Why the iPad Pro is terrible news for Microsoft

The first version of the iOS software that powers the iPhone and iPad, released in 2007, had radically less functionality than conventional PCs. It couldn't run third-party software, couldn't multitask, and didn't even offer a cut-and-paste feature.

But over the last eight years, iPhones and iPads have grown more and more capable, narrowing the gap with PCs. On Wednesday, Apple took two more big steps in this direction. The Cupertino company announced a new iPad Pro with a laptop-size screen, a stylus, and the ability to run two apps side by side. Apple also introduced "3D Touch," which allows iPhone users to do a new kind of "hard press" gesture that works a lot like right-clicking on a PC.

Microsoft participated in the iPad Pro presentation, demonstrating how well Microsoft Office works on the new, business-oriented tablet. But while selling more Office 365 subscriptions to iPad users would be good news for Microsoft, the incursion of Apple mobile devices into PC territory is an ominous sign for the Redmond software giant.

History is full of examples where simple, disruptive technologies — like smartphones — gradually cannibalize the markets of more complex established technologies like the PC. And the result is almost always a disaster for the incumbents.

Disruptive technologies start at the bottom and move up

A Bethlehem Steel plant in 1999. (Tom Mihalek/Getty)

In the 1960s, the steel industry was dominated by huge, complex integrated steel mills. These mills faced competition from new minimills, which processed scrap steel in small batches. Initially, the larger mills weren't too worried about the minimills, which could make steel more cheaply than conventional mills but could only produce rebar, the lowest-quality and least profitable type of steel.

Clayton Christensen, the scholar who developed the concept of disruptive innovation two decades ago, has written about what happened next. Over time, the minimills figured out how to produce steel of higher and higher quality, while maintaining their cost advantages over the traditional mills. By 2001, competition from minimills had driven a leading traditional steel producer, Bethlehem Steel, into bankruptcy.

Something similar happened in the PC industry. The first PCs in the 1970s were comically underpowered compared with mainframes and minicomputers that were already on the market. But over time, they became more and more sophisticated. Eventually they not only created new markets for desktop and laptop computing, they also began to invade the server market, traditional strongholds of more complex and expensive computers.

Today, huge internet companies like Google and Facebook run their sites using commodity servers that are little different, technically speaking, from the PCs people have on their desks at home. Meanwhile, most of the companies that built those pre-PC computers — with names like DEC, Wang Laboratories, and Apollo Computer — have long since gone out of business or been absorbed into PC companies.

A more recent example can be seen in the news business. BuzzFeed, for example, began its life producing the rebar of online content — cat GIFs and quizzes. People (including me) laughed when they hired the respected journalist Ben Smith to lead BuzzFeed's news operation. But over time, BuzzFeed has moved "upmarket," producing serious journalism and even hiring an investigative reporting team.

Early smartphones were a lot less capable than PCs — and that was a good thing

Microsoft founder Bill Gates and his successor, Steve Ballmer. (Jeff Chistensen/Getty )

Three decades after the PC disrupted the computer business, the PC itself is being disrupted by smartphones and tablets. When Apple introduced the iPhone in 2007, Microsoft CEO Steve Ballmer laughed, saying that "it doesn't appeal to business customers because it doesn't have a keyboard, which makes it not a very good email machine."

But of course the joke was on Ballmer: The really big market for smartphones wasn't business users wanting to check their email and edit spreadsheets — it was ordinary consumers who wanted to chat with their friends, share photos, and (eventually) hail a ride. And for these users, the simplicity and elegance of the iPhone interface was actually an advantage.

Beginning in 2008, Google copied Apple's approach with its Android smartphone platform, dispensing with the keyboard and other PC-oriented features. The iPhone and Android quickly became the dominant mobile computing platforms, leaving Windows and BlackBerry-based phones with keyboards in the dust.

Slimming down Windows hasn't worked

Meanwhile, Microsoft had spent the previous decade trying to cram all of the functionality of a Windows PC into a pocket-size device. Microsoft's early mobile OS, introduced in 1996 with the unfortunate abbreviation of WinCE, even had a tiny and extremely awkward start menu. Once it became clear that the iPhone and iPad were hits, Microsoft got better at developing mobile-first user interfaces, but the company's PC legacy continued to haunt it.

Windows applications are designed for a keyboard and mouse, not a multi-touch display. When Microsoft's developers tried to convert them to tablet format, the results tended to be a lot worse than the native apps that were appearing on iPhones and Android devices.

Meanwhile, Microsoft's attempts to foist more tablet-y features on its PC customers with Windows 8 generated a backlash, forcing Microsoft to backtrack somewhat with Windows 10. Like the manufacturers that dominated the market before the arrival of PCs — or newspapers too addicted to lucrative print ad revenues to shift their focus to the web — Microsoft is a captive to its still-lucrative but stagnant customer base.

Apple's mobile devices are becoming more like PCs

Apple has taken a different approach. When it created the iPad, it made the crucial decision to make it a scaled-up iPhone rather than a scaled-down Mac. It had no menu bar, no windows, and no user-accessible file system. Users got the same simple, uncluttered interface they loved on the iPhone, but on a bigger screen.

Apple's scaled-up iPhones have been a lot more popular than Microsoft's scaled-down PCs

At the same time, Apple — and Google — has gradually been making its mobile platform more capable. It added cut-and-paste, an app store, and better support for corporate email and calendar systems. Google developed a notification center to help users manage the flow of messages — a feature Apple quickly copied. Android vendors also introduced "note" tablets that are designed to be used with a stylus.

Apple's scaled-up iPhones have been a lot more popular than Microsoft's scaled-down PCs. And on Wednesday, Apple took two more steps into PC territory with the iPad Pro and the 3D Touch capabilities of the iPhone.

The mobile revolution is bad news for Microsoft

It's too early to say if these innovations will be successful. It's possible the market for business-oriented tablets just isn't that big, and that people don't want to learn still more gestures for their smartphones. But Apple's strategy of scaling up smartphone software has a better chance of success than Microsoft's traditional strategy of trying to scale down PC software.

If you start with a simple interface and add an additional option — like force-clicking — beginning users can simply ignore it, and the software should still work fine. It's much harder to start with a complex software — like one that assumes the user has a keyboard and two-button mouse — and make it work well in a simpler interface.

In the long run, this means that Microsoft's desktop PC business may wind up like Bethlehem Steel and Wang Laboratories: Mobile platforms could become more and more capable, cannibalizing demand for Windows-based PCs. Tablet-based computers are unlikely to totally replace PCs — after all, there are still some mainframe computers around. But history is not on Microsoft's side.

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