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Can the PC Empire Strike Back?

Handheld devices and Web appliances threaten the king of personal technology--or do they?

By Dan Briody, Infoworld   

The flames of the PC revolution 20 years ago were fueled by the desire to democratize processing power for a seemingly unlimited number of tasks. Today, many information technology managers are seeking freedom from the high cost and management hassles of corporate PCs and are discovering a growing number of alternatives, ranging from handheld PCs to server appliances.

But although it is fashionable to say the PC is dead or dying, the platform is far from being overthrown.

The growing need for communication and the availability of cheap processing power is splintering the PC platform into a range of devices designed to meet a number of specialized needs, such as remote e-mail access and network-based storage.

"PCs are definitely becoming network access devices," says Steve Kleynhans, vice president of workgroup computing at the Meta Group, in Stamford, Connecticut. "There are a lot of devices coming down the road, but you won't recognize them as PCs. We're moving away from personal computers and moving toward personal computing."

As the PC is becomes more than a "mainframe on the desktop," the need for greater simplicity and usability has increased. There are signs that PC makers will react much as they did when they banded together to stave off the network computer. But it remains to be seen if the PC can prove its worth in the age of the Internet.

The Winds of Change

When looking for proof of the changes ahead, one needs to look no further than the PC industry itself.

"In 1975 Bill Gates and Paul Allen had a vision: a PC on every desktop in every home. But in this, the third generation of computing, rather than pursuing a dream of a PC on every desk and in every home, what users want is to be connected to the Internet when they want, where they want, on any device," said Steve Ballmer, Microsoft president, at a recent conference.

With that sentiment in mind, Microsoft is for the first time allowing something other than a PC to run one of its major operating systems by including Windows Terminal Server as a core part of Windows 2000. In doing so, the software giant is making it easier to replace a PC with a variety of thin clients, from simple display devices to Windows CE handhelds.

And Microsoft is not the only industry heavyweight recognizing the shift in the PC market.

Intel has been spreading its money, investing in such non-PC-oriented chip businesses as the Internet-device-oriented StrongARM chip, snatching up networking start-ups, and heartily backing the Linux community.

"I believe very much that there will be an appliance model," says Paul Otellini, executive vice president and general manager of Intel's architecture business group, in Santa Clara, California. "Intel wants to have an Intel processor at every one of those [Internet] connection points."

Too Much is Too Much

So why would PC stalwarts such as Microsoft and Intel want to diversify away from the product that has been so profitable for them? Because customers are getting fed up with the soaring costs and complication of the PC platform.

"It's a vicious cycle," says Brian Jaffe, director of IT at a New York-based advertising agency. "Developers build more complicated apps, and the hardware guys build stuff to run it. And the added costs don't justify the performance."

With Microsoft aiming more than 30 million lines of code at each desktop with the release of Windows 2000 later this year, the cost of managing PCs is not getting any smaller.

"In the area of complexity there is a real beef, and it is a real vulnerability for the PC model," says Roger Kay, a PC analyst at International Data Corporation. "PCs have a tendency to fail, so there is a great longing from users for a simpler world. That is creating a big window of opportunity for other devices in the market."

PC makers are taking the complaints to heart. Compaq is currently working on a simplified PC that will run only Microsoft Office 2000, according to sources. And Hewlett-Packard, Dell, and Compaq have this year announced thin servers--fixed-function PC servers that perform a single task and rely on network-based resources for storage and data.

On top of specialized devices, such as thin servers, IT managers are taking advantage of the economics of the PC industry in the server arena by adopting PC servers for dedicated tasks such as Web serving and e-mail.

Meanwhile, NC makers are eyeing Windows 2000 as an opportunity to legitimize their products.

"The PC isn't going to be replaced by a thin-client company--ever," says Jeff McNaught, vice president of marketing at Wyse Technology, a maker of thin clients. "But the post-PC era means that PCs are no longer the only good solution, and that era is being ushered in by Windows 2000."

A Wily Veteran

Despite the constant onslaught from competitors and the complaints of end-users, the PC has demonstrated impressive resiliency in the past, and its makers have addressed legitimate complaints from proponents of the device model.

Three years ago, when charges of high cost of ownership and unnecessary complexity were lobbed at PC stalwarts by NC advocates--most notably Oracle Chief Executive Officer Larry Ellison and Sun Microsystems Chief Executive Officer Scott McNealy--the PC world responded.

Average selling prices of corporate PCs plummeted from $2453 in 1996 to $1321 in 1999, according to IDC numbers. And two years ago this week the industry rallied behind the ill-fated concept of the NetPC.

Although the products themselves were a total bust, the hype that was generated--and the development of better desktop-management software from vendors such as Microsoft and Intel--was enough to stave off the thin-client onslaught and kill off any momentum that might have mounted behind network terminals.

But the same arguments are likely to flare up again next year when Windows 2000 lands its bulky code base on corporate desktops.

"Windows 2000 is the kitchen sink of OSes," says Meta Group's Kleynhans. "Deploying it is probably going to be a larger undertaking than Microsoft would like you to believe. The migration will be harder than you expect."

PC vendors, however, remain confident that the PC is a survivor and will evolve to overcome any challenge it may face.

"In the near term, there will almost certainly be technology disruptions that make us look at the PC platform in a different light," says Duane Zitzner, chief executive officer of PC business at Hewlett-Packard, in Palo Alto, California. "The PC is capable of evolving with changing environments."

Don't Turn Off the Power

PC industry leaders point out that growing bandwidth creates a need for more processing power.

Analysts predict another precipitous decline in prices, as well as a wave of technologies to simplify the PC interface, including voice recognition and 3D graphics.

But applications using either of these technologies will likely require more processing power and more robust operating systems.

And the beat goes on.

For more IT analysis and commentary on emerging technologies, visit InfoWorld.com. Story copyright © 2011 InfoWorld Media Group. All rights reserved.