Can Microsoft Prove That Apple's Out of Touch?

Apple (NASDAQ: AAPL  ) is credited with modernizing smartphone operating systems with touch-optimized interfaces. Before the iPhone, it was hardware buttons for all phones, which are a rare breed nowadays. The iPhone maker subsequently brought the same paradigm to tablets.

There's been one category that Apple has decidedly not brought touch interfaces to: traditional PCs. Apple's decision not to pursue the segment comes from the inevitable ergonomic challenges. That's potentially an opening for rivals, and Microsoft (NASDAQ: MSFT  ) has set out with Windows 8 to prove that Apple is out of touch.

One way, or the other
Thus far, consumers have faced a tough dilemma when considering Windows 8 adoption. Traditional Windows laptops can typically be bought for $500 or less, but models with touchscreens come at a premium and cost $600 to $700. Windows 8 was absolutely built with touch in mind, even though it technically supports traditional input methods like a keyboard and mouse.

Consumers don't want to spend more, but they also want a full Windows 8 experience. Indecision stemming from this difficult choice has contributed to the PC slowdown.

However, that may all change by 2016. Market researcher IHS estimates that nearly 25% of all laptops shipped by 2016 will have touchscreens. Last year, there were a total of 4.6 million touchscreen laptops shipped, a figure that's expected to skyrocket to 24 million this year. That comparison is a little specious though, since this category only started shipping meaningfully in the fourth quarter alongside Windows 8. IHS believes that the market for touchscreen laptops will reach 78 million by 2016, or 25% of all laptops.

This potential adoption curve will be driven by falling prices for capacitive touchscreen display panels, with 2013 expected to be an inflection point. Costs are expected to get cut in half this year, which would inevitably translate into lower retail prices. Intel (NASDAQ: INTC  ) will play a role here, using its weight in component supply chains to help push down costs.

Intel ecosystem development exec Zane Ball makes it clear that Intel's goal is to "unlock new demand." The chip giant sees touchscreen PCs in general as a segment with "substantial" growth opportunities. Anything that helps boost PC units will benefit Intel, even if it's not the one selling touchscreen microcontroller components directly. Intel is doing what it can to make sure OEMs have sufficient supply of inexpensive touchscreens.

Apple's global PC market share hovers around 5%. If the forecast turns out accurate, then investors could be looking at less than 4 million touchscreen Macs (if Apple were to release such models). That's not a game-changing figure, especially since it wouldn't be incremental and would inevitably cannibalize regular Macs.

More importantly, if touchscreen laptop adoption were to hit 25%, it would be incontrovertible evidence that touchscreen laptops are here to stay, which would in turn necessitate a competitive response from Apple.

There's no doubt that Apple is at the center of technology's largest revolution ever, and that longtime shareholders have been handsomely rewarded with over 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.


Read/Post Comments (5) | Recommend This Article (1)

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 Report this Comment icon found on every comment.

  • Report this Comment On May 23, 2013, at 7:38 PM, doawithlife wrote:

    Touch screen already works OK for Mac OSX. I have Mountain Lion on my Surface Pro and the touch screen part works well (but not the Wacom Pen). In many ways, Mac OSx is already set up for touch screen, a small modification and they are fully set up.

    Just like with Windows, a good interface works well with a mouse or with touch. No need for a change unless you want to give the consumers something more fancy, but you tend to lose function.

  • Report this Comment On May 23, 2013, at 8:36 PM, mdl00 wrote:

    One word: Trackpad. All the touch gestures are there, not on the screen itself.

    Steve Jobs already pointed out how awkward it is to try to work with a vertical touch screen, which is what a laptop has.

    These "hybrid" tablets that double as computers really don't, and compromise the user's computing experience.

  • Report this Comment On May 23, 2013, at 8:42 PM, bbrriilliiaanntt wrote:

    Touch is great for iPad.

    Touch is ok for Macs/PC's.

    Why?; Because holding your arm up for more than a few seconds to manipulate the screen is tiresome, actually impossible.

    Summary: It is not important at this point, which is why AAPL isn't pursuing it harder. When iPad turns into a 'Draft iPad' then absolutely...

  • Report this Comment On May 23, 2013, at 8:46 PM, bbrriilliiaanntt wrote:

    @mdf00 Ha, you were reading my mind. I have BTT - Better Touch Tool app, on my MBPr, and can manipulate my screen as butter-smooth as Tom Cruise in 'Minority Report'. I have hated using trackpads my whole life, and with Apple hardware and BTT, I will never use a mouse again…for someone that puts 14 hour days on my mac, that is saying something…Cheers...

  • Report this Comment On May 23, 2013, at 10:38 PM, Mega wrote:

    "Consumers don't want to spend more, but they also want a full Windows 8 experience."

    If you ask them, most of them actually don't.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2450159, ~/Articles/ArticleHandler.aspx, 12/22/2014 2:22:15 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement