Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

First Mover Advantage

An article was plastered on the front page of CNN’s money site the other day describing the death of the desktop PC.  In a nutshell, the author proposes (with some help from tech research outfits like Gartner) that multi-function devices that have inter-connectivity and high mobility such as smartphones and tablets will replace singular functional, non-connective devices such as MP3 players, PCs and cameras.  To wit:

Yankee Group recently published a study analyzing gadgets for their ability to connect to tasks that consumers crave like social networks, applications and multimedia content. The analysts then examined those devices’ potential to connect to services like GPS, subscription services and wireless networks.

The study found that smartphones, tablet computers, e-book readers, connected cars and connected televisions had the highest potential to be “transformative” in those important areas, and would become the next ubiquitous and “game changing” devices.

On the other hand, portable navigation devices, MP3 players, digital cameras and desktop PCs had largely already made their mark, and will soon be replaced by the newer devices, Yankee Group predicts.


But a confluence of events among device manufacturers and service providers suggests that the end for the desktop computer and other “has-been” devices really is on the horizon. Unconnected gadgets are finally starting to lose their luster and are beginning to be replaced by more multi-functional, connected devices.

“We’ve been talking about this for 10 years, but what’s new is that component costs have come down, the ecosystem of services has become more mature, and these devices are supporting a wider variety of content now than ever before,” said Susan Kevorkian, mobile media and entertainment program director at IDC.

In other words, new gadgets have become cheaper, more functional and offer more bang for the buck than devices like the PC, MP3 player and netbook. High function but low-end smartphones are now available on low-cost wireless carriers like MetroPCS (PCS), Sprint’s (S, Fortune 500) Boost Mobile and Leap Wireless’ (LEAP) Cricket, and devices like e-readers have begun price wars.



Now, you might have a case for the MP3 player and the camera, but its very hard from me to imagine any smartphone or ipad-like device being able to run financial models, database applications or create a client proposal via PowerPoint. I can’t see NASA trying to run the space program from an iPhone. You might make the argument that we could possibly revert back to the dumb terminal if cloud computing really catches on, but I don’t see that happening in the near future.  The security infrastructure is not there yet.

What I did start to think about when I read this article was about Microsoft’s place in the tech world, both past, present and future.  It’s no secret that in the beginning,  there was no first mover advantage in the creation of client/server applications.  History is full of examples where Microsoft has been able to effectively utilize a product development process where they simply “improved” upon existing products.  Lets review (with the original “inventor”):

  • The Spreadsheet (VisiCalc)
  • The Word Processor (WordPerfect)
  • The Relational Database (DB2, Ingress)
  • The Browser (Netscape)
  • The Contact Manager (Eudora, Lotus Notes, The Rolodex)

Something has happened, though, where first mover advantage has decidedly become just that: an advantage.  And quite a significant one at that.  If you look at the previous list, it’s apparent that where Microsoft’s methodology worked was with client/server applications.  Now lets take a look at some newer technology and see how second mover advantage has played out:

  • Game consoles – Microsoft has done quite well in the console market as its Xbox/Xbox 360 ecosystem having sold over 39 million units (as of Jan, 2010), ahead of the PlayStation but behind Nintendo’s Wii.
  • Search Engine -  The latest figures has Google at 62.6%, Bing at 12.7%.  Remember, search engine=advertising.
  • Music Player – There really is no contest here with Apple dominating the market.  And while the Zune has garnered some very good reviews from the technocrats, its not in the same ball park.  Not even close.
  • Smartphone – Here is where Microsoft really has stumbled in what is the most important category of all.  I had a Windows mobile on a Treo back in the day and lets just say there was a fair amount of “re-booting” going on.  RIM, Apple and now Google have left Microsoft in the dust.  As compared to the other aforementioned categories, though, smartphones introduce a completely new paradigm of how we connect with our digital lives.  And while Windows Mobile 7 is slated for release later this year, its going to be one major uphill climb for MS.

So while product innovation has never been Microsoft’s strong suit, historically, they’ve been able to commercialize quite well on the desktop.  And yes, while I believe the desktop is not going away, shifts in digital connectivity, accessibility and interaction might leave MS to wonder what could have been.

Disclosure: No positions