Intel Corporation (INTC), Microsoft Corporation (MSFT): Old Tech Firms Struggle to Stay Relevant

Imagine seeing two people start to fight. One is young, lightweight, and nimble. The other is older, with a couple extra pounds, but with fighting experience. This fight resembles the struggle that big, older tech firms face against their newer competitors. To understand who will come out on top, we must take a closer look at what each contender brings to the table. With this in mind, let’s look to the mobile vs. PC example.

New contender: mobile device makers

Hip smartphones and tablets now offer computing power that rivals PCs. Furthermore, these small, portable devices are more convenient to use than PCs. Such factors lead consumers swiftly toward newer mobile devices, and away from PCs.

Just look to Samsung to get an idea of what PCs are up against. The market leader in mobile phone shipments with 29% of the market, Samsung shipped 63 million units in the fourth quarter last year and 64.7 million in the first quarter of 2013.

Keep in mind that this includes only mobile – it does not take into account tablet sales. In contrast, total worldwide PC shipments came to only 90.3 million units in the fourth quarter and 79.2 million in the first quarter of 2013 according to Gartner Research. As the PC market faced a 4.9% decline in fourth quarter shipments from 2011 to 2012, mobile saw a 27.2% increase.

Why the change? Consumers get much of the same functionality from a mobile device that they need from a PC: email, web browsing, social media, and games. So when the time comes to buy another unit, people tend to buy the couple-hundred-dollar phone, as opposed to a new PC that runs into the high hundreds or low thousands.

Old Fighter: PC makers

PC makers devised a new plan of attack to combat this challenge. With lower prices and reduced power consumption, they crafted technology to compete with mobile’s finest.

For example, Intel Corporation (NASDAQ:INTC) released information on its newest core CPU: the 4th Gen Intel Corporation (NASDAQ:INTC) Core 7. It processes more efficiently than previous Intel Corporation (NASDAQ:INTC) chips, while using less power. Computers made with these chips will help keep both the PC manufacturers and part makers (like Intel Corporation (NASDAQ:INTC)) afloat. One type of computer made with these chips is a laptop whose screen functions also as a tablet.

Microsoft Corporation (NASDAQ:MSFT) essentially designed its Windows 8  for touchscreen computing. Additionally, Microsoft Corporation (NASDAQ:MSFT) offers PC manufacturers drastic discounts on software to help lower the price of PCs for consumers. Manufacturers only pay $30 for Windows 8 and Microsoft Corporation (NASDAQ:MSFT) Office, a 75% discount from the original price manufacturers paid.