With HP's Decline, Should Microsoft Start Making Computers?

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The idea isn't new, but now that HP is considering spinning off its computer business, Microsoft could make a move for the market

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HP, the largest manufacturer of Windows-based computers, has recently stated that they're considering getting out of manufacturing consumer PCs. They cited disruptions in the business caused by the iPad, which is stealing sales from the inexpensive netbooks and laptops that have been so popular in recent years. But of course there continues to be a huge demand for Windows-based PCs -- the iPad is a disruption, not a death-knell. The problem is that price competition throughout the PC world has driven quality down, commoditizing the market and making it extremely difficult for manufacturers to make a profit.

Anyone who's ever used a Zune knows that there's a definite design sensibility at work at Microsoft.

The drop in quality has not gone unnoticed by consumers, who are experiencing increasing frustration with these machines. As more and more of our lives move to the computer, we find ourselves willing to spend a couple of hundred extra dollars for a machine that's less likely to break down, and that comes with good customer support when it does break down. We look longingly at Apple; but who wants to switch to a completely different platform? Isn't there a manufacturer that would make computers that are as good as Apple's, but run Windows?

I buy computers for the small non-profit arts organization where I work, and it's a complete drag. We mostly go with Dell, which used to have a reputation for decent hardware. But for the last five years, I've watched their quality steadily decline, to the point where close to half the machines have some sort of major hardware problem within their lifetimes. I would love a higher-quality alternative, but there seems not to be one.

Several manufacturers have tried something like this strategy, but they usually end up with something like a "deluxe-PC," something that adds unnecessary design flourishes (think: metal accents) without the solidity and reliability of Apple's products. And even when the internal components on these machines actually are better, it's hard for the manufacturer to convince consumers of it when a flimsy $399 laptop with the same logo is but a single aisle, or webpage, over.

John Siracusa discussed this issue recently and came to an interesting conclusion: Microsoft has a lot to lose with HP's decline. Lack of good Windows PCs portends a bad future for their software, after all. Would it not make sense for Microsoft to consider launching their own line of PCs? Microsoft already does produce mice and keyboards, and those are well respected. Their Xbox seems to be as popular as any other gaming console. And the Zune, while a failure as a product, was equal in quality and even design to Apple's iPod.

So why not launch a line of premium yet reasonably-priced laptops and desktops? Microsoft has the money to enter the market. And it could set prices just high enough to convince everyone that their machines are better than the undifferentiated stuff found at department stores while setting high standards for quality and design from day one.

The advantages seem clear: Microsoft gets to control the model platform for Windows and Office, the two pieces of software where they make the overwhelming majority of their revenue. They could integrate the functionality and design of the hardware and software as they see fit. Anyone who's ever used a Zune knows that there's a definite design sensibility at work at Microsoft. It's distinct from Apple's, but it's quite good. Seeing them turn their attention to making laptops and desktops could breathe new life into the whole Windows PC marketplace, and it would give consumers looking for quality and smart design an alternative to defecting to Apple products.

Of course, the idea of Microsoft creating its own PC hardware has been around a long time. But with the success of Apple's integrated approach, and the troubles in the PC market, it seems like the time has come.

Image: Reuters.

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Alesh Houdek lives and works in Miami. He writes occasionally at Critical Miami.

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