Apple Inc. (NASDAQ:AAPL)’s CEO Tim Cook once addressed the idea on an Apple earnings call:
“You can converge a toaster and a refrigerator, but those things are probably not going to be pleasing to the user…And you wouldn’t want to put [the Macbook Air and the iPad] together because you wind up compromising in both and not pleasing either user. Some people will prefer to own both, and that’s great, too…but [to converge them]…we’re not going to that party.”
Apple’s founder Steve Jobs had a similar view. Making an analogy to the car market, jobs likened the traditional PC to a truck — absolutely necessary for some heavy duty situations, but most people would be fine owning just a car (tablet).
Intel is either very cheap or very expensive
One stock that stands between the two different philosophies is Intel Corporation (NASDAQ:INTC). The chip maker is starting to break into the smartphone and pure tablet market, but largely remains dependent on traditional PCs.
The company’s latest line of processors — known as Haswell — have been seemingly designed around devices like the Surface Pro. With Haswell, Intel focused on designing a chip that required less electricity while generating less heat (thus it requires a smaller cooling system).
Haswell should allow Microsoft Corporation (NASDAQ:MSFT) to produce a second generation Surface Pro that is lighter, thinner and offers better battery life. That should make hybrid devices more competitive.
If consumers opt for these Haswell-powered hybrids in place of pure tablets, Intel — trading with a price-to-earnings ratio less than the market — is probably a very cheap stock. However, if consumers continue to flock to pure tablets, Intel should continue to perform poorly, as PC sales remain sluggish.
Who’s right?
Ultimately, they both can’t be right. Either users will continue to embrace pure tablets en masse (only buying the occasional PC), or they’ll flock to the all-in-one PC/tablet hybrids like the Surface Pro.
If the former hypothesis is correct, then companies exposed to the traditional PC market — like Intel — should continue to suffer as sales of the PC slump. But if the later is right, the PC industry is only facing a temporary setback, and should soon rebound as consumers come to recognize the advantages of owning hybrid devices.
With sales of PCs slumping, Apple Inc. (NASDAQ:AAPL) looks to have the right idea, at least for now. But with Intel Corporation (NASDAQ:INTC) rolling out better chips, perhaps Microsoft’s strategy will prove to be wiser in the long run.
The article Apple vs Microsoft: Who Has It Right When It Comes to the Future of Computing? originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.
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