Microsoft Corporation (MSFT), Dell Inc. (DELL): A Change In Form Factor

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In recent months, I’ve written a number of posts detailing the ongoing decline of the PC. Most of these articles have solicited a flurry of negative responses from incredulous techies, skeptical that their precious PCs could ever become obsolete.

Despite the fact that the traditional PC remains an indispensable tool right now, powerful trends are increasingly threatening the classic PC paradigm. But don’t take my word for it — here are how some big PC-related companies are dealing with the shift.

Microsoft CorporationMicrosoft Corporation (NASDAQ:MSFT) radically redesigned Windows

Perhaps there is no greater symbol of the traditional PC’s decline than Microsoft Corporation (NASDAQ:MSFT)’s decision to radically alter its Windows operating system. Windows 8 is the most significant redesign of the operating system since 1995.

Of course, Microsoft Corporation (NASDAQ:MSFT)’s decision seems to have backfired — Windows 8 has been widely panned by the media, drawing comparisons to such famed business debacles as New Coke.

Windows has long had a near monopoly in the PC operating system business — Mac devices remain too expensive for most consumers, while Linux remains too daunting. Chrome OS might make Google Inc (NASDAQ:GOOG) a threat some day, but that seems to be in the far distant future.

So why shake it up? Why mess with a good thing? What possessed Microsoft Corporation (NASDAQ:MSFT) to take Windows — a piece of software with no legitimate competitors — and reinvent it to such a great degree?

The short answer is that (contrary to popular belief) Microsoft’s top management isn’t stupid. They know that the PC is dying (or as Steve Ballmer would prefer to say, shifting in form factor).

Windows 8 wasn’t designed with desktops in mind. It wasn’t even meant for laptops. Windows 8, with its touch-focused Metro interface, was designed for hybrid devices like the Surface Pro. Devices that combine the power of a laptop with the mobility and form factor of a tablet.

Microsoft Corporation (NASDAQ:MSFT) believes these hybrid devices are the future, and has bet its Windows division on this vision.

Dell Inc. (NASDAQ:DELL) wants to go private and become a mini IBM

Dell Inc. (NASDAQ:DELL) remains one of the world’s largest makers of PCs. But the company realizes that won’t cut it for much longer.

The founder, Michael Dell, has partnered with Silver Lake Partners in an attempt to take his company private. If Dell Inc. (NASDAQ:DELL) is successful, he will do some significant remodeling. Specifically, Dell aims to make the company a mini IBM — a provider of IT services to small and medium-sized businesses.

(Private equity firm Blackstone Group was mulling its own offer for Dell Inc. (NASDAQ:DELL), but backed out after data showed that PC shipments had fallen 14% — the worst drop on record).

Competitor Hewlett-Packard Company (NYSE:HPQ) has been slowly moving in that direction as well. In fact, before his departure, former CEO Leo Apotheker wanted to spin the company’s PC-making operation off entirely.

Current CEO Meg Whitman nixed those plans after Apotheker’s exit. Regardless, the fact that both Dell Inc. (NASDAQ:DELL) and Hewlett-Packard Company (NYSE:HPQ) are moving away from the PC business shows that all is not well.

Intel Corporation (NASDAQ:INTC) has made power consumption, not raw power, its primary focus

Intel Corporation (NASDAQ:INTC) makes the majority of the processors that power traditional PCs. For years, the company had battled rival Advanced Micro Devices, Inc. (NYSE:AMD) over which company could produce the more powerful chips.

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