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Alan: HP bet big on PCs, and we're entering the "post PC" era. This isn’t just me joining the post-PC bandwagon. We saw a taste of the post-PC world in Japan with NTT DoCoMo's i-mode more than a decade ago, and today's 3G/4G world and today's smartphone is the global reality of that original vision. Today, except for games and content creation, you can consume most of your entertainment and information on lower-powered devices like tablets, smartphones, smart TVs, and devices like a Boxee or Apple TV. My Core i7 standard voltage ultraportable laptop offers more performance than the original eight-core Xeon workstations. This means that the market for desktop PCs is going to shift to a world of increasingly-powerful laptops, and the market for laptops is going to shift toward next-generation smartphones and tablets.
So, who would want to buy a whole new PC business?
Chris: Of course, I'm obligated to step in here. IBM's CTO Mark Dean recently discussed moving beyond the PC and using a tablet as his primary computer. His assessment was indicative of IBM's growth strategy, which involves exiting commodity businesses to pursue higher-value markets. However, I believe it prematurely discounts the role PCs will continue to play in our lives.
While it's true that mobile devices, by virtue of more advanced architectures and manufacturing technology, continue offering more compute power at similar (or lower) power levels, software developers remain viable by exploiting the capabilities of less constrained form factors, and pushing their ideas down into more portable platforms as they evolve. You can do things with a notebook today that required a 2P workstation in the past. Sure. But what can today's 2P workstations do? Data from Intel suggests that 10 Xeon E5645-based servers can achieve the same performance as 18 Xeon E5607-based servers for $20 000 less—and that's within the same generation of hardware! Just think about the ways PC technology will continue to enable opportunities for SMBs that only an enterprise would have been able to afford five years ago, and how that same progress affects desktop users.
"But Chris, it's your job to defend the PC; you represent a PC hardware-oriented property." I recognize this, of course. The fact remains that building and selling PCs is still a high-revenue business for HP. But the company's lack of added value makes it a low-margin opportunity. Let that be a lesson to more nimble organizations: value is the key to making money in a mature marketplace. And as HP waffles with its profitable-but-fiercely-contested PC business, other organizations have the opportunity to differentiate their own products. Saying you're now going to operate like a start-up doesn't mean you're actually able to follow-through, HP.
Alan: Yeah, but the world is made of creators and consumers. The PC is going back to its roots as a tool for the elite, rather than the masses. The masses are going to be consuming all of their media and accessing the Internet on their mobile devices. It's 1984 all over again. The big difference is that, "back in the day," building your own computer was cheaper than buying a computer. In 2011, that's not true. The reason to build a computer is that you can get the parts you want (which ultimately are cheaper than buying a pre-built computer and then upgrading it). The other reason to build a computer is that modern desktop CPUs are so ridiculously overclockable that the overclocking is how you make your money back.
Chris: But you can't just split everyone up into creators and consumers. I might be a creator by day and a consumer by night. That's why it's so common to find both desktop and mobile hardware under the same roof. The problem is that the desktop market is mature and less susceptible to the subsidized upgrade cycle the smartphone business encourages. So of course that's where the growth is.