What Microsoft, HP and Other PC Players Have Learned from the Smartphone World

While the smartphone has done a lot of damage to the PC industry, it has also been a positive influence in some important ways.

Microsoft's (MSFT)  Tuesday unveiling of three new Surface PCs -- the Surface Pro 6 notebook/tablet convertible, the Surface Laptop 2 and the Surface Studio 2 all-in-one desktop -- showcased how much many of the smartphone industry's obsessions have rubbed off on PC makers. So did HP Inc.'s (HPQ)  Monday unveiling of its Spectre Folio convertible.

From a hardware standpoint, the similarities between Microsoft/HP's latest PC launches and high-end smartphone launches by the likes of Apple (AAPL) , Samsung and Alphabet/Google (GOOGL) aren't hard to spot. Among the hardware features emphasized by each set of product launches.

  • Premium materials. HP claims the Spectre Folio is the first convertible to be fully clad in leather -- and not just any leather, but (in the company's words) "100 percent chromed tan, full-grain leather." Likewise, Microsoft trumpets the fact that its new Surfaces are available in a matte black finish it "fell in love" with. "We obsess about the way this finish looks and feels," the company said in a line that one could easily imagine Apple design chief Jony Ive uttering.
  • Battery Life. Under normal usage, Microsoft promises 13.5 hours and 14.5 hours of battery life for the Surface Pro 6 and Surface Laptop 2, respectively. HP promises up to 18 hours of battery life for the Spectre Folio.
  • Advanced Displays. The Surface Pro 6 and Surface Laptop 2 feature bright, high-contrast displays that support Microsoft's PixelSense multitouch tech. The Surface Studio 2's touchscreen is said to be 38% brighter than its predecessor's, and to support 4,096 stylus pressure levels.
  • Getting little details right. In addition to folding up so that it can be used as a tablet, the Spectre Folio supports a "tent" position that tucks away the keyboard while the device is placed on a user's lap. This, together with the leather, leads tech analyst Patrick Moorhead to call the Folio "one of the most interesting and unique devices that I've seen in a long time from a PC maker." The Surface Pro 6 features a revamped cooling system that allows it to pack a quad-core Intel  (INTC) Core i5 or i7 CPU in a tablet form factor.

Microsoft's Surface event also featured a slew of accessory, software and service announcements that one wouldn't deem to be amiss at a smartphone launch event. These included:

  • The unveiling of the Surface Headphones. They cost $350, contain 8 microphones, support 13 levels of noise-cancellation and (naturally) come with voice-activated Cortana support.
  • The unveiling of an app mirroring feature that will (through a PC app called Your Phone) let Windows 10 users view and use Android apps on their desktops and notebooks.
  • The introduction of Surface All Access, a financing program that lets a user pay for a Surface device over the course of 24 months. Plans start at $25 per month, and come with a 2-year subscription to Office 365.

One can also see attempts by PC industry players to borrow a page or three from the smartphone industry in the low-end and mid-range segments. Chromebooks, with their simple interfaces, rapid boot times and Google Play Store support, certainly have some smartphone-like qualities. And though software support for them remains a work-in-progress, the same holds for Windows notebooks powered by Qualcomm's (QCOM) Snapdragon processors. Initial Snapdragon-powered models boast 20 hour-plus battery lives and an "always connected" mode that allows for smartphone-like instant device waking and background data downloads.

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Though not the only reasons why PC sales have begun to stabilize -- a business PC upgrade cycle and demand for high-end PC gaming experiences are also helping -- efforts to take some lessons from the smartphone industry appear to have done some good for PC demand, particularly on the high-end.

In July, research firms IDC and Gartner respectively estimated global PC shipments rose 2.7% and 1.4% annually -- each firm reported unit growth was the strongest it had seen in six years. And last Friday, Intel, while discussing recent CPU shortages, said it now expects "modest growth" in the PC total addressable market (TAM) this year, after having previously expected a decline.

Meanwhile, on Wednesday, HP's shares rose in after-hours trading after the company issued above-consensus fiscal 2019 (ends in Oct. 2019) EPS guidance. With the help of fresh share gains, HPs Personal Systems division saw its revenue rise 12% annually in the company's July quarter, with commercial and consumer sales both seeing double-digit growth.

None of this means that PCs will be a high-growth market again anytime soon. But the industry does look a lot healthier than it did a couple years ago.

And arguably, this rebound has at least a little to do with the willingness of PC industry players and others to learn from the industry that disrupted them.

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