Only Microsoft can save the PC

OEMs have responded to the PC sales crisis in a variety of ways. We've seen them try to embrace Android, we've seen them betting the farm on different form factors, and we've seen they try to outgun Apple's iPad. But none of it seems to be working. The ball is now in Microsoft's court.
Written by Adrian Kingsley-Hughes, Senior Contributing Editor

Much has been written about the shift from the age of the PC to the post-PC era. I myself have spilled quite a few pixels on the subject. But while we've got a pretty good idea of the scale of the problem facing the PC industry, so far ideas on how to help bump up PC sales are thin on the ground.

While the decline in sales of the PC seems to coincide with the release of the iPad, personally I'm not convinced that the iPad was solely to blame. One factor to consider is that many companies had just completed an upgrade cycle to switch to Windows 7, and those PCs will be expected to last a few years before being upgraded again. Another factor is that PCs last much longer than they used to, both because of reliability and because of the performance overhead they bring. Once upon a time you upgraded PCs in order to take advantage of performance gains, but the average PC is now already fast enough that this extra speed doesn't add much value.

Bottom line is that the PC market is pretty well saturated and sales now have to rely increasingly on replacements.

OEMs have responded to the crisis in a variety of ways. We've seen them try to embrace Android, we've seen them betting the farm on different form factors, and we've seen they try to outgun Apple's iPad.

But none of it seems to be working.

I've thought long and hard about this problem, and while I too have considered things like nifty new form factors or price cuts as the way to make PCs sexy again, I've come to the conclusion that there's only one company that can save the PC industry – Microsoft.

And there's only one thing Microsoft can do – and that's start giving away Windows for free.

Now you might be thinking that I'm only suggesting this because Apple is doing the same thing with OS X, and in part you'd be right. Consumers – and even a lot of business and enterprise buyers – don't understand that there are big differences between how the Windows PC ecosystem and the Mac ecosystem work. Microsoft is primarily a software company, and selling software licenses is what props up its bottom line. Apple, on the other hand, is in the business of selling products – a fancy word for hardware – and for it operating systems such as iOS and OS X aren't big money spinners.

So wouldn't Microsoft be giving up a huge revenue stream if it started giving away Windows for the princely sum of $0?

Well, in terms of immediate revenue, yes, it would, but let's put some constraints on "free."

  • First, limit this $0 copy of Windows to upgrade. This means that users should already be running a fully licensed and activated copy of Windows.
  • Secondly limit support to installation. Support costs money, so no freeloading.
  • Exclude volume licensing enterprise users. Again, no freeloading.

With these restrictions in place, the offer of a free Windows upgrade – which is what it becomes – doesn't affect Microsoft income from OEM license sales or enterprise. But it would have a big effect within the consumer market.

  • People are like moths to flames when it comes to free and would be more likely to adopt the latest version. This gives the user base a boost, which is good for encouraging developers to develop apps for the platform.
  • People who can't upgrade are sent the subtle message that their hardware is obsolete and that they should consider buying a new PC. This would be good for OEMs.
  • It generates buzz and gets people talking about Windows and PCs, all of which would be good for the market as a whole.

Microsoft has had a problem getting people to upgrade since Windows XP was superseded by Windows Vista. People clung on for dear life to Windows XP, partly because for many it was the first operating system they encountered and they believed it would be the last.

According to data supplied by metrics firm Net Applications, Windows XP will be powering almost a third of the world's Windows PCs after its April 2014 retirement.

And Microsoft has allowed people to cling onto Windows XP for too long. So many Windows XP users being dragged along beyond the support period for the operating system is going t be a problem for Microsoft because security issues affecting these people will undoubtedly tarnish the Windows brand despite the fact that ultimately the users are themselves to blame. Microsoft needs to send a clear message – perhaps via the Windows Update mechanism – to Windows XP users that the end is nigh for the platform.

And this too would help boost sales of new PCs. 

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