Microsoft showing signs of total disarray

OVER THE PAST two decades, the combination of Microsoft and Intel - dubbed "Wintel" in later years - has dominated the PC world. But both companies are showing their age and both companies are in the process of retooling the roadmaps they put up over the past few years. While Wintel dominates the PC desktop market, there are windows of vulnerability opening up for Microsoft and Intel. To be sure, they're small windows, but there are a lot of companies that would like to pump through as much business they can to secure a beachhead and potentially dislodge one or both companies.

Consider Microsoft's biggest hype event this year: The release of "Halo 2" for the XBox. It's a game, for crying out loud, not an operating system release. At the same time, Microsoft is soft-rolling a beta release of its Internet search engine at http://beta.search.msn.com/ while many pundits are anointing Firefox 1.0 as the second coming. The Microsoft of old would have put together a massive media blitz to brainwash the press that its web search site was going to give Google a run for their money, not thrown it out as a "beta" product.

Nope, the Vole is too busy trying to get security patches out for its existing code base and reworking Longhorn so it can get it to ship by late 2006, gutting out an (allegedly) revolutionary file system. And to top it all off, Steve Ballmer is running around saying that a $100 PC would stem piracy, but doesn't really discuss how a $100 PC would solve the problem of the $200 list price for Windows XP.

And there's a right royal mess of Windows XP "products" right now? There's XP Home Edition, XP Professional (being pitched as XP "Home Improvement" edition), XP Media Center, Tablet PC Edition, and Windows XP Professional with 64-bit extensions. Not to mention XP Third-World, the castrated but lower-cost version of XP. No wonder why it wants to hype Halo 2 so much!

Fortunately for Microsoft, Apple can't manage to get above five per cent market share and Linux just hasn't had a breakout event on the consumer desktop. Linux continues to nickel-and-dime away in enterprise establishments, but there's been no sweeping desktop replacement wins. Even if Firefox manages to displace IE over the next couple of years, the bulk of Firefox clients will likely run on Windows XP boxes.

On the other hand, Intel knows it has competitors gunning for it, and all it takes is one of them to start cranking out chips in sufficient quantity and price/performance points in order to rattle the windows. If you don't think Intel has figured out that its chips are a commodity, why is a non-engineer running the company now? New CEO Paul Otellini is an MBA by trade. After all, the engineers promised a roadmap to deliver 4 GHz chips that Intel has had to publicly eat, along with some other chips along the way. Further, the market leader in 64-bit x86 chips is AMD, despite Intel throwing tons of money at the Itanium.

Let's not forget the fact that Intel has managed to confuse things further for buyers by dumping its too-long-held practice of selling by clock speed and coming up with a bizarre number scheme for its chips. AMD had run away from MHz and GHz long before Intel finally had to face the music.

AMD is showing signs of smartness. It's taken the lead at the high-end and is promising to run the table on the low-end. If people are shopping for the cheapest machine, they are looking at the price tag, not for "Intel Inside." Further, if Microsoft is crying for a cheap computer, AMD plans to provide the CPUs to make it happen.

Still, defeating Intel is going to take a lot of good luck and a few more screw-ups by the company. Intel has deep enough pockets and enough diversity in silicon to weather any sort of short-term gains by AMD in high-end processors and on the desktop. At the low-end, AMD will have to come up with solutions that will beat Intel's XScale processors. And Intel doesn't care if a box is running Windows XP or Linux so long as the cheques clear for the chips. µ