Decades ago the PC market standardised around Microsoft’s Windows and Intel’s microchips and thus an entire ‘Wintel ecosystem’ was born. It grew into an enormous habitat of programmers, hardware and software vendors as well as system integrators and consultants. For generations, Wintel became the de facto omnipresent ecosystem of enterprise IT.
It still is, but Barbarians at the gate: with the arrival of the smartphone (and tablets) less than a decade ago, things started to look really bad. With sales of these handheld computers growing quickly to phenomenal volumes, PC sales started to decline. The knock on effects have proven invasively corrosive to the entire Wintel ecosystem.
And as growth can progress exponentially, so can decline; as Hemingway once put it: “How did you go bankrupt? Two ways. Gradually, then suddenly”. Users have already shifted to mobile and with software and hardware vendors following suit. Continuing to run Wintel applications is becoming a liability because the vast majority of them can run only on Wintel.
Your organisation better watch and prepare for an accelerating decline of the Wintel empire that will send shockwaves spreading. Another important reason to put priority on getting rid of your legacy running exclusively on Intel Inside1.
1. When we talk about Wintel we also include the marginal AMD that also produces CPU’s based on the x86 architecture.
Let us take a closer look.
Mobile is chipping away at the user end of the Wintel ecosystem:
- The PC share of the market of programmable devices (computers, smartphones, tablets) has evaporated as users have moved to mobile devices - see graph below. According to IDC estimates for 2015, 1.432 billion smartphones were sold compared to 276 million PC’s. In absolute terms, PC sales are falling year on year. Competition is fierce and margins have eroded for PC manufacturers, brands and supply chains.
- As users spend less time using PCs and performance improvements of Intel processors have slowed down significantly, replacement cycles have lengthened. Furthermore, the interest of users to buy software for the PC-market continues to decline.
- Intel has missed the boat in the mobile space. During the PC era, Intel dominated the market and benefitted from the biggest economies of scale. In the miniaturisation race, Intel was always one process node ahead of all other manufacturers, because it had the financial might to invest in the newest fabs.
In the mobile era, the Intel production volumes and corresponding cash flows are dwarfed by the ARM based chip industry that supplies all mobile phones. For the first time, Intel is no longer ahead in the miniaturisation race -crucial for notebooks and mobile devices- and most likely the chip manufacturers who can leverage the mobile volumes will leap ahead next year.
- The work computer is no longer synonymous with a Wintel PC. SAP and IBM are developing their mobile apps for enterprise on Apple iOS, thus placing ARM processor based Apple hardware on the shortlist for certain Wintel PC replacements. Google has announced its Chromebooks will also run Android apps. These laptops are often Intel Inside, but this will shift when mobile apps become more important. Productivity tools are becoming agnostic: Microsoft Office is available on Android and iOS; Adobe tools are being made available for Android and iOS platforms.
- The developer community and software vendors are shifting to either mobile apps or cloud-based applications. The dominant front end is either the browser, an Android or an iOS app. You do not need a Wintel device to run any of these.
Apple is a good case study for the ongoing decline of the Wintel ecosystem.
The Apple Worldwide Developers Conference starts next week and many rumour sites have reported that Apple shall not announce any new macbook pro’s at the event and that these are due only in quarter four of this year. Apple’s laptop line has seen no major refresh for a couple of years. Most of the delay is related to production problems that Intel has faced in the 14nm manufacturing process. But now that Intel’s new 14nm Skylake CPU’s have been released, all other PC manufacturers have launched laptops incorporating this technology. Why would Apple delay the release of overdue hardware refreshes by another six months?
One logical explanation for such a delay would be a switch of the Apple Mac line from Intel to ARM processors. Apple would most likely wish to combine such a hardware release with the release of a new version of its operating system, planned for quarter four. An additional advantage of releasing late in Q4: Apple can use the new ARM processors that are released with the new iphones, to be announced every September.
We are not trying to predict the exact timing of this processor switch, but we are convinced Apple will make the switch in the coming years for the following reasons:
- Intel was late in investing in graphical processor units (GPUs) and its offering is inadequate for professional use. Apple is forced to combine the Intel processors with an additional GPU from nVidia or ATI, thus adding complexity in its design and deteriorating battery life. The iPad Pro -based on ARM architecture with an integrated GPU- has already surpassed the graphical (and CPU!) performance of the ultra portable Macbook line with Intel Inside. Very likely, the future designs of ARM processors will offer Apple a competitive design in the high end professional market as well.
- Apple incorporates advanced features integrated in its ARM based chip designs for mobile devices in order to offer functionalities such as biometric authorization. Moving the Mac from Intel to ARM based chips will allow Apple to incorporate these features in its computer line as well. Sticking with Intel will mean either the exclusion of such features or the addition of extra chips to achieve the same goal.
- Apple has always strived to control key elements of its products. One important exception are Intel processors and the current trends will allow Apple to get rid of this exception. ARM processors will provide Apple much more control, as ARM provides a licensed template that Apple can further tweak and integrate with GPU’s and other functions in one System on Chip (SoC).
- Switching from Intel processors will allow Apple to either increase its margin or reduce the prices of its products or do a bit of both.
- Moving to a single CPU & GPU architecture across all of its products gives Apple significant economies of scope. Apple will be able to consolidate the sizeable effort it has to put into optimizing several software components, such as compilers, graphical libraries and LLVM’s2.
- Unifying its chip architecture will make it easier for Apple to integrate iOS and OS X apps where it wishes. It is clear that Apple does not wish to merge the two operating systems, but being able to run iOS apps on OS X without using emulation does have benefits. Dashboard widgets in OS X offered much more limited functionality to what iOS apps offer.
Using its own ARM based chip designs will allow Apple to achieve thinner designs and better battery life without a sacrifice in performance and with additional features. In addition, the huge installed base of iOS apps can be leveraged in the OS X platform. This will allow further differentiation of its computers and is a direct result of the economies of scale and scope afforded by the mobile industry.
2. Low Level Virtual Machine
As the rot in the Wintel ecosystem spreads further, Wintel based applications will become increasingly marginalised. Keeping legacy applications that are tied up to the Wintel architecture is a guarantee for diminished innovation, increased risks and costs.3
We can draw a parallel to our own past experience migrating away from a mainframe. First, innovation comes to a grinding halt, then risks of continuity in hardware, software and resources mount to an unacceptable level. Finally, the last application left on the mainframe has disastrous economics because it has to shoulder all the fixed costs. Similarly, you do not want to be the last one holding the Wintel-can.
3. We focus on Wintel applications requiring a run time on the user’s PC. Such applications can be centralised in a data centre in order to eliminate the dependence on a Wintel end-user device. Techniques such as server based computing or VDI are used but our experience is that this approach is in most cases sub-optimal (complex and expensive).