Why Microsoft should buy HP's PC business

Why Microsoft should buy HP's PC business

Summary: PC vendors can't afford to compete with Apple - their margins won't allow it - which means that PCs are always at a quality deficit against Apple. Only one company has the money and the software to fix the problem: Microsoft.

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The tipping point for the PC business isn't 50% but 20% - look at the how Firefox has changed the market - and Apple will be there in as little as 3 years. If Microsoft wants a long-term future, they need to follow Apple's strategy of building integrated products.

As PCs become business tools and casual users move to tablets, quality is more and more important. But PC vendors don't have the money to invest in quality. They can't afford the CNC machines that mill Mac and iPad cases. They can't afford to buy companies - like Siri and fabless semiconductor houses - that have innovative technology that needs nurturing and a platform.

PC vendors are all commodity, all the time, because that's all they can afford.

Microsoft Microsoft, OTOH, has money to burn. Which they do, on everything except strengthening their core OS business against Apple's powerful business model and industrial design mojo.

Of course, Microsoft doesn't have a Steve Jobs. Yet neither, now, does Apple.

Can great design be bought? The fact is that top industrial design talent is readily available. It may not be as good as Apple's internal team, but it doesn't have to be.

Microsoft just has to get close. Intel gets this: their Ultrabook initiative is designed to narrow the gap between MacBook Airs and PC notebooks. If they can, they can hold their own.

But really, given Apple's market share, should Redmond worry? You bet they should.

The tipping point Remember when Explorer owned the browser market? Lots of websites that wouldn't work right with anything else? Thanks to Firefox reaching 20% share, those days are gone.

In computing the tipping point is ≈20%. Apple's share in the US PC market - not counting tablets - is up to almost 14%. At their current growth rate they'll break 20% in the US within 4 years.

This is important because Window's marketing advantage is owes much to the fact that corporate IT departments throw up a huge wall of FUD every time Macs are mentioned. But once the share reaches 20% - among executives especially - IT's bosses will stop listening and tell them to figure it out.

And once that happens the Windows lock on the corporate market will be broken forever.

The Storage Bits take Microsoft's OEM business model has had a good run, but it needs to be augmented. The PC was OK as long as there wasn't anything better, but now there is.

Tight integration between OS and hardware improves quality, reliability and the entire user experience. Someone needs to do it, and Microsoft is the only company that can.

Which is why they should buy HP's PC business. It will be Ballmer's chance to prove he can beat Apple at their own game.

Comments welcome, of course. So maybe HP decides not to sell. There are plenty of other players Microsoft could choose.

Topics: Apple, Hardware, Hewlett-Packard, Microsoft

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118 comments
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  • Not seeing this

    The surest way to alient Asus, Lenovo, and Dell is to become a direct competitor with them. Any market Microsoft *may* garner from their own branded PC would surely be lost with their existing relationships looking at alternative OS'
    Your Non Advocate
    • RE: Why Microsoft should buy HP's PC business

      @facebook@...

      Exactly!

      And not just the relationships would suffer, but also licensing fees would be lost as those companies switch to other operating systems.

      The hot item a few years ago was netbooks. Currently, tablets outsell netbooks 2-to-1 (and that ratio is getting bigger all the time). PC manufacturers who would have made Windows tablets would likely switch to Android Honeycomb.
      Harvey Lubin
      • Microsoft PC's and laptops and netbooks? Intel Wanted!

        @Harvey Lubin

        A good move for everyone with the future of Windows 8 in the balance. Also, it remains to be seen if gaming will any longer be supported or any new Directx 12 coming for everyday computing. Microsoft will be releasing AVX2 software by 2015 and they already have strong ties with Intel and IBM.

        Pricing would be inline with Dell because Microsoft doesn't give anything away. Plus it would make a lot of sense for them to expand brand recognition for their retail store fronts. I suspect that Windows 8 will be the gamers move to X Box 360; as Sandy Bridge-E (socket 2011) is also the new Xeon socket type and latest server quad-channel design to come from Intel.

        Ivy Bridge is going to be released for Intel netbooks and we'll see who will be oem laptop manufactures. All in all; the integrated graphic that Intel has stumbled upon is revolutionizing current demand for portability in the work place and adopted by the home user as mainstream.

        Times are-uh! changing!
        Rob T.
      • RE: Why Microsoft should buy HP's PC business

        @Harvey Lubin

        They going to switch to Android or their own OS anyway. It just doesn't make sense for these OEMs to continue with Microsoft and make single digit margins when they can create competitive differentiation (unlike commodity Windows PCs) and increase their margins without Microsoft.
        AdamS12
    • But where would they go?

      @facebook@... Linux? That has yet to prove to be a commercial success on the desktop. Nor do consumers seem to be clamoring for it.

      Pagan jim
      James Quinn
      • Yes...Why not?

        @James Quinn

        I support a lot of linux desktops and servers. And my home systems all run linux. I spend less time supporting those than the windows systems even though the linux ones outnumber to windows ones by almost 3 to 1.
        linux for me
      • Really?

        @linux for me
        [i] spend less time supporting those than the windows systems even though the linux ones outnumber to windows ones by almost 3 to 1[/i]

        That is the opposite from what other admins tell me. Are you doing something wrong with your Windows half of the network?

        That's - unusuall.
        William Farrell
      • RE: Why Microsoft should buy HP's PC business

        @James Quinn <br>I think the top factors that dictate os "purchase" are the degree that current applications will run on the new os, the degree to which current applications may be replaced inexpensively, and willingness to learn new interfaces.<br><br>As applications move trend to being essentially interface by browser with data stored remotely, the lower the barrier to changing the os.<br><br>I know I've just rehashed the raison d'tre for Chromebooks, but Google is not trying to disrupt pc manufacturing, they are trying to disrupt business desktop markets. Google, so far, has chosen to work with manufacturing partners and not go into the hardware business.<br><br>It would not be easy to come up with an alternate to the Microsoft PC with Windows, but look at the situation, if you were LA (Lenovo Asus just to make up something), would you trust that you were getting the best information about Windows in a timely fashion? Would you remember the 90s when the memo of changes in Windows 95 fell on the floor and didn't quite make it to competitor Word Perfect? I think one would develop models with another operating system and sell them just to have a means to keep Microsoft honest.<br><br>I see problems, such as how the licensing can make differentiation costlier if not improbable, and of course, Microsoft will wave patents at the manufacturer and increase the os costs, but maybe BSD is the answer there. Yes. I guess I'm saying someone does a NeXTStep/Apple, but they better do it faster than 12 years, this time around.
        DannyO_0x98
      • RE: Why Microsoft should buy HP's PC business

        @James Quinn

        They are clamoring for it in mobile and on the server side. The reason consumers have not been clamoring for it on the PC side is because no one provides a decent distro for PCs that is installed by the OEMs. The OEMs are too concerned about upsetting Microsoft to go after their bread and butter.
        AdamS12
      • RE: Why Microsoft should buy HP's PC business

        @linux for me
        Sorry we run a lot of Window servers here, and it's supported by 2 people if even that (I would have to think hard on that one)... ACTUAL experience in the enterprise points in the opposite of your "experience".
        ItsTheBottomLine
      • RE: Why Microsoft should buy HP's PC business

        @ItsTheBottomLine

        I work at a company of over 300,000 employees. I think that's enterprise. I'm only responsible for a tiny tiny portion of the servers here, but in my experience unplanned downtime for the Linux vs. Windows is the same, and "planned" downtime, rebooting for updates, is greater on the Windows side. I have licenses to everything via the enterprise, so marginal costs for both was 0, but in absolute terms the Linux costs were closer to absolute 0. Bottom Line.
        tkejlboom
      • RE: Why Microsoft should buy HP's PC business

        @linux for me : What you are saying is a rarity since current Linux marketshare has flatlined at roughly 1.1% of the OS [PC/server] market. "Less time supporting...[Linux]"? That's bad for you as if you don't have enough work, you may not have a job! I have 40+ clients [some with multiple computers]. Guess how many with Linux? None.
        Gisabun
      • Actually, PJ, why NOT Android?

        @James Quinn : In many ways Android is far more OS than is needed for a tablet and it seems to be the first really viable Linux iteration that's gained any popularity--simply because most of the configuration work is done before the customer ever touches it. It's already proven itself at least capable as a "netbook" OS and has a far better graphical interface than any of the standard distress, including Ubuntu. Sure, it still has its issues, but that's due more to the fact that the tablet hardware simply isn't robust enough for it.
        Vulpinemac
      • This is a moot question, anyway

        _

        Too late, Robin.

        http://bottomline.msnbc.msn.com/_news/2011/10/27/8510484-hp-decides-to-keep-pc-division

        Had you waited a day, this article of yours would've been unnecessary.
        ScorpioBlue
    • RE: Why Microsoft should buy HP's PC business

      @facebook@... yep, 3dfx all over again
      SinfoCOMAR
    • RE: Why Microsoft should buy HP's PC business

      @facebook@... <br><br>Yeah, I laughed when I read this article. Microsoft's advantage is a mulitplicity of hardware manufacturers building hundreds of different models each tailored to a specific niche. Need a dirt cheap portable computer with a 10" screen? Pick up a $300 netbook from any one of 10 manufacturers. Need a gaming ultra portable? Pick up an Alienware Mx11. Need a dektop replacement laptop with a 17" screen and a separate, built-in number pad? It's available. Need a rugged laptop for your field techs to lug around? Try a Panasonic Toughbook, or a similar product from a competitor. Need a cheap, powerful desktop? There ar more options than you can shake a stick at. Want an all-in-one desktop? You can get that too, frmo multiple manufactures. Need a gaming monster with the latest and greatest CPU, RAM, cooling and graphics cards? Plenty of manufacturers will let you build your own and spend as much as you want (or can adfford). Apple builds products in many of those same categories, but simply cannot build a product to fit every niche that the tens of PC manufacturers do.<br><br>This is the same as the Android "fragmentation" argument that just doesn't add up when you exzamine it more closely. Windows' strength is the universe of PC manufacturers producing products customized to every niche imaginable.<br><br>Apple's strength lies in the elegance of its offerings and the tight integration between operating system and hardware. Only recently has Apple managed to bring prices down to a level where they're suddenly able to compete with the Wintel world (though I'd argue that they'll never be able, or want, to compete with the cheapest Wintel offerings.) And those lower prices along with seriously innivative new product categories are helping Apple expand enormously. But to cmoepet, Microsoft needs to play to its strengths, not try t compete with Apple.
      dsf3g
      • That variety is exactly the problem Windows faces

        @dsf3g : It's too variegated, too uncontrolled. In short, Windows has to somehow adapt itself to piles and piles of different configurations that tend to interfere with each other. If Microsoft had tighter control of the hardware used, then many of its problems would simply go away.
        Vulpinemac
    • RE: Why Microsoft should buy HP's PC business

      @facebook@... : And how is this different from Google alienating HTC and others by buying Motorola Mobility? As long as Microsoft doesn't play favortism, there shouldn't be an issue.
      Gisabun
    • RE: Why Microsoft should buy HP's PC business

      @facebook@...

      I disagree. They should approach HP and use it to design high end pc's/tablets. They could create the Mercedes of Windows lines as a "this is what we envision". Since no one is making that high-end (except maybe Alienware), they would not effect any of their partners while still being able to challenge Apple head on.
      RGC6789
    • Why not?

      @facebook@... Asus and Lenovo are probably the two best brands out there, excepting maybe Samsung in place of Lenovo. Quite honestly, many brands out there simply aren't worth wasting your money on, but when you're on a tight budget you really don't have much choice.

      If, on the other hand, Microsoft-branded hardware were placed in the same class and price range as Apple's own hardware, they wouldn't necessarily be competing in the same arena, would they?

      Look at it: Since Dell bought Alien, the Alienware PCs really aren't anything like they used to be; neither are any of the other high-end PCs though many of them are grossly overpriced for what they are. You complain about Apple's prices as too high, yet they fall almost dead-center between the low-end junk that most people buy and the high-end workstations that most real professionals buy--except for Apple there really isn't a mid-range PC which is why Apple effectively owns the above-$1000 PC range. If Microsoft purchased HP and placed their hardware in that exact range (preferably creating their own "Microsoft" look while they're at it) then the only challenge would be meeting Apple's customer satisfaction ratings, of which no PC manufacturer to date has been able to match.
      Vulpinemac