Is Microsoft Killing the PC Industry? (AAPL, DELL, HPQ, MSFT)

Is Microsoft Killing the PC Industry?

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Click Here Now

There's a wide range of opinions when it comes to the fate of Microsoft's (Nasdaq: MSFT ) upcoming Surface tablets.

Naysayers think it will flop. Apple's (Nasdaq: AAPL ) iconic iPad has been able to withstand the onslaught of cheaper Android devices, they say, so why should a Windows tablet stand a chance? However, believers think it's the Surface's advantages over Apple's iOS -- among them Flash support and native support of Microsoft Office -- that will make it stand out.

If you're Hewlett-Packard (NYSE: HPQ ) or Dell (Nasdaq: DELL ) , you'd better hope the skeptics are right. After all, it's many of the same Surface advantages that have led consumers to desktops and laptops instead of plunking down perfectly good money for the "good enough" computing abilities of the iPad.

Jefferies & Co.'s Peter Misek has it right. He thinks the world's largest software company's push into putting out its own tablets will find it competing with its partners and confusing consumers.

Analysts are already skeptical about the state of the PC industry. Many see a small year-over-year decline for the quarter ending this week and a bigger decline in the third quarter. Misek's comments are directed primarily at companies planning on making Windows 8 tablets, but the Surface is really going to freeze sales of desktops, laptops, and especially Ultrabooks.

There will be fewer reasons to buy a laptop after Microsoft's Windows-fueled Surface tablets hit the market with their decent-sized keyboards on the covers. HP and Dell combined for 51.3% of the PCs shipped in this country during the first quarter, according to Gartner. Will HP and Dell feel as loyal to Microsoft once Surface sales begin gnawing away at their sales? Will the response be to put out more Android gadgetry?

The next few months will be very important for the PC industry, and it's OK to be worried.

Does not compute
The next great investing trend will be in mobile, but the best play isn't necessarily one of the tablet or smartphone makers. A free report details the company leading this new revolution.

Jeff Fischer and team have demystified options. And they can rack up income like $1,030... $2,626... and $3,228 on a schedule you can set your watch by!
That's why we're glad to announce every single one of their closely guarded strategies is available to YOU during May and June – 100% FREE, no strings attached! Just enter your email address in the box below...

The Motley Fool owns shares of Microsoft and Apple. Motley Fool newsletter services have recommended buying shares of and creating bull call spread positions in Microsoft and Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He owns no shares in any of the stocks in this story and is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment icon found on every comment.

Report this Comment On June 27, 2012, at 9:35 PM, RandomMeaning wrote:

Seems pretty clear that Microsoft's goal is to keep more of the profits to themselves. Their partners have been building and marketing ultra-books in an attempt to regain some of the high end of the market. In their presentation, Microsoft announced that their Surface with Intel inside would be priced to compete with those same ultra-books. How can it be made more clear that Microsoft wants to keep most of the profits to themselves. That is fine. But they should drop the pretense of being a partner.
After all, Microsoft could easily have worked with those same partners to create the Surface. Even handed them the blueprints with a working demo model. Thus sharing the field with their long time partners. Clearly, sharing profits is not what they have in mind.
The question is, what can those partners do? They've already started. Either withdrawing from hardware and/or turning to Android. Will be very interesting to see how this all plays out.
Report this Comment On June 27, 2012, at 10:30 PM, normcf wrote:

The OEMs are caught in an impossible position. They cannot spurn microsoft because if they do, microsoft can deny them an OEM license, or raise the price of it to make them uncompetitive. As well, they cannot even sell machines without an OS, or an alternative OS, with the current microsoft relationship. So, they're stuck going along with microsoft, but earning ever thinner margins while microsoft does whatever it wants.
Report this Comment On June 28, 2012, at 12:36 AM, fgains wrote:

This is not about MS looking to keep all the profits, as one poster suggested. MS will probably make very little if anything trying to keep this machine’s price competitive. They also announced it would only be available in MS retail stores; why wouldn’t they sell this everywhere PC’S are sold if it was all about hardware profits?
IMO, the Surface is a blueprint and warning to OEM’s. A “this is how you do it!” How OEM’s respond will determine how hard MS pushes the Surface in retail. I’m just glad that there is such a big emphasis on quality and beauty coming out of MS lately. Hopefully the OEM’s respond with great products!
Report this Comment On June 28, 2012, at 7:17 AM, TerenceFL wrote:

What this does is kill the consumer PC "value" market. Vendors will quit making affordable laptops and desktops because Microsoft made it uneconomical. Enterprise sales will be the focus, and consumers can either go with a tablet or pay a lot more for ultrabook/all-in-one/workstation PC.
OEMs will not "respond with great products" because it doesn't add up to enough profit for the effort. They will just get out and let Microsoft succeed or fail by themselves. IBM was prescient in getting out of PCs years ago, but Dell and HP are now up against the wall and have to do the same thing.

updated 23 hours ago Sponsored by:
	DOW	15,354.40	121.18	0.80%
	S&P 500	1,667.47	17.00	1.03%
	NASD	3,498.97	33.73	0.97%

HPQ	$21.27		-0.09	-0.42%
Hewlett-Packard Co…		CAPS Rating:

MSFT	$34.87		+0.79	+2.32%
Microsoft		CAPS Rating:

AAPL	$433.26		-1.32	-0.30%
Apple		CAPS Rating:

DELL	$13.40		-0.03	-0.22%
Dell		CAPS Rating:

0

Is Microsoft Killing the PC Industry?

Don't let it get away!

Comments from our Foolish Readers

Report this Comment On June 27, 2012, at 9:35 PM, RandomMeaning wrote:

Report this Comment On June 27, 2012, at 10:30 PM, normcf wrote:

Report this Comment On June 28, 2012, at 12:36 AM, fgains wrote:

Report this Comment On June 28, 2012, at 7:17 AM, TerenceFL wrote:

Add your comment.

Compare Brokers

Report This Comment

Sending report...

Today's Market

Create My Watchlist

You don't seem to be following any stocks yet!

Related Tickers