RENEE MONTAGNE, HOST:
Staying in the tech world now, later today Microsoft releases its earnings for the final quarter of 2012. And no matter what the computer software giant announces, it won't mask the fact that last year was a brutal one for the personal computer industry.
Dell - one of the largest computer makers on the planet - is in talks to be taken over by a private equity firm. PC sales are declining globally.
And as NPR's Steve Henn reports, some see a technological shift in the works that could undermine the empire built by Microsoft.
STEVE HENN, BYLINE: Mobile devices like tablets and smartphones are now clearly stealing sales from the traditional personal computer industry.
Scott Weiss is a venture capitalist at Andreessen Horowitz.
SCOTT WEISS: And the only problem is, is that there's no, you know, Microsoft tablet.
HENN: Actually there is. There are lots of them. They're just not popular.
WEISS: You know, all the tablets are being shipped as either Apple or Android.
HENN: Personal computer companies that haven't moved aggressively into mobile - companies like Dell - are suffering.
WEISS: And so it puts kind of the whole WinTel thing in a pickle.
HENN: That's the technology empire Microsoft Windows and Intel created together - and now that empire is falling apart.
JEREMY REIMER: It's actually a fascinating story because it starts in - way back in 1975.
HENN: Jeremy Reimer is a writer and programmer who's studied technology life-cycles. He says personal computers took down main frames a generation ago - by being cheaper and getting just good enough to do some real work. Today he says mobile devices are doing the same thing.
REIMER: A lot of people are finding they can get by with just...
HENN: A smartphone or a tablet.
REIMER: Particularly in the developing world, a lot of people are skipping PCs entirely and just going straight to a smartphone.
HENN: The smartphone is their computer, and according to Bob O'Donnell, an analyst at IDC, these devices are now taking a bite out of traditional computer sales.
BOB O'DONNELL: In 2012, PC sales declined by a few percentage points and it's the first time we've seen negative growth.
HENN: Outside of once during a recession. And today, big American PC manufacturers - like Dell or HP - are getting crushed. IDC says Dell shipped 21 percent fewer personal computers last quarter than it did just a year ago. And even though Dell has almost $11 billion in cash and generates billions in profits each year, its stock price has collapsed. Investors just don't see a bright future - and all that's made it an attractive target for a private equity takeover, according to Weiss at Andreessen Horowitz.
WEISS: I don't think it's necessarily a capitulation.
HENN: But turning Dell around probably won't be pretty.
WEISS: I think going private, it's almost like you pull a curtain up because there are some messy things that are going to have to go on.
HENN: Think restructuring, layoffs.
WEISS: And doing that all in the, you know, under the public glare, is not easy.
HENN: Weiss's firm, Andreessen Horowitz, has done deals with Silverlake. That's the private equity firm in talks to buy Dell. Together the two firms explored buying Yahoo, and a couple years before that Andreessen Horowitz and Silverlake bought Skype; then later they sold it to Microsoft.
WEISS: You know, listen, the folks that are contemplating taking Dell private are incredibly smart.
HENN: Weiss says Silverlake and other private investors clearly believe they can continue to sell PCs profitably for years, even if their business isn't growing.
WEISS: When a platform shift happens - like it did to Blockbuster Video - and, you know, kind of the writing's on the wall, it still is amazing just how long it takes for a product line of for a company to go out of business.
HENN: Weiss says there still could be an upside for Dell. It does more than just sell PCs and...
WEISS: Microsoft has seen the success that both Apple and Google have had in making their own tablet kind of a, you know, just controlling the user experience from beginning to end.
HENN: So Weiss wasn't surprised that Microsoft is reportedly interested in buying a piece of Dell. Helping Dell survive can't hurt and perhaps Microsoft and Dell together could actually build a mobile product people want to buy.
Steve Henn, NPR News, Silicon Valley.
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