"If the tablet and the notebook had a baby, this is kinda what you'd expect to see," said Navin Shenoy at the Consumer Electronics Show, a vice president in the mobile platform group at Intel. The recent rollout of Microsoft's (NASDAQ: MSFT ) Windows 8 has spurred the development and release of an entirely new wave of "crossover" devices that are a blend of notebook productivity and tablet ease of use. Some are more tablet, while many others are more PC, but what the devices have in common is strong touchscreen functionality without losing the ability to be highly productive devices.
What this means for you as both a consumer and an investor is that rather than writing off the PC, and therefore the companies that make them, you are advised to understand what the shifting computer market looks like, what changes are inescapable, and how the "non-death" of the PC might be leveraged and cashed in on. Ultimately, Intel may be the best positioned to capitalize on recent trends, but the likes of Dell and Hewlett-Packard should not completely written off, either.
Rumors of the PC's death have been...
It's a fact: PC sales have been declining. A recent piece in Barron's, reported that "this will be the third of the past four years that PC growth is less than 4%." The article additionally observes that "performance is increasing at just 10% per year for desktops and 16% for laptops, a far cry from the good old days of 60% annual performance increases. As a result, PC users have little incentive to upgrade their systems.'"
On the opposite end of the spectrum, Roy Choi contends in a recent argument in TechnoBuffalo that "Windows 8 in itself is an admission of the death of the PC, with the heavily touch-based OS, Windows 8 is much more a tablet operating system as it is a desktop ecosystem." To put this in perspective, in 2012, PC processors were responsible for $31 billion in revenue, measuring roughly five times what can expected from the mobile processor segment. My long-held view, and one that seems to be supported by recent evidence at this year's CES, is that the PC may be dying in one sense, but it is immediately being reborn with several critical advances.
What does this mean as a consumer?
While some major criticism has been released regarding Windows 8, it is important to take these positions in the proper context. Consumer Reports noted that the lack of a "start" button was very annoying to many users. Also among the consumer publication's observations was the fact that without a touchscreen, functionality is somewhat limited.
I have little doubt that the new design is "confusing" or hard to understand for many that are used to the way Windows works. What I find confusing is how the same critics who pan the company for being stale or lacking a fresh approach, are frequently the same ones that criticize Windows 8 for not being just like the last version. It seems that if the goal is ever going to be real progress, then changes and the inevitable learning curve that comes with those changes should be embraced. When the most recent version of Microsoft Office was released, there were similar protests until the new approach was simply accepted.
What this means as an investor
As an investor, I would assert that the non-death of the PC means that Microsoft and Intel are very well positioned heading into 2013. It also likely means that as manufacturers like Dell and HP release new competitive products, these stocks have really potential for some big moves. Intel has a diversified enough portfolio to allow it to fight back as a solid value from recent lows. At current levels, both Intel and Microsoft should be considered buys for the rest of 2013.
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