This weekend's Barron's cover story shows a tombstone
inscribed, "R.I.P. PC" beside this teaser: "As the personal-computer era
wanes, Microsoft and Intel scramble to remain relevant. Apple and
Google feast on the spoils of tablets and smartphones. What last week's
scary earnings reports mean for investors."
Ah, the bottom tick. Magazine covers are notorious for arriving at
the end of a cycle. A BigTrends.com look at bullish and bearish cover
stories over the past 30 years found that the market moved opposite
these calls more than 70 pct of the time. The reason? Expectations are
pushed to the extreme edge, which is almost never real. As the saying
goes, things are never as good or as bad as they seem. Thus it is with
stocks. Is the PC industry having trouble here ahead of the Windows 8
release? Yes. Is it dead? No.
The opening paragraph of the Barron's story follows the
script: "When Microsoft introduces its long-awaited Windows 8 operating
system Friday, it will be the first Windows rollout to face real
competition since, well, forever. Today, smartphones and tablets do
almost all of the day-to-day tasks a PC does — including sending e-mail,
surfing the Web, and editing photos — and do some of them better.
Already, tech investors, long accustomed to a lift from Windows, are
primed for disappointment."
Yes, primed for disappointment. Expectations are low. Nobody thinks
much good will come of it. That's why stock prices are so compressed
going into the release. What if the disappointment isn't as bad as
expected? What if people like Win 8? What if companies decide it's a
good investment to keep their legacy software humming for another
generation? What if Microsoft saw the trends, too, and decided to
release its own Surface tablet along with Win 8 to show that Windows has
evolved to the multi-device world?
Longtime readers know that I'm no fan of Microsoft, despite our
having owned it in the past. Even I, however, respect the resources it's
poured into Win 8 and have seen what needles the company can move when
it goes into a marketing frenzy. The mistake I think analysts and others
are making is in equating "PC" with just beige desktop boxes. Part of
this makeover of Windows is to get it on more devices than desktops. The
same way Apple is not confined to just its Mac line, nor is Windows
going to be confined to just desktops and laptops. It, too, will play a
part in the move to smaller devices and, presumably, so will its
partners in the PC industry.
AP tech writer Peter Svensson wrote Friday that "consumers are in for
a shock. Windows, used in one form or another for a generation, is
getting a completely different look that will force users to learn new
ways to get things done." Sounds bad, right? But why is it a new look?
Because "Microsoft is making a radical break with the past to stay
relevant in a world where smartphones and tablets have eroded the
three-decade dominance of the personal computer. Windows 8 is supposed
to tie together Microsoft's PC, tablet and phone software with one
look." Well, isn't that addressing the very irrelevance that analysts
accuse the PC industry of facing?
Walt Mossberg's review captured this even in the title: "Windows
Pushes Into the Tablet Age." He wrote that the new Start screen that
replaces the old Start Menu is "not just a menu, it's a whole computing
environment that takes over the entire display… a handsome, modern,
slick world of large, scrolling tiles and simpler, full-screen apps best
used on a touch screen and inspired by tablets and smartphones… This is
a bold move and in my view, the new tile-based environment works very
well and is a welcome step." He warned that the changes "will require
re-learning the most familiar computing system on the planet."
However, Microsoft "is gambling that the confusion will be brief and
will be offset by the ability, via the old desktop, to run traditional
productivity apps like Microsoft Office, which can't be run on the iPad
or its Android brethren."
Whatever it's going to be, it'll inject excitement into the PC
industry and there's basically only one way for sales to go. We're
betting that Barron's just called the bottom, and only hope
that our orders to buy more PC stocks fill before the new Win 8 holiday
sales show up everywhere and revenues rise.
I though my office assistant put it best. "People are complaining
that Windows doesn't look like it looked before," I told her. "Right,"
she replied. "That's why they call it new."