Robert Scoble asks "Does anyone in Silicon Valley care about Windows anymore?" I think the bigger question is "Do Operating Systems Matter Anymore?" Of course every computer needs an operating system to work, but does anyone care which one? Increasingly users are spending more time with applications that run in the browser, and rarely interact with the operating system.
In the old days there were "killer apps" like VisiCalc or Lotus 123. The choice of app determined which operating system you purchased. Today most applications run in the browser so the underlying operating system is irrelevant to the end user.
With hundreds of millions of Smartphones and Tablets flooding the market, and hundreds of thousands of apps, does anyone think about operating systems? Probably not. But that doesn't mean they aren't still wildly profitable.
Microsoft annual revenues are over $62 Billion and growing. Apple is bigger than Microsoft, at $65 Billion and growing. Both are powerful companies making huge profits. Much of Microsoft's revenues and most of its profits come from Windows and Office. Apple has diversified significantly so that most of its revenues and profits come from iPods, iTunes, iPhones, and iPads.
Cost of hardware - Computing has always moved to smaller, faster, cheaper platforms. Starting with million dollar main frames in the IBM days, to hundred thousand dollar mini-computers in the DEC, SUN, Data General days. Thousand dollar personal computers were the next step in computing. And today, hundred dollar Smartphones and Tablets are the hot platform.
Software prices dropped too - It was common to pay hundreds of thousands of dollars for software on the old main frame computers. Software for Mini computers typically cost tens of thousands. PC software cost hundreds of dollars. Web based applications are a few dollars a month, or maybe free, funded by advertising dollars.
Economics of Computing - While the cost of hardware and software has dropped significantly with each platform transition, the number of users has multiplied ten fold, or more. So, the economics still work. Look at this chart from Morgan Stanley analyst Mary Meeker;
With the explosion of computing devices at such low prices do operating systems matter? Every device needs an operating system, but it has become a low cost, low margin commodity. Where is the future of computing?
Phone Computer – Your cell phone will become your primary computer, communicator, camera, and entertainment device, all in one. The exciting new applications run in the browser, with application code and data in the cloud. There will be docking stations everywhere with a screen and a keyboard. You simply pull out your phone, plug it into the docking station, and instantly all your applications and data are available to you. You can connect to the Internet via your cell phone service, WiFi hotspot, or wired connection. Your phone will have enough storage so you can decide which applications and data are stored on your phone, and which will be in the cloud. Replication will work seamlessly in the background so that you always have a backup copy of your data in the cloud.
Cloud Computing – The explosion of reliable broadband bandwidth, virtualization technology, cheap storage, memory, and servers, has made Cloud Computing the obvious choice for the next decade. There are huge cost advantages versus on-premise servers. Why buy servers, hire IT admin to manage them, buy operating system licenses, application licenses, pay 20% maintenance fees every year, worry about security updates/breaches, hassle with asset management, etc., when you can just “pay as you go” with cloud computing resources? You can buy compute cycles from Amazon, or hosted applications like Gmail and Google Apps. Google also provides a cloud infrastructure with an integrated development environment to build scalable web applications. The Cloud provides lots of choices and cost advantages.
Browser as Web OS – The browser is becoming more important than the underlying Operating System. HTML5 puts many OS capabilities into the browser, especially off-line storage/use. Google is developing Chrome OS that is essentially a browser and operating system in one. The Chrome CR-48 Notebooks are now in beta test, and will likely be available to the public later in 2011.
The cell phone as your computer, the Cloud for applications and storage, and the Browser as your operating system. These are huge changes in computing. They are happening now. Ten years from now will people care about Windows or Mac operating systems? Not likely.
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