The financial and IT news services tell us very pessimistic stories about the major PC players like DELL and HP. The general gist is that sales of PCs are down and sales of tablets are up and that the share prices of DELL and HP are falling. Just yesterday, the CEO of HP announced to a stunned market that 2013 will likely be worse than 2012. She also lamented the frequent turnover of HP CEO’s since the demise of Carly Fiorina. But to my mind that was a strange thing to do when also announcing that she won’t be improving anything and in fact will be in charge when things get worse. The mental picture I get is of the captain steering the ship into the rocks. My guess is that the musical chairs game at the top of HP will continue for some time yet because market analysts don’t like bad news and shareholders don’t like falling share prices.

So is the PC dead? Will we see it completely replaced in our homes and offices within a few short years? Are you still planning to buy a new PC? If so, why? Is business still planning to buy more PCs, for example to support Windows 8?  Will business in fact move to Windows 8 in 2013 or 2014 or 2015? Why would anyone be investing in expensive new PC hardware for their home or office? Are there better alternatives available now?

To my mind the global financial crisis that began in 2007/2008 has at least as much to do with falling PC sales as the advent of clever tablets from people like Apple. All over the western world people are holding back on spending money and are simply not replacing ‘older’ PCs or notebooks. In fact, I see the current crop of tablets as complimentary devices to PCs and notebooks, not replacements.  I blogged about this previously in “Why aren’t tablets the single solution yet?” and still believe my arguments to be valid.

My customers for example, still use PCs in the office to run my enterprise content management system RecFind 6 and use notebooks to run it when travelling. However, they are also now demanding that I provide support for a range of mobile devices including smartphones and tablets. But my customers are not replacing their PCs and notebooks with tablets, they are using tablets in an appropriate way to extend what they can do with mobile workers.

I also think that companies like DELL and HP are their own worst enemies. They have both exhibited a surprising lack of innovation and salesmanship and their marketing people seem to be about five years behind the market. They have both outsourced their services and support to awful Indian call centres and focussed more on reducing costs than on improving customer service. Customers have a way of showing their disapproval by walking away and I believe this is what they are doing.

So whereas I think tablets are the future I don’t think they are capable enough yet to replace PCs and notebooks in the office environment. I think most people have a tablet in addition to their PC and notebook (and smartphone).

I don’t see tablets, even the next generation, having all the functionality and screen size and power we need to replace PCs in the office. Even in the home, the small screen size of a tablet mitigates its value as does the lack of applications and connectivity; not everyone wants to replace their working backup drive and USB printer just to accommodate Apple.

I also think that PCs and notebooks are too expensive and that Intel, DELL and HP are too used to big margins. In economics we talk about the intersection of the price and demand curves; the theoretical point at which we make the most money. Set the price too high and you sell fewer and make less money. Set the price too low and you sell more but make less profit. Somewhere in the middle is the point where we set our price to get the optimum sales and profit results.

For example, if Apple priced the New iPad at $5,000 if wouldn’t sell any and it wouldn’t make any money but if it priced it at $10 it would sell a shed-load but also wouldn’t make any money. At $400 plus it seems to sell as many as it can produce and also make the maximum profit. Apple has found its optimum price point.

Every vendor struggles for the optimum price point and over time as technology matures and becomes more common, prices have to drop. I don’t think the prices of PCs and notebooks have dropped enough. It’s just economics stupid, your PC and note book prices are way above your optimum price point and that’s one reason why people are not buying them.

So no, I don’t think PCs are dead. I think their sales have dropped because of a combination of the ongoing global financial crisis and poor management and product decisions from the major players like Intel, DELL and HP. Apple has cleverly capitalised on this situation, it didn’t create it. Apple is clearly innovative, HP and DELL are not.

I believe that we are yet to see at least one more re-invention of the PC and notebook, albeit of a higher quality and with more innovation that Intel’s Ultra Book attempt at reinventing the notebook. The re-invention should also come with a new lower pricing algorithm, not a raising of prices as attempted by Intel with the Ultra Book range of notebooks.

So, Intel, DELL and HP; the ball is firmly in your court. You all employ scores of really smart and innovative people. Why don’t you give them the challenge? If you come up with a realistically priced and innovative new PC solution I would certainly buy a few. But, please do something about your service levels; I for one am really tired of being bounced around Indian, Singaporean and Philippine call centres. If foreign call centres are part of the new deal I am afraid that I want no part of it. That model is broken. If you want my business then I demand better service.

I run an application software development company called Knowledgeone Corporation that develops enterprise content management software applications. My customers are generally big business and big government and part of my job as the designer of our applications like RecFind 6 is to predict what my customers are going to ask for in twelve or twenty-four months’ time.

I read a lot of technical papers and forecasts and blogs and try to ingest and evaluate as much as I can about where our business is moving so that I can make the changes necessary in our products to meet future demand. I have been doing this for twenty-nine years and like most pundits, sometimes I get it right and sometimes I get it wrong.

Like Gartner (that never seems to get it right) I have been silly enough to publish a number of my predictions as white papers and they make interesting reading years later. Some examples are listed below:

2009   Windows 7 – Frank’s views

2007   Technology as a Tool – Where is Records and Document Management Heading?

1998   The Thin Client – The Next Panacea?

1997   Knowledge Management – The Next Challenge?

1996   Information and Records Management Towards 2000 – Electronic Document Management Principles.

1995   Document Management, Records Management, Image Management, Workflow Management,…What? The I.D.E.A.

I have also published more predictions in my blog, a few examples follow:

09/2011        Will developers, Corporates and Government upgrade to Windows 8?

11/2011        Mobile and Web – The future of applications?

12/2011        The real impact of mobilization – how will it affect the way we work?

01/2012        Will desktop virtualization be the final nail in the computer room coffin?

03/2012        What is the future of software applications in 2013 and beyond?

The obvious problem with publishing prediction is that you can’t always get it right and you will be judged at a later time when everyone is a lot wiser. However, people in my business have to predict the future because we start working on a new product a year or more before we are able to sell it. In a way, it is a silly business. We invest man years and large amounts of money designing, building and testing software applications long before we can get any kind of return on our investment.

Games makers have a similar problem, they have to invest millions and many man years long before they know if their game is going to be a success or not. This is why we have to predict the future and why we need to get it right more times than we get it wrong.

Right now I happen to believe that the world of software applications is going through a major paradigm shift. The advent of powerful mobile devices that really began with the first iPhone has changed the way most people want to work with applications. Like the PC network paradigm change of the early 1980’s, this one is also end-user driven, not IT Department driven. In fact you may conclude that the often reactionary IT heads of the commercial world have been dragged kicking and screaming into this revolution just as they were in the early 1980’s.

The availability of smarter and more powerful mobile devices like the iPhone and iPad have already had a major impact on PC and notebook sales and have caused major vendors like Intel to re-evaluate their product lines and strategies. In Intel’s case it first tried to leverage off old technologies with the promotion of ultra-books and now it has announced a move into new processors for mobile devices to rival those from companies like ARM and Qualcomm. Similarly, Microsoft, late to the party as usual, is now focusing on its new range of surface tablets and new versions of Windows 8 to support mobile devices.

As I said above, it is significant than none of these major changes have been driven by the usual suspects like Microsoft and Intel, they have been caught napping and are now in catch-up mode.

So, what are my chances of correctly predicting the future if giants like Intel and Microsoft with their huge budgets and research departments can’t get it right? Or, is the problem not one of budget but one of corporate arrogance? I will leave that judgement to you.

In my view the move to faster, smarter, more powerful and more user-friendly mobile devices is inexorable. When I now look at my office with its bulky PCs and masses of wires and connections it looks like a museum honouring the 20^th century. My iPad in contrast, looks like the beginning of the 21^st century; still not there yet but definitely the progenitor of coming office computing.

I see the same picture when looking at enterprise application software. Most of it, including my product RecFind 6 (based on the very latest Microsoft .NET technology), needs to be completely redesigned for the coming mobile world and this is the real challenge.

Everyone now knows (or should know) how to design games and small simple apps for mobile devices like the iPhone and iPad but most of us are still struggling with the redesign of heavy-duty, feature-rich and enterprise-strength applications like RecFind 6 for the new mobile platforms.  We can’t just scale them down, we have to come up with a completely new way to communicate with our mobile end users. We have to discard the technology we are most familiar with and re-invent our solutions using new and unfamiliar technology.

Just like Intel and Microsoft we have to change our game and we have to do it fast because this particular revolution isn’t being driven by us, it is being driven by end-users and the innovative people at companies like ARM and Qualcomm and Apple all of whom have had very little impact on corporate application software in the recent past.

The current paradigm shift is still in its early days but it will completely change the way we all run our businesses in the near future. If only I could predict exactly how.