Microsoft Can't Keep Up in a Mobile World

The PC ecosystem is under threat. To rescue it, Microsoft and Intel may have to dig deeper—into their own pockets.

Global personal-computer shipments fell 14% in the first quarter, according to research firm IDC, their steepest decline ever. Microsoft's stock duly fell 5% on April 11, with Hewlett-Packard's stock down 7% and Intel's, 3. What is surprising is that investors are surprised. Not only did the two halves of the "Wintel" duopoly miss the boat with mobile, their latest attempt to regain momentum has looked ineffectual for months. New machines running Microsoft's latest touch-enabled operating system, Windows 8, typically powered with Intel chips, are so rare as to elicit stares when seen in the wild. Microsoft blames limited distribution. But IDC analyst Bob O'Donnell points out that such machines have proven too confusing and expensive.