LAS VEGAS--Remember the days when Microsoft (NASDAQ:MSFT) and Intel ruled the world? Everyone used desktop or laptop computers running Windows software and powered by Intel chips. While there were alternatives (think Mac), most of the world computed with Wintel whether they wanted to or not.
Today, thanks in large part to the smartphone and tablet cavalcade, the world's primary computing platform may change. Microsoft and Intel are relatively minor players in both smartphones and tablets, whereas upstarts Google (NASDAQ:GOOG) and Apple (NASDAQ:AAPL) are leading the game. At the Consumer Electronics Show here, Motorola (NYSE:MOT) and LG took the wraps off tablets powered by Google's Android 3.0, dubbed Honeycomb, and Nvidia's Tegra 2 processor. Though Honeycomb is not yet complete, vendors are promising to ship devices in the coming months.
Further, Research In Motion (NASDAQ:RIMM) is gearing to release its PlayBook tablet this quarter, while Apple likely will soon introduce an updated version of its iPad. And Hewlett-Packard has scheduled a Feb. 9 event where it may announce a webOS-powered tablet.
If consumer and enterprise users move the bulk of their computer use to tablets and smartphones--as some believe they will--then the relevance of Microsoft and Intel could fall into history.
"The future of computing is mobile. That doesn't mean that desktops and notebooks go away, just that the growth appears to be in smartphones and other light computing platforms," wrote Current Analysis analyst Avi Greengart in response to my questions on the topic. "Right now, ARM and phone vendors have a decided advantage over Intel and PC manufacturers. This is not only relevant for tablets, but for smartphones as well--it's why Apple, Dell, Asus, Acer, HP, et al are all trying to become smartphone vendors."
Microsoft and Intel are attempting to reinsert themselves in the smartphone game, though their efforts are still in the early stages. As for tablets, Intel is working to supply chips for the gadgets but silicon vendors such as Nvidia have managed to capture the lion's share of awareness in the space. For its part, Microsoft has said Windows Phone 7 is not intended for tablets and that tablet vendors should instead use its Windows 7 operating system for their devices, despite criticism that the platform is not suited for touch-based tablet computing.
Interestingly, according to a Financial Times article, Microsoft is at work on a "rewrite" of Windows geared toward touchscreen tablets. Microsoft representatives weren't immediately available to provide details on the reported effort.
"Google's Honeycomb poses a much bigger threat to Microsoft than it does to Apple," wrote Forrester Research analyst Sarah Rotman Epps. "Of the 24.1 million tablets we expect U.S. consumers to buy in 2011, the majority will still be iPads, but consumers looking for a cheaper, feature-rich alternative will turn to Google, not Microsoft."
Asymo's Horace Dediu took a broader view. In a post titled "This is the most exciting CES ever," Dediu noted that PC makers have embraced platforms beyond Windows, and Microsoft has moved Windows beyond Intel architecture by embracing ARM Holdings. "These actions confirm the end of the PC era. Although most people would characterize the era as exemplified by a particular form factor or market, for me the definition of that era is the way the value chain was structured and hence how profits were captured."
So what does this mean for the current crop of tablet and smartphone vendors? Despite evidence of a withering Wintel, it's not a panacea. CCS Insight analyst Geoff Blaber told me that Android tablet vendors are already caught in a race to the bottom--a trend highlighted by Android tablets nearing the $100 mark--which indicates that vendors will have to innovate on the service layer to effectively compete. And they have a steep hill to climb, considering the work Apple has already done on the service layer (think iTunes and App Store).
Concluded Current Analysis' Greengart: "One thing is certain: There is a rush to market here, and products that can deliver a clear and differentiated value proposition have a shot at standing out in the crowd. Slapping components together with a stock OS may work if you've got a time to market and distribution advantage, but that won't be sustainable for long. There will be a lot of carnage along the way."