Apple Inc. (AAPL), Nokia Corporation (ADR) (NOK), And Could Bill Gates Even Save Microsoft Corporation (MSFT)?

Page 1 of 2

salesforce.com CEO Marc Benioff thinks Bill Gates should return to Microsoft Corporation (NASDAQ:MSFT) as CEO. He’s not alone. With Steve Ballmer set to retire, the Windows-maker is in need of a new CEO. Who better to fill the spot than the man who started the company in the first place?

Unfortunately, Microsoft Corporation (NASDAQ:MSFT) is in a tough spot, and based on Bill Gates’ recent comments, not even he could turn the company around. Microsoft’s management, including chairman Gates, just doesn’t seem to understand the nature of the PC market.

Microsoft Corporation (NASDAQ:MSFT)

Two different theories of the PC

Fundamentally, it goes back to the definition of the PC. At the AllThingsD conference back in 2010, Microsoft Corporation (NASDAQ:MSFT)’s Ballmer and Apple Inc. (NASDAQ:AAPL) CEO  Steve Jobs offered very different theories about the future of the PC market.

Jobs:

When we were an agrarian nation, all cars were trucks, because that’s what you needed on the farm. But as vehicles started to be used in the urban centers…cars got more popular… now… maybe one out of every 25 vehicles, 30 vehicles is a truck, where it used to be 100%. PCs are gonna be like trucks. They’re still gonna be around, they’re still gonna have a lot of value, but they’re gonna be used by one out of X people.

Ballmer:

I think PCs are gonna continue to shift in form factor… real question is what’s a PC? … There may be a reason why they call them “Mack” trucks, but Windows PCs are not gonna be trucks — they’re not — they will continue to be the mass popularizer of a variety of things people want to do with information.

In short, Jobs offered a view of the market that was highly fragmented. One with different devices satisfying different niches. Tablets would never fully replace traditional PCs, but for many users, they would be enough. In contrast, Ballmer appeared to predict the emergence of a single unified device, one that combined the benefits of a tablet (portability) with the benefits of a traditional PC (content creation, power).

More recently, in an interview with CNBC, Gates echoed Ballmer’s comments, arguing that Microsoft Corporation (NASDAQ:MSFT)’s Surface was that ideal, hybrid device:

In terms of the devices themselves, Windows 8 really is revolutionary in that it takes the benefits of a tablet and the benefits of a PC, and it’s able to support both of those… Surface, Surface Pro, you’ve got that portability of a tablet, but… the richness of the PC… iPad… users are frustrated, they can’t type, they can’t create documents… We’re providing them with the benefits…without giving up what they expect in a PC.

The Surface RT bombs and Windows 8 fails

But Microsoft Corporation (NASDAQ:MSFT)’s vision of a unified product is clearly wrong — the market has spoken.

Last quarter, Microsoft took a $900 million writedown on the Surface. Microsoft admitted that its tablet had not sold as well as expected, and that it was forced to cut the price by 30% in order to boost demand. It also noted that among consumers, demand for traditional PCs had fallen roughly 20%.

Consumers just don’t seem to want what Microsoft is selling. Evidently, people are not as frustrated with the iPad as Gates believes. Last quarter, Apple Inc. (NASDAQ:AAPL) sold 14.6 million iPads; in comparison, Microsoft sold just 1.7 million Surface devices from its debut last October through the end of June.

Throwing good money after bad

Microsoft’s recent reorganization intends to shift the company to one focused around “devices and services” — a strategy it said it will stick with even after it brings in a new CEO. This is why I find Microsoft’s situation so alarming — management just doesn’t get it.

Even after the Surface RT’s price cut, Apple Inc. (NASDAQ:AAPL)’s iPad is still a better buy than the Surface RT, and will probably continue to be for the foreseeable future. With its far better selection of apps, the iPad offers a much better tablet experience.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!