PCs are the new Mainframe, and not in the good sense

Every time I write something about Microsoft’s strategy, and suggest the classic desktop PC (and the desktop, indeed the WIMP model itself,)  is becoming a niche offering, I get inundated with comments challenging my position.  Now this just in from Gartner, unless Microsoft gains traction in tablets and smartphones in the next four years they will become irrelevant.  Microsoft itself realized this years ago which is why they’ve stuck with banging their head on the wall to make Windows Phone succeed and started the re-invention of the PC with Windows 8.  From a sheer numbers perspective, phones and tablets dwarf PCs and moreover are displacing PC usage in increasing numbers of areas.

The traditional PC market is in long-term irreversible decline.  That doesn’t mean it goes away, mainframes are still with us for example, or if it does (as happened with minicomputers) that it goes away in the next decade.  But sales volumes will rapidly shift to smartphones, tablets, and tablet-inspired devices.  Microsoft can cannibalize its own traditional business or watch Apple and the Android cartel do it to them.  Microsoft’s approach is to try to redefine the PC to encompass the so-called post-PC world.  That’s a tough thing to do, and one can question details of the route that Microsoft takes, but they have no choice.  Despite what many Windows 8-haters believe.

One recent comment on this blog challenged Microsoft’s move away from the traditional desktop with the assertion that Apple remains committed to that market with OS X.  Let’s be clear here, despite Apple’s relative (to previous decades) success with OS X the Mac is a pimple on the overall PC market.  The much maligned Windows 8 has already passed any version of OS X in market share and will pass the combined market share of all versions of OS X by the end of this year.  If you want to hold OS X up as proof of the vitality of the traditional PC market you may be demonstrating the opposite.  That the much-loved OS X hasn’t been able to exceed single digit market share range despite Microsoft’s travails with anti-trust restrictions on its business practices, the Vista debacle, and a general malaise towards the company suggests that the desktop is a niche.  Few want to pay the costs of moving to OS X because they don’t see that as a meaningful change.  Their personal and corporate attention is on the much more impactful paradigm shift that is under way.

One could also challenge the assertion that Apple is investing in OS X.  It’s more like a cash-cow.  Years ago they reportedly cut the size of the OS X team and moved the resources to IOS.  Even in the last couple of days there have been reports of resources being taken off of OS X to help with the development of IOS 7.  Apple continues to invest enough in OS X, and refreshes of the Mac product line, to keep it generating healthy profits.  But the full weight of the company is behind IOS and the non-desktop world not OS X and the desktop.  I wonder if critics would have been happier had Microsoft put a skeleton crew on producing Windows 7.1, 7.2, etc. while the bulk of its resource went into producing a Windows-based “Tablet OS 8″.

Microsoft has been in the toilet for over a decade now yet neither OS X nor the variety of attempts at Desktop Linux have made a dent in its desktop dominance.  On the other hand, IOS and Android are kicking the c*** out of Microsoft.  Apple and Google have taken advantage of a paradigm shift away from WIMP as a usage model and the “desktop” as the place most people do computing.    And now that is spreading from being secondary devices (or consumer toys as some try to position them) that reduce Minutes per Day (MpD) usage of PCs (and lengthening the PC replacement cycle) to replacing traditional PCs outright.  Retail is a very visible example of this, where iPads are replacing in-store PCs and PC-based cash registers as the primary device used by store employees.

Microsoft may fail to make the transition and become irrelevant just as Gartner asserts.  I think the Windows team made some rookie mistakes in putting out Windows 8.  Those are things they can recover from, although the delay in getting to a place where the reinvention of Windows garners more praise than hate makes their cause significantly more difficult.  On the positive side it looks like both Windows Phone and Windows are shifting some of their attention back to the Enterprise market where their traditional strength lies.  That’s probably a strategy they should have pursued from the beginning, but fear of “keep doing what you’ve done and you’ll keep getting what you got” caused the pendulum to swing too far to the Consumer.  Again, not technically irrecoverable but certainly a huge speed bump in achieving business success.

Microsoft has a long and difficult road ahead of it and they will make mistakes along the way.  But they really have no choice in whether or not to attempt the journey.  The traditional PC is the new mainframe.  And even for the mighty IBM, mainframes are just a niche business as this point.  When it comes to computing the phrase “change or die” has never been more appropriate.

 

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25 Responses to PCs are the new Mainframe, and not in the good sense

  1. Tom says:

    I am *very* wary of minutes/day as a metric. Maybe watching movies or whatever, you want to increase minutes/day. But for actual work, you want your users to get their stuff done as quickly as possible.

    Mainframes are not a niche business for IBM. They generate minimal revenues, but lock the customer base into IBM software and services. Analysts estimate that IBM generates 40% of its profits from mainframe-related products.

    The point is, there’s perception, and then there’s financial reality. The perception is that mobile/tablets are the future. The reality is that Samsung and Apple make all the profits in mobile, and Apple makes all the profits in tablets.

    This is why I feel the Surface lineup is just as important to Microsoft than Windows 8/RT. It diversifies the revenue stream, so that Microsoft has a foot in the door. If profit margins on software come down, then Microsoft turns into Apple. If profits margins on hardware come down, then Apple is in trouble and Microsoft falls back on software.

    • Minutes/day metric was an eye opener for me. I have never thought about software this way before and it is an excellent way to measure how sticky one’s product is. It is easy to measure, and I believe it is also how a person would roughly quantify the value they are getting from a service.

  2. aiotbbb says:

    Yes, iOS and Android dominate the mobile device sector but they need to be potent enough to be able to replace most of what is done by PCs and exist independently from PCs.The form factors continue to evolve and MSFT is gonna have to adapt Windows to leverage strengths of mobile devices but , despite the preponderance of “casual users” , iOS/Android or derivatives thereof would also have to mature to bolster their capabilities before they can “replace” PCs to the extent that has been suggested by many.Is there a technological reason why one would be easier than the other ?

  3. Edgar says:

    I just saw in global stat counter the usage of operating systems, the first thing I notice is the mobile and desktop usage, desktop is whopping 85% although with a trend to decline, mobile is about 18% with a trend to grow.
    Second, this month in the OS usage, the “doomed” windows 8 just surpassed iOs as the fifth OS in the world, and is in way to top OSX and Vista by mid year, Android is marginal, bellow 5%.
    So? what means that?
    First, (counting ipad’s, iphones, and ipod’s) the iOs devices are in the hundreds of millions, also the web usage in these devices are high, so that means that win8 adoption if far above the pundits estimate.
    Second, Android despite the market share in mobile OS, is a bottom feeder OS, powering cheap tablets and phones, just a few high end devices make the cut.
    Third, Win8 is growing, the fact that just surpassed the biggest mobile OS just show the great opportunity for developers and OEM’s.
    Win8 is touch enabled, just imagine the potential market when win8 have the market share of win7? it dwarf the market size of iOS.
    The apple app store is saturated, good luck trying to make a profit in android, the only growing touch OS is win8.
    OEM’s are whining about apple eating his lunch, they blame win8 and Microsoft. I have a tip, create high quality hardware, well designed, well built (just look apple or Microsoft hardware) and people will start buying, the day they introduce something like the Wacom cintiq 24 hd touch, bellow the $1.5k mark I will be the first in the line for buy one.

  4. skc says:

    It’s been interesting watching you slowly go from very optimistic to apparently souring a little on the idea of Windows 8 being successful product Hal.

    What’s changed?

    • halberenson says:

      Sorry, it wasn’t my intent to be negative. I’m trying to get across to the non-believers why it was so critical for Microsoft to go through this transition, and that Microsoft itself is aware of the dire consequences of failure. To do that you have to get people to understand how the world is changing and how big the challenge is.

  5. dafowler says:

    You know people complaining about Windows 8 and RT seem to overlook that the OS is about getting Microsoft into the tablet space. Also I think people downplay tablets as toys and glance over the fact that almost from day one people where attaching keyboards to them and trying to use them with printers. I’ve been in multiple stores that don’t carry iPads but carry rows upon rows of Apple accessories. The reality is that computing is becoming more and more keyboard optional.

  6. jon says:

    The OS is irrelevant, it’s the breadth of the software base that determines whether a platform lives or dies. Microsoft have taken their position of the vendor with the world’s largest software base and thrown it away in the hope they can overtake Apple and Google who are years ahead of them. No matter what they do to Metro it will always be a distant third to iOS/Android. So saying they had to do _something_ is fine, but why start by ditching their one true asset? That’s just crazy.

    • Brian says:

      Never say “never” with Microsoft. Look at Xbox. It took a long time for it to succeed (and will likely take longer to “pay back” the startup (and RROD) losses. But, it’s the market and thought leader now.

      The WinRT work (the APIs plus Windows on ARM) isn’t some short term thing for Microsoft. As Hal says, it’s Microsoft’s way to stay relevant.

      All that “largest software base” software still runs on Windows (geez, DOS and Win3.1 apps mostly still run on 32-bit Windows). It will continue to run for a long time. Developers and engineers will continue to use a keyboard and a mouse when they are toiling away on AutoCAD or Visual Studio. But, there are *a lot* of users for whom a 600g, touch-driven, always-connected device is *exactly* what they need and want.

  7. Dave says:

    It is surprising even Office is held hostage to Windows and the PC. Office365 has done little to innovate in key tablet productivity scenarios or user interface. Throwing an HTML editing experience at everyone is also silly. Microsoft’s entire offering is stuck in the PC era and they aren’t moving quickly enough to be relevant. With today’s mobile announcement from Facebook, it is clear had every reason to partner with Microsoft but instead they found it faster and easier to work with Google’s Android and HTC.

  8. W8 won’t be successful until touchscreens are significantly more common. My SurfaceRT and my WP8 are great devices. However, when I upgraded my dual monitor non-touch desktop to W8, it just didn’t feel right. No bugs or problems, just not what I’m accustomed to. My phone and Surface are ‘fluid’, but the desktop just feels clunky. Just let folks boot to the desktop and most of this goes away.

    When friends ask me what to do, my advice is always to stay with W7 unless you have a touch enabled device. In a general sense, MSFT had to introduce a touch enabled W8 just to get the PC manufacturers to go that direction. MSFT just won’t/can’t cement their place in the future until we all have touch. That said, if W9 isn’t absolutely brilliant, then MSFT is in deep trouble.

  9. Eric the Red says:

    It’s gonna be an interesting 5+ years watching this unfold. I, for one, am fully in agreement that Microsoft had to go all in to try to make up for lost time in the mobile space. It’s a shame they were not more successful on the first go, IMHO, and in particular that so many things they have gotten right on Windows Phone were not carried over to Windows RT.
    I just think there is reason to believe the decline of the desktop will be slower than that of the mainframe. PC’s were orders of magnitude cheaper than mainframes and from the start were able to do things that mainframes couldn’t do. Today, there is a whole continuum of devices spanning the gap from desktop PC to tablet, and price isn’t the overriding factor. Businesses don’t go to the expense of redesigning business processes just because the devices on people’s desks aren’t cool anymore. For every desktop or laptop computer that is replaced by a tablet, the marginal utility of the ones that are left goes up.
    I am not in denial here. Maybe in part, I’m just bitter. Microsoft failed ISVs miserably with WPF. Frankly, I think they stopped caring about ISVs about the time you were working on SQL Server, focusing instead on enterprise developers. Now that they suddenly have native code religion, all the love is going to Metro app developers. No soup for the desktop. The native APIs we have are 20 years old. And now Microsoft seems intent on dropping the desktop like a hot rock.
    If Metro/RT were actually ready for applications like ours, we would be happy to move on. It’s not close. Maybe by Windows 9 or 10. I suppose if Microsoft will get Metro/RT to that point in a few years, they do us a service by not giving us anything new on the desktop to spend time implementing.

  10. Mainframe hardware is a couple percentage points of IBM revenue but combined mainframe hw + sw + svcs pull is still pushing half their profit, so it isn’t a niche by any means.

    And “the Vista debacle” is officially referred to as the Vistaster.

  11. Bob says:

    I think Microsoft will be able to gain a large tablet market share, but I think their profit margins will drop like a rock. In a world where Amazon and Google give away tablets at $159 and $199, Microsoft will struggle to maintain a large market share *and* healthy profit margins.

    • busabus says:

      I wouldn’t say that. Prices will come down just like anything else. Amazon sells the Fire at a loss because they make that revenue up with book and app sales. The cheap Android tablets simply are crap and you pay a comparable amount for the models that perform well.

      Furthermore, you get much more value from a Win 8 tablet that can run more robust programs such as Photoshop and the like.

    • Edgar says:

      Is the opposite, actually despite android have a huge market share, the profits are concentrated in apple and Samsung, and apple eats three quarters of that.
      Microsoft may be never lead the mobile OS market, but their share will be profitable, as long OEM’s understand that the key to success is to market GREAT hardware in terms of quality and design. Just look at the recent drop in prices of win 8 devices, only Microsoft surface keep the original price and I bet, is the best selling too.

  12. Kamahl says:

    I’m sorry but there’s clearly a huge misunderstanding both in the comments and in the post, and that is “People hate that ms is going touch”.

    This is wrong, it’s why microsoft isn’t succeding and is getting so much hate.

    Try to understand please. People dislike how microsoft is doing it, not that it is.

  13. Kamahl says:

    Also attributing the lack of switches to OSX or linux as evidence that the desktop is a niche makes no sense. Windows 7 was the best selling OS of all time.

  14. Formfiller says:

    “One could also challenge the assertion that Apple is investing in OS X. It’s more like a cash-cow. Years ago they reportedly cut the size of the OS X team and moved the resources to IOS. Even in the last couple of days there have been reports of resources being taken off of OS X to help with the development of IOS 7. Apple continues to invest enough in OS X, and refreshes of the Mac product line, to keep it generating healthy profits. But the full weight of the company is behind IOS and the non-desktop world not OS X and the desktop. I wonder if critics would have been happier had Microsoft put a skeleton crew on producing Windows 7.1, 7.2, etc. while the bulk of its resource went into producing a Windows-based “Tablet OS 8″.”

    Um, YES! That would be far better. W7 with a few under-the-hood improvements would beat the W8 mutant by a far margin.

    Actually, W8’s desktop portion “improvements” are far below skeleton crew. It’s not even on game-mod level.

    Game mods usually enhance a game, they don’t butcher it. Unlike W8..:

    http://penguinday.wordpress.com/2013/03/01/windows-8-fucking-sucks-2/

    http://sparklements.blogspot.de/2013/01/how-microsoft-windows-8-is-just-like.html

  15. Compiler says:

    From another blog:

    We are witnessing the greatest technological regression since a long time, maybe ever. I get sick hearing from the pundits the claim that the forced touchiness is the same as the transition to GUI from CLI, utter garbage.

    The new paradigm gives less functionality (Microsoft’s own metro apps prove that), is far harder to use (try to stretch your arms for a prolonged time), needs far more maintenance (cleaning screens from fingerprints constantly), and is a health nightmare in the making (gorilla arm). Seriously, it inverts all the health cautionary warnings and recommendation for the office workplace. Then of course the loss of empowerment by the forced accompanying appstores, with no sensible sideloading most of the time. It’s tech from hell!

    I really wonder what’s going in the mind of these darn ABMers (anything but mouse) promoting this garbage as the future of all computing, consumer and work alike. BS. Were they bitten by mice in the ass when they were children or something, and we have to suffer because of their traumas? Even the Minority Report interface they are always wetting their pants about is garbage in reality. Watch that scene again – it looks cool, but every cop would prefer a desktop computer after two days of standing around and twisting your arm like a retard all time.

    The “new paradigm” is a trifecta of reduced functionality, reduced ergonomy and reduced flexibility; the PC used to be the perfect platform, it had all software, it supported all known input methods and it could allow for all known usage scenarios (including locked down enterprise workstation scenario).

    Now, we’re moving fast towards a new state where even game consoles may be more flexible than PC (look at what nVidia is doing), it’s ridiculous

    All this talk about comparing this garbage to the transition from command line interface to GUI? All those past revolutions were additive, nothing got replaced or
    removed, CLI is still with us and the only non-CLI automation solution is Apple’s Automator, even then, CLI is still there on the Mac and so is Apple
    script. On Windows we not only have the full CMD CLI, but we also have DOS BOX, the emulator, Power Shell, the new and improved CLI for Windows and even UNIX CLI options made for Windows.

    All those Command lines can be made to serve as the primary UI if anyone choses to do so, almost all of them can be made to autostart and go to fullscreen, completely removing/replacing the desktop. Full MS-DOS experience is available today, nearly twenty years after it was replaced by Windows. The experience has not drastically changed, if you liked old MS-DOS CLI you will like today’s solutions. And let’s not forget that lots of MS DOS applications are still in use. Look what lots of doctors are still using for example.

    Now let’s look at Metro; it replaces significant parts of Windows’ desktop, it cannot be sanely avoided (“Blue” already trashes several of these start menu replacements, so it’s not reliable), the remaining desktop presents a drastic change in usability, there are no official (or trivial) solutions that would allow for a WinXP or Win7-like experience, no matter how advantageous that would be (for MS!).

    Bottom line is, MS has forgotten everything (or they never learned anything in the first place), they forgot that the transition (if it is happening, there are dubious signs of that) will last a decade or two, they forgot that the old system will never go away (win32 will be used for 50 or even 100 years, that’s if MS drops support tomorrow, they’re not dropping it however), they forgot that a large contingent of users will never switch, at all, and, they forgot that a badly executed transition can anger their users and destroy any consumer confidence they may have had.

    To put it mildly: MS is executing a corporate suicide, they’ve stepped on each and every mine in the field and they are doubling down, after being told, clearly, to change direction. Sinofskysoft is madness

    And yes, that timeframe – I am serious. Something none of these Facebook and Angry Birds users understand is how insanely expensive it is to replace software that works and performs an important function. It’s why there was all that “COBOL LOL” 15 years ago and stuff written in COBOL is exponentially less useful than software designed since. There are things that may take a billion dollars to replicate in the flavor of the week, and with virtualization, it’s now feasible to just let the old shit run until the end of time. It’s gonna be way cheaper to keep updating VMware than it will be to rewrite all these applications. Even if metro and touch would be sent from heaven (actually it seems to be from the other direction), their pipe dream that this “evolution” will only take 5-10 years to complete and no one would complain is utter madness.

    And what about Microsoft’s desire to close down everything? (forced appstores with no sideloading). Open platforms serve a large and diverse set of needs by allowing what some call hacking; that’s the point of such platforms. The reason why open source never took off was precisely in the fact, that Windows was open enough, and the reason why the old Mac never went anywhere, was because it wasn’t open enough.

    Bizarrely, MS is now trying to out-Mac the iOS, even though we’re seeing that open platforms remain hugely popular, even if they have significant flaws – Android is the proof of that.

    The question they should have asked themselves was: “Who needs another iOS?” and “Who needs a better – faster, more usable – Android?” instead, they asked “How can we mimic Apple?”. That’s killing them. Android has a higher marketshare on smartphones than iOS and Windows a far higher share on computers than MacOS. The only case where Apple is leading in number is on tablets, but it seems that Android is closing in there too. Apple usually wins by raw profits per unit, Microsoft per marketshare. Now MS trying to out-Apple Apple is like Walmart seriously trying to out-Gucci Gucci. It’s classic cargo cult strategy; they have no idea why things work as they do and are performing bizarre rituals that superficially resemble the work of others, while waiting for the promised results that will never materialize.

    The pipe-dream about replacing everything with tablets/phones? Nearly all of the iOS/Android customers also use a desktop PC/Mac. No one is making the argument that they can do PC tasks on their tablet.

    Ok, Ok, so the Apple zealots are, but it’s a transparent attempt at inflating the value and weight of the iOS platform, since Apple still has no tangible desktop presence (the market share lingers on Vista level). Once MacOS starts to gain ground – when users look for a Metro alternative – all the iZealots will instantly remember how important the good old desktop is and they won’t shut up about it.

    What will MS have to say then, when it becomes obvious that Apple played them like a cheap guitar?

    The main reason PC/laptop sales are slower is because the hardware got fast enough to run pretty much any software without upgrading constantly, and not because suddenly no one needs the functionality and comfort they provide.

  16. Jason C. says:

    You’re ignoring the main criticism which is that Metro is being forced on desktop users that don’t want to use it and have no plans to buy a touch monitor. In fact for certain size/resolution combos there aren’t any touch screens available.

    Your defense of Windows 8 will be to the detriment your own credibility. This is a bad product and the market doesn’t care about how you think it fits into a long-term strategy. It’s getting bad reviews and Ballmer is looking like a clueless idiot as always.

  17. interfilip says:

    Aiiii … the critiques would always be so much more relevant if the name calling would be left out.
    I put Win8 on my 5 year old laptop mainly because I was curious were MS is headed. The start screen indeed is not extremely useful on a desktop. But also no big obstacle. And while there are plenty details that could and should be tweeked, overall it is alright. And by alright meaning: the most usable OS on the market today – in terms of compatibility, software, hardware, support, and just plain daily-life shit.

    To me the criticisms sound like judging the menu and not what’s on the dish. The point being: The hardware is only picking up traction, the app store is something I havent even used so far. But it’s been only in recent weeks, that Win8 tablets and hybrids have showed up in sizable numbers in stores around here. And some of the hardware is pretty enticing. That is the point in separate OS and Hardware: Choice. I don’t see why there should not be a large customer base to the new line of Win8 devices. Instead of a new laptop, why not having a hybrid? IOS & Android are interesting options, but Win8 at least just as much. Each time a new apple device comes to the market, it goes straight to the end user. That is one marketing advantage. MS has to rely on manufacturers, so naturally adoption picks up with some lag. And adding to that, software developers seem unsure about the Win8 potetial, which has been written down constantly by the tech circle. But sheer OS adoption numbers speek a different language. It was pointed out here that Win8 now offers the biggest potential in app market gains. No estimate will hold much relevance before the next half year or so.

  18. interfilip says:

    Aiiii … the critiques would always be so much more relevant if the name calling would be left out.
    I put Win8 on my 5 year old laptop mainly because I was curious were MS is headed. The start screen indeed is not extremely useful on a desktop. But also no big obstacle. And while there are plenty details that could and should be tweeked, overall it is alright. And by alright meaning: the most usable OS on the market today – in terms of compatibility, software, hardware, support, and just plain daily-life shit.

    To me the criticisms sound like judging the menu and not what’s on the dish. The point being: The hardware is only picking up traction, the app store is something I havent even used so far. But it’s been only in recent weeks, that Win8 tablets and hybrids have showed up in sizable numbers in stores around here. And some of the hardware is pretty enticing. That is the point in separate OS and Hardware: Choice. I don’t see why there should not be a large customer base to the new line of Win8 devices. Instead of a new laptop, why not having a hybrid? IOS & Android are interesting options, but Win8 at least just as much. Each time a new apple device comes to the market, it goes straight to the end user. That is one marketing advantage. MS has to rely on manufacturers, so naturally adoption picks up with some lag. And adding to that, software developers seem unsure about the Win8 potetial, which has been written down constantly by the tech circle. But sheer OS adoption numbers speek a different language. It was pointed out here that Win8 now offers the biggest potential in app market gains. No estimate will hold much relevance before the next half year or so.

  19. Jim R says:

    Sorry, but I just don’t see it that way. It’s about productivity.

    First, I also think that we will see desktop system market share drop, for some very simple reasons that don’t have anything to do with old vs new or fads. The simple fact is that up until a few years ago anyone who wanted to have an online presence of any sort (email, web, facebook, blogs, pick whatever) HAD to have a personal computer of some sort. With the advent of feature phones, smart phones, and tablets, this is no longer true.

    I helped my hair stylist get a cheap laptop computer a year or so ago. But then she had to sell it because she needed the money. Now she just has a smartphone, and that does what she needs. All she really wanted from a computer was communication in the form of email, facebook, and web browsing. Her most important electronic job tool is a phone so she can take calls for appointments. Oh yeah, the smartphone does that too. So that’s a perfectly productive tool for her. A windows box just isn’t needed. A few years ago it would have been.

    Same for my parents. A computer was a tool for email, IM and video chat, web, tax and budgeting software, and the occasional game. Any of the range of modern devices can do that.

    On the other hand, I work in software, and have a very powerful desktop computer setup to do my productive work, and would not and could not do it any other way. (I can use a powerful laptop in a pinch and when on the road, but it’s not the same level of productivity mostly because of much less
    screen real estate.) I have a tablet and a smartphone (Windows Phone) and think they’re great, but I could no more do my real work on those than flap my arms and fly away. BTW, I don’t consider answering emails while on the run to be ‘productive work’, that’s overhead. And I’m happy to be able to do that on multiple devices, especially portable ones. Desktop systems or equally powerful laptop systems and whatever they will evolve to in the future are simply necessary for me. And I’m not so rare that I’m a niche consumer. Anyone doing software, graphics arts, publishing, media creation, etc., needs the power and screen space that the portable devices don’t deliver.

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