Last week was another tough one to be a member of the “WinTel” community, either as a shareholder, user or employee. The near-monopoly platform that was Microsoft (NASDAQ:MSFT) Windows software combined with Intel (NASDAQ:INTC) chips, on which so much of the tech industry was built, continues to crack apart.
But those were the days, no? Heady times: Microsoft was once the most valuable company in history and actually helped keep Apple (NASDAQ:AAPL) alive when it was down! And now, well, not so much. Intel has its own problems, too. In fact, look at what happened to this once-dynamic duo just last week alone:
- Microsoft and Nokia (NYSE:NOK) unveiled a joint smartphone (Lumia 920 and 820) running on MSFT’s Windows 8 platform. YAWN! went the market, and down went NOK’s stock price.
- Intel announced it was slashing it forecast for the third quarter and withdrew its full-year forecast numbers yet again. The market wasn’t happy at all, and INTC was down over 3% on the news.
- In case anyone’s been hiding under a rock, Apple is set to announce Sept. 23 as the on-sale date for its iPhone 5. Oh, and CNNMoney published this graphic showing sales of the iPhone now exceed MSFT’s total sales volume.
That will be enough short-term piling on for now.
Long term? Wow, where to start?
Both bookends of WinTel almost totally missed the mobile revolution and have been playing catch-up every day. It feels like neither company has had a monster winner since the last time the Baltimore Orioles had a winning season (1997, but that’s about to change this year).
Their stock performance is equally ugly: Both shares trail the S&P 500 over the last 10 years by a fairly wide margin. Over the last five years, MSFT has returned a paltry 8% (not counting dividends), while Intel shareholders would be in the red were it not for dividends.
The world is clearly rotating into another model that I may not be able to quantify or term, but I know it when I see it: It’s led by the likes of Apple, Google (NASDAQ:GOOG), Amazon (NASDAQ:AMZN), Salesforce (NYSE:CRM) and other more nimble players cranking out products aimed at consumers and rewarding investors with sky-scraping returns.
Do I think the sky is falling? Heck no. I’ve yet to see a full-on, jump-ship, clear-the-decks dissolution of the WinTel model, particularly in businesses. But there’s no denying PC sales are slowing dramatically, and if and when tablets and mobile devices can truly work for business purposes as seamlessly as the PC, that could be the game-ender.
In fact, Microsoft’s tablet entry, the Surface, almost needs to be that change. The Windows 8 Pro model with an Intel chipset (the less-capable RT version uses an Nvidia chipset) has features and functions aimed right at people who love the ease and convenience of the tablet, but can’t use one easily for business.
So, maybe that becomes the savior of WinTel. In any case, it will be a long road, and investors may have some *facepalm* moments along the way. But like any eroding dynasty, this one needs to be closely watched.
Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing he is long AAPL, MSFT, and INTC.