Intel’s and Microsoft’s problems are encapsulated in the following statements in an NYT article: “Computers have reached a point where for the most common home purposes Web surfing, e-mail and word processing they are already more than fast enough to suit a typical home user’s needs…No new computer generally means no new copy of Microsoft Windows sold, no upgrades to word processing or spreadsheet programs.” Adds the article:
Mr. Paul Otellini [Intel’s president and COO] acknowledged that most of the incremental growth in the personal computer market since 2000 is already coming from what he calls “emerging markets” developing countries where there are now few computers.
“We believe that 50 percent of all the incremental units sold in the next five years will come from these markets,” he said. There are now about 500 million personal computers in the world, he said, and with the help of the emerging markets the industry, over a long period, could still expect to see double-digit growth outside the industrial world.
The next set of users in the world’s emerging markets need computing at much lower price points, and so far Intel and Microsoft are doing nothing to cater to that. The cost of computing needs to fall by 50-70% to spur the next wave of buying. This is unlikely to be led by Intel and Microsoft.