'Wintel' puts all its chips on Windows 8
Taipei, June 10, 2012
The world of Wintel - Microsoft, Intel and the Taiwan-based companies that build the computers their products power and run on - is taking a huge collective bet on Windows 8.
And while this week's Computex trade show in Taiwan has largely presented a united front, it has also highlighted some of the tensions that big gamble has created in a once tight relationship between the US firms and their Asian partners.
At stake is the future of the world's largest software developer, whose new operating system is expected to be launched in the fourth quarter, and it largest chip maker, as well as an island-wide industry of computer makers and parts suppliers.
In one corner you have Microsoft Corp, which is porting its tiled Metro interface used in Windows Phone to tablets, laptops and the desktop. Although the old point and click interface is still available, the focus is on a touch screen that pits Windows against Google's Android and Apple's iOS. In another corner you have chip maker Intel Corp, long Microsoft's partner in personal computers.
Intel has not only seen its position slip as the world shifts to mobile devices, it has also had to make room beside Microsoft for Britain's ARM Holdings, whose mobile-friendly chips may be better suited for tablets running Windows 8.
And then there are the computer manufacturers themselves, most of whom are based in Taiwan and who are struggling to combine Microsoft's new operating system and Intel's chip-based designs into products that sell - and turn them a profit.
The Computex show that ended at the weekend has illustrated just how delicate this arrangement is - with differences over pricing, promotion and the ecosystem that will be needed to support this new chapter in Windows' history.
'Is this going to be a major resurrection? Well, at least it'll help stop tablets from cannibalizing the PC laptop sector,' said Jonah Cheng, an analyst with UBS.
Microsoft, though still strong on conventional PCs, has watched the energy and innovation shift to mobile devices - led by Apple's iPhone and iPad. While PC shipments fell 1.4 percent last year, and are expected to grow by only 4.4 percent this year, according to research firm Gartner, tablet shipments have grown from 19.4 million units in 2010 to 68.4 million last year, with that figure expected to rise by 85 percent this year, according to rival IHS.
Of those tablets expected to sold this year, Gartner estimates more than 60 percent will be iPads - and only 4 percent of them will be running Microsoft's operating system.
Microsoft, therefore, has little choice but to overhaul Windows to straddle both its traditional computer market and the world of tablets. The result is a potentially jarring shift for users long comfortable with the familiar Windows interface.
Intel, for its part, is having to rethink its chip business, which has focused on processing data rather than more mobile-centric issues such as power consumption. In the meantime, however, it is pushing its vision of a slimmed down laptop called the Ultrabook.
The first round of such devices - which owe a lot in look and feel to Apple's successful MacBook Air - were not a huge success, but Intel has come up with better chips, materials and designs featuring sliding, folding or detachable keyboards that it hopes will blur the lines between laptop and tablet.
All of this, however, depends on the computer manufacturers and suppliers themselves. It's they who have to build the devices and figure out how to turn a profit.
This creates its own internal tensions because Microsoft wants each Windows machine to leverage all its features as much as possible, while the original equipment manufacturers, or OEMs, as Taiwan's gearmakers are known in the industry, have traditionally cut corners to keep prices low.
'Microsoft will live and die on how well the OEMs implement the features of Windows 8,' says Forrester principal analyst Frank Gillett.
Intel, too, is trying to push the OEMs to add touch screens and other whizz-bang features to help to push the Ultrabook up-market and differentiate it from the MacBook Air.
Intel has even gone so far as to sign agreements with touchscreen suppliers undertaking to buy up excess capacity to ensure there are adequate supplies for the OEMs, who make much of the world's computer hardware for global vendors and, increasingly, their own brands.
The result is that Intel is emphasising quality and features that may push the price of such devices above the sensitive $1,000 mark. A touch screen, for example, adds roughly $100 to the cost of an Ultrabook, Forrester's Gillett says.
Intel defends the creeping rise in cost, arguing that while it could easily offer designs for much cheaper models it believes the market is looking for more sophisticated devices.
'We can specify the Ultrabook to get the price point all the way down to $399, but we don't think that's what the consumers want,' said Intel senior vice president Tom Kilroy.
The Computex show-floor reflected this diversity and ambition. Asustek's Taichi dual screen Ultrabook - where both sides of the lid sport a screen - was a particular draw. And although most manufacturers appeared to have embraced the full range of Intel's suggested designs and Windows 8's features, the quality remained uneven.
The plastic slider on one device, for example, failed to unhinge the tablet from the keyboard. Some models remained encased in glass boxes, suggesting they were some way from completion.
While Computex was show time for Windows 8 and the devices running the system, there is still some way to go until the software's launch. And there are plenty of issues still to hammer out. - Reuters