If you've been in the technology industry for more than a decade, you remember the Wintel world that was: PCs from Hewlett-Packard and Dell reigned, Windows was the only operating system that mattered, and the Wintel duopoly would live as long as Rome. In 2005, the still-struggling Apple dropped the PowerPC and embraced Intel chips; about the only sign of trouble was IBM getting out of the PC business, selling it to China's Lenovo -- but that was framed as the fall of an American icon that was stretched in too many directions and the concurrent rise of China, not related to the PC itself.
Then it all fell apart.
Today, the companies that matter are not the old Wintel hardware powerhouses, but Apple, Google, and Samsung -- and Microsoft, thanks to a turnaround piloted by its current CEO, Satya Nadella. IBM's pivot away from the PC helped it focus enough to get a new wind as a systems integrator and back-end provider -- it essentially decided to play a different game.
Of the three Wintel hardware giants, HP and Dell seem destined for the dustbin of history, though they can persist as is for years through a slow decline. Intel may -- or may not -- turn around, Apple-like, by conquering new markets. It's flailed for years but still keeps trying, with the advantage of having retained an innovative engineering culture that Dell never had and HP long ago jettisoned.
Let me explain why.
Around 2010, people and companies started buying fewer and fewer PCs -- and the numbers are still down. Apple's Macintosh defied the trend, growing while Windows PCs declined -- but about 18 months ago the Mac joined the downward trajectory. In 2007, then-Apple CEO Steve Jobs dubbed the shift "post-PC."
Those forever giants of the Wintel world reacted with panic.
How HP and Dell set a path to likely oblivion
HP spasmed several times, with its unparalleled Palm/WebOS tragedy showing the emperor had no clothes. Worse, HP was a rightfully fabled company -- that emperor once had a full closet of fine clothes, but over the years jettisoned its non-PC and nonprinter businesses, betting on a cash cow in a market that soon would stop drinking milk.
Then as Microsoft's Windows 8 disaster unfolded, HP looked for a new boat to jump into. The result was the Palm debacle -- a risky, poorly managed bet to usurp Apple and the then-emerging Google Android as the mobile standard.
That was followed by ham-handed attempts to go into datacenter technology, where high-margin enterprise sales lurked. After several false starts, HP started getting a cohesive business going -- just as the cloud began hollowing out the private datacenter. HP has tried to move to the cloud, with decidedly mixed results.
HP also tried to make the PC work, slavishly supporting Microsoft's several failed PC technology directions over the last decade, such as touchscreen PCs and Windows Phones. HP also spun up the Pro Slate line of Android tablets once it realized Windows tablets were going nowhere. The completely generic, underpowered Pro Slates went nowhere, and HP finally dumped them this summer.
Ironically, Microsoft last year finally figured out a compelling approach to Windows 10 tablets, and now enjoys both healthy sales and respect for its fourth-generation Surface Pro. But so far, only Microsoft has pulled off this twofer -- not Samsung, Lenovo, Dell, or HP.
Last year, HP President Meg Whitman split the company into HP and HP Enterprise, the former stuck on PCs and printers and the latter charged with figuring out the cloud and legacy datacenter business, which it's tackled through a hybrid approach meant to appeal to trailing-edge IT customers. Whitman leads HPE, not HP, for obvious reasons.
Dell's story is less dramatic but equally as dispiriting. Dell wasn't an engineering company in the sense of Intel, HP, or Apple -- its engineering focus was all about manufacturing process, not the PCs it was making. That process focus gave Dell its claim to fame in the early PC days: the ability for customers to configure systems via the web, then get that customized PCs in a few short days. Everyone else had a few, preconfigured models for customers to choose from -- like toasters and refrigerators.
Customization was a masterstroke in that era when PC technology changed so quickly and had so many legitimate variations. Over time, though, PC technology standardized, so the need to customize faded beyond a few aspects any seller could handle: amount of memory, hard disk size, and type of optical drive. Oh, and do you want a monitor with that? Dell became like any other PC seller.
Like Compaq, Gateway, and others, Dell did the same as most providers in a commoditized market: Sell on price. Dell began compromising the quality of its components to save a nickel here, a dime there. Soon, its PCs became unreliable as components like power supplies failed increasingly often.
Dell was hardly alone, but it had established itself as an enterprise provider. It would guarantee stable hardware offerings for several years, so IT didn't have to worry about driver differences (which to this day can suddenly disable Windows and PC applications when updates come out) as it replaced or added PCs in the office.
As an enterprise provider, Dell made an implicit deal with IT regarding quality: reliability. It's why IT shied away from Gateway, Packard Bell, eMachines, and Compaq (which, in its latter days, pulled a Dell). By the late 2000s, Dell's reputation for poor quality turned off IT buyers in droves; I know several large organizations that still won't buy Dell as a result.
In the last few years, Dell has tried to move upmarket with servers and other higher-margin products aimed at enterprise, and it's branched out into software and IT consulting. What old-school hardware company hasn't? (IBM, HP, and Intel all have, that's for sure.) But with its reputation for quality tarnished, it faces plenty of competitors in its midmarket aspirations.
Like HP, Dell has also fiddled with other low-margin consumer electronics as it shifted its PC business. In fact, Dell did it before HP, by coming out with its own Venue Android phones and tablets. The products were cheap and uninspired; unsurprisingly no one bought them. Dell egotistically assumed its name alone would be enough for individual and IT buyers. Umm, no -- especially not with Samsung, LG, and sometimes HTC making determined efforts to produce high-quality Android devices.
Over the last few years Dell's focus has been more about who owns the company than any other factor.
Both HP and Dell are chasing after the market, not trying to figure out where the market is going and trying to get there early enough and good enough to matter. They're piloting from the rearview mirror, and that gets you nowhere.
Intel has a chance to reinvent itself
Intel's journey is similar to HP's and Dell's. Overconfident due to its PC processor hegemony, it has tried to enter or even create several markets -- expecting everyone to get out of the way or follow -- to no effect.
Remember the WiMax broadband wireless technology that would connect everything at superfast speeds? That was Intel trying to displace Qualcomm, Broadcom, Texas Instruments, and the whole base of technologies we call 3G and 4G.
Intel then tried to take over the communications chip market, despite the much lower margins. It's earned a share there but does not dominate. After that came a disastrous mobile strategy fueled by ego, not good products. Its power-hungry processors were shunned by smartphone and tablet makers. ARM's triumph showed everyone that Intel could fail in a market that mattered to its longevity.
Intel's attempt to goose the mobile x86 market by porting Android removed any doubt about that Intel was out of its depth: The x86 version of Android was late, incomplete, and slow. Even Microsoft, Intel's longtime partner, decided to go with rival ARM. Android for x86 is not officially dead, but in practice it is over.
Intel tried again (taking second chair to Samsung) with Tizen, an open source OS that has been passed around way too many times. Intel treated it as an academic project, not a product. (Intel seemed to be the actual engineering driver behind the Tizen OS, with Samsung focused on devices using it.) Not surprisingly, it still is incomplete and irrelevant -- though now allegedly focused on the internet of things rather than phones and tablets (where it has no chance against Android).
Now, Intel has jumped to two new fads: the internet of things and virtual reality, as showcased at the Intel Developer Forum last week. It's also moving into support chips that can be used on multiple devices, not only PCs -- a very rational decision.
Part of me foresees another journey to nowhere for Intel in these market fads. Although both markets have real cores, much of the technology industry is addicted to the hype and not building for the reality. We'll see major flameouts here over the next few years. Intel's recent history points to it being part of the coming meltdown.
But there are signs that Intel will be smarter -- or at least smart enough -- this time. The newish CEO, Brian Krzanich, seems to have real passion here; he appears at all sorts of industry events to show off Intel-powered prototypes, and he stars in an Intel-fueled TV contest show, "America's Greatest Makers," for hardware tech startups. We may have something different at the top this time.
If Krzanich's strategic focus is as strong as his marketing focus, there's a chance Intel can approach both IoT and VR with both the necessary hubris and the necessary engineering innovation to create the next big thing. In the communications and mobile markets, Intel simply tried to swoop in and force-fit what it already has into new markets -- a recipe for disaster fueled by Intel's arrogance. Intel can't do that this time if it wants to succeed.
Dell and HP were captive to Wintel -- the products they sold were based on others' technology. By contrast, Intel was a co-creator of Wintel. Microsoft finally stepped back and deeply rethought itself as the post-PC era threatened it, and so too could -- and should -- Intel. After all, there are many big guns also tackling IoT and VR, including IBM, Samsung, and Qualcomm.
Actions speak louder than words, and it'll be a while before we see what actions Intel is actually taken. Intel's words are clear, but we've heard that jive before. Wouldn't it be wonderful if this time the story matched the reality, and Intel pulled off the kind of comeback Apple did a decade ago and Microsoft is now doing?