Lack of competition is stifling IT innovation

But are the green shoots of change starting to emerge?

Jeremy Laird

Windows 7 is 234 per cent more popular than its predecessor. It's official. OK, so that figure relates to the first few days of sales in the US, and the predecessor in question is Windows Vista, the Antichrist OS.

Even so, pathologically mediocre as it may well be, Windows 7 was well received. What interests me is how this reflects a broader malaise that continues to blight the PC industry.

What else but Microsoft's ongoing near-monopoly can explain the continued success of an operating system that sports a near-total absence of real innovation?

The broader problem involves the fact that the key components inside your PC, both software and hardware, are still owned by far too few companies. In just about any other industry of global import, the way Microsoft dominates the software landscape while Intel has the hardware platform largely sewn up and Google owns web searches would be viewed as unhealthy.

A handy analogue is the food industry in the US. If you've seen the documentary Food, Inc., you'll know what I'm talking about. According to the film's makers, key sectors in the US food industry have been whittled down from around 20 major players in the 1970s to just four mega-producers today.

Unsavoury practices

The result has been the emergence of a range of seriously unsavoury practices – the concentration of power in the hands of a handful of massive companies hasn't done anyone any good. Except those companies, of course.

Compare that to the PC industry and, if anything, the concentration of power looks much, much worse. It's a fact that both Microsoft and Intel, for example, have recently been subject to prosecutions for market abuses. But a plausible argument can still be made in terms of the benefits to the PC industry and end users.

Together, Intel and Microsoft provided developers with a single, unified platform and a massive customer base. Thus was born the astonishing ecosystem of PC-compatible applications and devices we take for granted today.

Moreover, I suppose we should all be grateful for what little competition there has been. Without AMD and ATI to keep Intel and Nvidia honest, for instance, we might now be marvelling at the power of single-core Intel Pentium 5 processors and Nvidia GeForce 4900 TI graphics.

Similarly, I scarcely dare imagine what horrors the Beast of Redmond would have sired were it not for the threat, however remote, of Apple's OS X and the opensource Linux operating system.

So, a lot of power and wealth may have been accumulated in the hands of a few thanks to the Wintel monopoly, but mankind has benefited enormously from the emergence of ubiquitous personal computing.

A democratic wave

Still, if I'm convinced it's all been worth it up to now, I'm equally sure the time has come for a more democratic wave of innovation. Fortunately, there are signs it's already happening.

Microsoft is increasingly under siege from all conceivable angles, whether it's the success of Linux as an enterprise OS or the arguably even more lethal threat posed by the humble web browser. Who needs a complex operating system if all your applications are hosted online?

Intel's hardware nut seems trickier to crack. Creating computer chips is a complex business – the idea of new entrants to the market is virtually inconceivable. However, the increasing importance of mobile devices might be the key.

Currently, ultra-mobile computing is dominated not by Intel chips but by ARM's processor architectures. Crucially, ARM's approach to producing CPUs is rather novel.

In fact, ARM doesn't really produce processors at all. Rather, it licenses out designs. This gives chip makers the option of simply knocking out an off-the-shelf design or fusing an ARM processor architecture with its own technology to create something unique.

As the remit for ultra-mobile devices expands over the next few years, so will the range and ability of ARM-based processors. Chips with all kinds of enhanced functions, from video decoding to cryptography acceleration, are likely to appear.

Intel recognises the threat posed by a plethora of purpose-built ARM processors and so has taken the bold step of licensing out the Atom processor architecture to TSMC, one of its main rivals in the chip production business. Again, the idea is to allow the Atom core to be combined with a range of third-party circuitry.

All of which means we're poised for a battle royal between ARM and Intel in the ultra-mobile segment.

Google, meanwhile, might just provide a similar foil for Microsoft. The result would be a perfect storm of hardware and software innovation. If that happens, the mediocrity of Windows 7 will be but a distant memory.

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