The vanishing PC: Race to the bottom accelerates

Computers and electronics are always getting cheaper. That’s one result of Moore’s Law. But the demand for more performance and features has traditionally kept the PC from falling too far, too fast. Those days may now be ending.

The truth is that things began to change some time ago. The writing has been on the wall since Microsoft released Windows 7, the first version of the operating system with essentially the same system requirements as its predecessor. (Nowadays, system requirements make news only when they are loosened.) But the rapid growth of cheap tablets, fueled by $20 ARM processors and the (sort of) free Android OS, has hastened the decline of traditional PCs. The industry is responding to this with new chips designed for low-cost convertibles and tablets.

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Intel’s fourth-generation Core processor, which we now know will be announced at Computex in early June, will almost certainly deliver better performance, especially with graphics. But the focus of Haswell is clearly on better battery life (Intel promises the biggest generational improvement in its history) and improved thermals so that it can squeeze into thin, fan-less Ultrabooks and convertibles. The company says that touch-enabled Haswell Ultrabooks will be available later this year starting at about $600.

That’s a good start, but the real story may be Bay Trail, an overhaul of Intel’s Atom processor due later this year. The platform, which is designed for Windows 8 and Android devices, will be manufactured on a 22nm process, will have a quad-core CPU, and will deliver more than twice the performance of the current Clover Trail tablets. Intel said the Bay Trail platform will be in “touch-enabled thin notebooks with really good performance” starting at around $300 and Android tablets around $200. Most of the least-expensive devices are likely to be convertibles, or what most people consider tablets with detachable keyboards. Last week, an Intel executive told CNET that Windows 8 versions will be a little more expensive — depending on Microsoft’s pricing — but consumers may be willing to pay a bit more to run legacy Windows apps.

Meanwhile, there are rumors that Microsoft is toying with lower prices. Last month, The Wall Street Journal reported that the company has been offering computer makers big breaks on Windows 8 and Office licenses for devices with smaller displays. Also in March, Microsoft lowered the screen resolution requirements for Windows 8, making it a better fit for devices with smaller displays. The upcoming Window 8 refresh, code-named Windows Blue, could reportedly include new editions targeting smaller tablets and convertibles with lower prices.

AMD is used to competing on price, and company executives keep talking about how tablets and good-enough computing play to its strengths with $300-$400 devices. Its current Z-60 processor hasn’t gotten much traction (Vizio uses it in an 11.6-inch tablet), but it has two newer processors, already shipping to computer makers, which should be more competitive. Kabini is a quad-core designed for low-cost ultrathin laptops and Temash, which comes in dual- or quad-core versions, is for Windows 8 convertibles and tablets. At Mobile World Congress, AMD showed some prototype convertibles based on these new chips. These should help to push down prices of all Windows 8 tablets.

These upcoming platforms should make Windows convertibles and tablets more competitive by this holiday season. The PC market isn’t going to disappear overnight, but it is likely to look very different a year from now.