Netbooks a nail in Microsoft's coffin?
Quocirca's Straight Talking: Laptops lose appeal
What's behind Microsoft's hard times? It's not just the economic downturn, says Quocirca's Simon Perry. It's also a fundamental shift in enterprise hardware.
Microsoft's 22 January announcement of relatively poor financial performance, together with news of the first job cuts in its 34-year history has added to the gloom already felt on Wall Street.
Before assuming, however, that Microsoft is just the latest to be affected by the economic downturn, it is worth considering a separate trend - the rise of netbooks.
According to Microsoft's announcement, "client revenue declined eight per cent as a result of PC market weakness and a continued shift to lower-priced netbooks". While for Ballmer and co the movement toward netbooks might have proven to be an unfortunate trend, it is neither wholly unexpected nor is it necessarily undesirable.
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Several recent developments in enterprise IT buying have increased the netbook's appeal.
Throughout 2008 enterprises looked at their IT estates in light of worsening economic conditions, and with a concern for the electricity consumption of desktop PCs and servers. Along with other industry analysts, Quocirca has pointed toward the need for a re-examination of organisations' hardware choices in light of emerging computing architectures such as SaaS and the cloud.
Quocirca's advice continues to be that organisations should consider sweating the hardware assets already deployed. This obviously defers the expense of replacement and allows enterprises to focus further on best-practice management of their IT assets.
At the same time it is becoming mainstream for enterprises to focus not only on effective remote management of the software stack across the office but also on active management of the power state of the devices. The financial savings resulting from, for example, turning off and sleeping existing desktop machines can be substantial - not to mention the very real benefit of lowered greenhouse gas emissions that comes with reducing electricity consumption.
In environmental terms, there is certainly an argument that newer machines are computationally more powerful and less power-hungry than older models. However as the embodied carbon dioxide and ecological footprint of neither the existing machine, nor the potential replacement model is easily and accurately calculated, it is difficult to say whether there is a net environmental benefit in replacing existing equipment.
As long as the existing desktop kit is relatively young, active power management will probably yield as much benefit in electricity savings as implementing newer devices.
If businesses do wish to replace their desktop systems, power consumption of the hardware during its lifetime needs to be a consideration in the selection. A PC/laptop on every desk might have been an incredibly lucrative market for Microsoft's OS/Office combination but its suitability is questionable in terms of consumed computing power out for every watt of electricity in.
Netbooks, on the other hand, generally require less electricity while in use. They are also simpler devices and may prove to have an embodied carbon footprint that will be less than a fully featured alternative.
Meanwhile, many industry watchers are advising enterprises to consider whether they will continue to need computationally powerful and power-hungry desktop machines at all. Sure, a newer like-for-like device is almost certainly more powerful than the old but do you need the extra horsepower? If a significant proportion of your application environment is (or will soon be) web-based then traditional PC hardware is perhaps a poor choice.
Another argument against needing desktops is that newer computing architectures shift the major processing demands away from the client machine. The increasing desire for computing mobility, so well served during the last decade by laptops, is arguably better served today through storage of data in the cloud, from where it can be accessed via a browser from whichever device suits.
From a security point of view, the large attack surface of a traditional desktop or laptop system has continued to present an expensive and complex set of problems for enterprises. Anytime you can reduce the amount of software installed on a machine - by using a netbook and/or by accessing web-based applications - then there is less software to manage, less software that hackers can try to get through, and therefore less need to install security software.
Netbooks are, as Microsoft seems to have discovered, a natural candidate for consideration to meet the needs of many organisations.
The software giant's disappointing financial results, paired with their willingness to place some of the blame on the rise of such devices, speaks volumes about the company's strategy, or lack thereof, as computing requirements change.
Difficult trading conditions during the lead up to the now official recession have certainly played a part in Microsoft's hard times. However it is arguable that the macroeconomic factors have merely been the accelerant that has flared an existing fire rather than being a new conflagration burning through Microsoft's wealth.
A leading user-facing analyst house known for its focus on the big picture, Quocirca is made up of a team of experts in technology and its business implications. The team includes Clive Longbottom, Bob Tarzey, Rob Bamforth, Louella Fernandes, Fran Howarth and Simon Perry. Their series of columns for silicon.com seeks to demystify the latest jargon and business thinking. For a full summary of the consultancy's activities, see www.quocirca.com
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