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

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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.

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Read/Post Comments (10) | 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 January 12, 2014, at 2:49 PM, JeanDavid wrote:

    Will OpenOffice or LibreOffice run on Android. If so, then other than compatibility issues (that mostly can be dealt with), there is an alternative to Microsoft Office already. It also runs on Linux and UNIX.

  • Report this Comment On January 12, 2014, at 3:12 PM, jameskil wrote:

    Uh .... who cares? There's a reason that in over 40 years of UNIX and its derivatives has never been embraced ... its an engineers OS ... Second, to those folks who miss the important stuff like support of millions of users, applications that actually aren't toys, hardware manufacturers that can't write code stable, a device driver model that works for hundreds of thousands of devices, authors that are compelled to document for the average Joe how to use stuff ... that's the stuff that makes a market and sorry, but 5 inch form factors does not keep eyeballs health for long.... today, android and IOS runs very simple apps on controlled and very simple devices ... there development is simple ... and hardware is to engineer ... so when the novelty confronts the reality of this, it will go the way of the "dumb client" which was the last supposedly big "windows killer" ... I wish some adults would start authoring articles about technology investment 👹

  • Report this Comment On January 12, 2014, at 3:44 PM, snommis69 wrote:


    hy·per·bo·le (noun) \hī-ˈpər-bə-(ˌ)lē\

    : language that describes something as better or worse than it really is.

    For examples, see ANY title of a Sam Mattera article.

  • Report this Comment On January 12, 2014, at 4:16 PM, emilykulish wrote:

    HP has lost its direction. It should have focused on building high quality products to compete with Apple, go after the high-margin business. But instead, they are going after low cost and low margin business, which they really cannot compete with cheap OEMs based in China and Taiwan.

    Meg Whitman is stupid to call Microsoft a competitor, now HP is in a helpless position - it wants to endorse Chromebook and Android, but that will only lower its revenue and profit faster. A typical Chromebook / Android tablet only sells for about $199, with competitors like Acer, Asus and Lenovo, the profit margin is much lower than a Windows laptop / tablet.

    Even if HP can dominate the Chromebook and Android market, it's revenue and profit will shrink by at least 50%, not to mention it is far behind Samsung, Acer, Lenovo and Asus and many other Chinese cheap OEMs. Looking at how fast HP is losing market share, it is doomed. It won't kill Windows or Microsoft, but Microsoft's Surface and Dell's Venue and Asus's Transformer T100 will kill HP.

  • Report this Comment On January 12, 2014, at 4:29 PM, nanarchy wrote:

    Kill Windows? this looks more like a move to make HP even less relevant or perhaps kill them off entirely. Chasing the low end of the market with these devices could be the final straw that breaks HP.

  • Report this Comment On January 12, 2014, at 5:18 PM, symbolset wrote:

    The job of Microsoft Office is to make documents. More and more that task is becoming an expected free aspect of any device. All iOS, Android and Windows RT devices come with a free office suite, and they can all use more.

    It is like a text editor now - just a basic expected accessory. It is like cupholders - significant only when they are not there.

  • Report this Comment On January 12, 2014, at 6:33 PM, KenLuskin wrote:

    I think there is probably a good reason that GOOGLE released a Chrome book, and NOT an Android book.

    It makes even less sense to have an Android desk top, in my opinion.

    HP is in deep doo doo... they really are clueless about what they should be producing.

    The author likes to issue OVER the TOP titles to gain readership.. but he basically as CLUELESS as HP.

    HP used to make the BEST instruments, and from there moved into computing.

    HP calculators were the best back before there were PCs.

    Watching HP self destruct is rather sad.

    Reading articles from Sam Mattera is like watching Saturday Night skits... comedic lunacy!

  • Report this Comment On January 12, 2014, at 7:17 PM, PSLover14 wrote:

    You know that Office 365 is a app on Android too. As long as HP's PC isn't on Gingerbread or Honeycomb, it can run it.

  • Report this Comment On January 12, 2014, at 7:49 PM, opticash wrote:

    In case you haven't noticed, more and more Windows tablets and touch-based laptops are coming out. The Dell Venue Pro is a notable value.

  • Report this Comment On January 12, 2014, at 9:36 PM, iphonerulez wrote:

    I'm willing to bet, for most consumers, an Android PC would suffice. If it can play games, browse the internet, play back movies and do emails and some light documents, it should satisfy at least 80% of the consumers out there. I still want my Intel iron for re-encoding movies but for other than that some less-powered computer would be just fine.

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Sam Mattera

Sam has a love of all things finance. He writes about tech stocks and consumer goods.

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