Answer ALL questions

Read the case study below and answer ALL the questions that follow.

Intel, Microsoft: too PC

The PC is a relic. People shop on talking computers, email on their watches and read newspapers on their smartphones. Traditional nolebooks and desklops have reached saturation, innovation has slowed, sales have slid. Bad news for Microsoft, whose Windows software has been the default PC operating syslem since the $1990$ s$.$ Bad news for Intel, whose processors have powered most PCs since the $1980$s$.$

Yet shares in both companies, which report quarterly earnings on Thursday, have risen more than $20$ per cent in the last $12$ months. Weaning themselves off PCs would be a positive shift, justifying the appreciation. And they are trying: Microsoff's great hope is the cloud, where it competes with Amazon and Google to manage corporations' data. Intel is betting on the internet of things', with the related explosion in the number of devices incorporating sensors$.$

The transition, though, is neither fast nor assured. Operating profit fell in the last $12$ months at two of Microsoff's three divisions. The only gainer was the PC division, boosted by the latest Windows release, which accounted for $22$ per cent of profits and $44$ per cent of revenues. Intel, which infamously botched the move to mobile computing, remains even more reliant on PCs$.$ Its PC$-$dominated 'client computing division' makes up more than half of all revenues and profits.

An outperformance in PCs also bears the weight of expectations for earnings on Thursday. Intel, in particular, had been cautious on fourth quarter sales but data from IDC suggest shipments were strong, $70$ m compared with $60m$ in the first. Overall, PCs are certainly declining $-261m$ were shipped in $2016,$ according to IDC, cormpared with $276m$ in $2015-$ but the pace of decline is more gradual than had been feared. Flatter is better: it should help both Microsoft and Intel fund their transformations, with cash to spare.

Yet it would be a safer $-$ and a sturdier support to valuations $-$ if the newer areas were already rising faster. Nvidia, another chipmaker, enjoys a lead in virtual reality, artificial intelligence, cloud computing and self$-$driving cars $($though it is valued accordingly at nine times sales$).$ It turns out office workers do not dispense with a PC just because their phones get smarter. But should artficial intelligence live up to its promise, companies will dispense with more office workers. The insurgent machine brains will need software and chips, but not the traditional PC variety.

QUESTION $1$

$(10$ Marks$)$

In light of the case study above, discuss the future of the PC$.$

QUESTION $2$

$(15$ Marks$)$

Assess and analyse crucial correlations and links between business information systems and strategr.