surface and Windows 8 stems from the fact that Microsoft "refuses" to put out a product that is either strictly for the enterprise or strictly for consumers; instead, the software giant tried to make Windows 8 a one-size-fits-all solution, and, in doing so, could just leave both markets wanting more.

Thomas Koll, former corporate vice president of Microsoft's Network Solutions division and the current CEO of Laplink, a software vendor based in Bellevue, Wash., feels strongly that Microsoft shouldn't be counted out of the consumer market yet. But, like Silver, he also believes Microsoft may have been better served by rolling out a completely distinct operating system to run on tablets and smartphones, rather than attempting to shape its legacy Windows OS as a be-all, end-all solution for any computing device.

Microsoft could have taken a cue from Apple, Koll noted, which supports two distinct operating systems -- OS X for its Mac notebooks and desktops, and iOS for its iPhones and iPads. "Microsoft, for too long, clung or attached itself to the Windows environment," Koll told CRN. "But you need something different for a smartphone or a tablet."

The enterprise will always be Microsoft's go-to market, but consumers are driving IT trends today more than ever, Gartner's Silver said, which makes the consumer market an especially important one for the software giant.

"We're getting to the point where if you look at all sorts of end point devices, including phones and tablets, a few years ago, before that existed, most folks were using Windows for most of their computing needs," he said. "Now when you factor in phones and tablets and iOS and Android, at some point, Microsoft will be on a minority of devices, where it used to have a near monopoly."