Hewlett-Packard's Radical New PC Could Could Kill Microsoft's Windows

At the Consumer Electronics Show last week, Hewlett-Packard showed off a radical new desktop PC that could be Microsoft's undoing.

Jan 12, 2014 at 2:30PM

Last year, analysts at Gartner predicted that, by 2017, Microsoft's (NASDAQ:MSFT) Windows operating system would be irrelevant. Given the rapid growth of tablets and smartphones, the majority of which are powered by Google's (NASDAQ:GOOGL) Android, Windows is quickly falling by the wayside.

Yet there's a problem with that prediction. Tablets and smartphones are amazing, but they can't fully replace a traditional PC -- not for office workers or for gamers. As long as Microsoft owns the PC market, Windows should persist, in some capacity, for the foreseeable future -- right?

Not if Hewlett-Packard's (NYSE:HPQ) new PC catches on. Last week, the world's second-largest PC maker unveiled a radical new device, one that could ultimately destroy Microsoft's Windows business.

Android on your desktop
Pick any smartphone or tablet at random -- there's a good chance it's running some version of Google's mobile operating system. Android now powers more than 81% of smartphones, and more than 60% of tablets, worldwide. More than a billion devices running Android are expected to ship in 2014.

But not all of those devices will be mobile. Hewlett-Packard's new PC, unveiled last week at the Consumer Electronics Show, is meant to sit on your desk -- with its 21-inch screen, it would be quite difficult to lug around. Yet unlike other desktop PCs, this one doesn't run Microsoft's Windows -- it's powered by Google's Android.

What makes this machine all the more troubling for Microsoft is that Hewlett-Packard is the world's second-largest seller of Windows-powered PCs; HP's bet on an Android-powered desktop isn't just some small company's attempt at breaking into the market.

Hewlett-Packard isn't alone
But what's even worse is that the world's largest seller of Windows PCs -- Lenovo -- also plans to release an Android-powered desktop this year. The Chinese giant showed off the N308 last week alongside HP's offering.

With the world's top-two PC vendors embracing Google's operating system, it's likely that others will follow suit. If Android-powered PCs emerge as a trend, it would be quite a blow to Microsoft, particularly as Windows-powered tablets continue to struggle.

Microsoft Office could save Windows
But even if consumers flock to Android-powered PCs, business users may stick with Microsoft's operating system if for no reason other than Office -- the popular productivity software suite isn't available for Android. Subscribers to Office 365 can access a dumbed-down, Web-based version of Office, but for Excel Jockeys, it just isn't the same thing.

The growth of Android gives Microsoft's competitors an opportunity: Hewlett-Packard's Android PC will come with Kingsoft Office Suite pre-installed, an alternative to Microsoft's Office. There's also Google's own Apps, a mainstay among Android users. Still, Office may be too ingrained -- keeping the full version of Office confined to Microsoft's operating system could prevent Android-powered PCs from ever really catching on.

Android PCs: the next great tech trend?
Nevertheless, this is one trend Microsoft investors should keep a close eye on. If Android PCs do catch on, they will wreak havoc on Microsoft's Windows business and, if Microsoft keeps Office confined to Windows PCs, on its Office business as well. That's significant, as collectively, the two businesses account for the vast majority of Microsoft's revenue and profit.

As the world's top PC vendors, Hewlett-Packard and Lenovo's decision to bring Android-powered PCs to market is a troubling development for Microsoft.

A better investment than Microsoft? Get our top stock pick for 2014
There's a huge difference between a good stock, and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report: "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Google and owns shares of Google and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information