I know this is not the usual content of this blog, but an insight hit me today and I wanted to pass it along. It came from reading this Business Week story about the high prices Microsoft wants for Windows 7.
Microsoft's revenues have two main drivers: the Windows operating system and the Office suite. Now what happens to those revenues when Apple and Google release cradles for their phones (and the iPod Touch) that will drive a full-size monitor, keyboard, mouse, speakers, and printer - with built-in Firefox, Chrome, or Safari browsers to access cloud applications? (like Google Apps) If I have modest computing needs - web, email, pictures, video, documents, spreadsheets, presentations, etc. - why do I need a full-size PC or laptop with Windows and Office if my phone can drive everything I need to do and fit in my pocket to boot? As an added bonus, I can also choose to drop my home broadband service and go all 3G. All of a sudden Windows PCs and laptops are a niche market for high-end gamers and graphics.
It will take a little while to get there - faster phone processors, more memory and storage, better browsers that are stronger application platforms, iTunes conversion to a cloud app - but the trend seems inevitable, and the transition could happen very quickly once it starts. Microsoft has been able to drop Windows prices to hold on to netbooks (vs. Linux), but a price drop won't be able to stop this wave.