Microsoft Death Watch – Market Share Down to 19%

The Future of Microsoft
The Future of Microsoft

For years I’ve been warning everyone that Microsoft as a corporation is in deep trouble. Now Microsoft’s share of the new device market is down to 19%…

The first thing you should be asking is, am I right?

My numbers are from a post by Tomi Ahonen on the Communities Dominate Brands blog. His numbers indicate that Microsoft fell from 24% in 2012, and 31% in 2011, if you include Tablet and SmartPhone numbers. Yes, I too consider Tablets and SmartPhones to be computers. So do the computer OEMS.

But they do different things, you cry! Actually, no. They do the same things. The limiting factors appears to be screen size and keyboard. For most applications a keyboard isn’t necessary (do you really need a keyboard to watch LOL Cat videos?) For a lot of applications you can get by with a smaller screen – after all, who is going to carry a forty inch screen to the park…

For some applications a large screen, or a keyboard is necessary, or at least desirable. For some. For the rest? No.

Microsoft appears to have made the mistake of assuming a keyboard is necessary (see specifications for the more expensive Surface Tablets). Microsoft also appears to have made the mistake of believing that a Tablet and/or SmartPhone needs the complete Windows User Interface, whereas Apple had already proved with the iPhone that it doesn’t.

If this was Apple, if would mean nothing. Apple has always aimed at the premium market. The problem is Microsoft aims at the entire market, and it is now losing huge chunks of that market.

Because of the huge take up for Tablets and SmartPhones in the last five years, the “computer” market has grown dramatically since 2008.

2008 – 465.5 Million

2009 – 465.5 Million

2010 – 646 Million

2011 – 950 Million

2012 – 1,224 Million

2013 – 1,492 Million

 

At some point the growth is going to level off – unless they can convince us to replace our devices every six months… The current world population is estimated to be 7.15 Billion or 7,150 Million. According to the sales from 2013, 20% of the world population bought a new computer/tablet/smartphone in that year, which if we assume every person owns a computer,  means that devices are lasting five years on average.

In simple terms, I’m expecting sales to level off soon. Yes, there are people who don’t currently own a computer/tablet/smartphone, but prices have been dropping, and more people buying computing devices.

Unfortunately Microsoft has landed nearly none of this market. 

Microsoft marketing has historically played on the existence of Microsoft software in one market, to push adoption in other markets. This works if the software offered in those other markets is attractive, and a good deal for the buyer, or if there is a specific advantage the original software gives.

Take Microsoft DOS/Windows and Microsoft Office. Due to Microsoft knowing the insides of DOS/Windows better than anyone else, they could product an Office Suite that had significant advantages.

Microsoft wasn’t able to leverage the DOS/Windows advantage in the Tablet and Smartphone markets (or the set-top box markets, or automotive markets where Ford is dumping Microsoft for BlackBerry’s QNX OS). Because of this, if other products are more attractive or a better deal, the customer is free choose those products.

And choose them they have. Apple produced 270 Million computing devices last year, Samsung produced 365 Million, etc.

Microsoft’s main market is software for Desktop/Laptop computers. Sales of Desktop/Laptop computer have dropped over the last five years. Part of the drop has been caused by increased usage of Tablets and SmartPhones as Desktop/Laptop replacements, or as partial Desktop/Laptop replacements. Part of the drop was caused by the recent recession, which is still having an impact.

If a user can use a Tablet or a SmartPhone to replace X% of the functions of a Desktop/Laptop computer, that enables them to hold off replacing the Desktop/Laptop computer for Y amount of time. This is called Disruptive Innovation. The Tablet/Smartphone is far more portable, and is often far less expensive than a Desktop/Laptop device.

If Microsoft is unable to develop new products that are attractive, capable, and inexpensive, the company will fail.

Regards

Wayne Borean

Sunday March 16, 2014

Advertisements

4 thoughts on “Microsoft Death Watch – Market Share Down to 19%

  1. Good points all round. I have a love/not-so-love relationship with my iPad 3. It is heavyish and the keyboard ain’t so good. However, I use it a lot. The next iPad will be the mini with retina display and I will hunt down a decent attachable keyboard. Reading is a fav app as is Movies for my late night bed watch. My iPt is my music and my note taker. All the other apps for internet and composition work fine on the touch and iPad. The toys or info apps are quick and dirty.
    I am so surprised that MS failed to understand the importance of the first iPhone and then the iPad. A terminal case of Denial is what I scratch it up to being. Foolish. You don’t underestimate the competition, ever, especially the likes of Apple which is the lynx of tech competition. It plans, it stalks, it springs with such agility and concentration, that its protégé work like magic at first introduction. Apple perfect? I know not from some of my experiences but it sure beats the competition.
    I do like to write and for that I prefer the computer. I may still buy a MBAir for this very reason but the iPad will continue to have an impact on my computer time.
    MS’s latest foot shooting is the past-due introduction of its Office family. Sadly for MS, a lot of traffic has been lost as people got used to alternatives and will now see the expense of that set of wares costly and unnecessary. And for that bit of sowing, MS deserves the little of what it reaps.
    The big question for me is how many older-time MS users have learned the habit of Apple iPhones and iPads and have gone onto the brand’s desk and laptop computer family or are looking into one as their next heavy weight. If you’ve got a powerful show that draws the audience, you don’t want the theatre next door to draw away your paying guests and that is exactly what MS has done holding its guns to its own feet.

    1. It will be fun watching this play out. As a long time Microsoft watcher, and as someone who worked in sales selling to Fortune 500 companies, I’ve been fascinated by how Microsoft has not been handing things.

      Part of this is companies become arthritic with age. They aren’t as flexible as they used to be. Sometimes the company can work past it – IBM being a good example.

      Sometimes they can’t, and things happen. Novell is a good example of that.

      Microsoft has appeared to be on a downward slide since the release of Windows ME and Windows 2K. Windows ME was a horrible joke. Windows 2K really didn’t offer much more than Windows NT, and was less stable.

      I got a lot of hate mail for saying that I thought Microsoft was in trouble. Curiously the hate mail has dried up. I wonder if it’s because everyone else can see the cracks now, or because it was AstroTurf.

      Wayne

  2. Wayne,

    I think MS is at an identity crossroads: either they are a software house that sells an OS or an OS house that sells software. The first identity says they should be making applications for all the current OS and devices to grab a bite of the apple (puns not intend). If the later the risk is users migrate to other devices that do not use their OS that person is effectively permanently lost. I am a Linux user and because MS has so far refused to support any Linux distro I do not personally use any MS applications. They can not get a bite of my apple even if I wanted to buy MS Office for example. Currently MS is acting as if they are OS house that sells software.

    A trend to watch is the how much of the market Chromebooks and the ChromeOS take in the low end laptop market. If it is significant, MS is has a serious problem.

    1. It looks like they are trying to migrate to being a Hardware house like Apple, based on the various XBox devices, the Surface tablet, the purchase of Nokia’s mobile devices division, etc. What will really blow things wide open is if Microsoft builds their own computer. That would cause major havoc.

      FYI, my wife has a ChromeBook, and loves it. I’m sticking with the Mac for writing, it has a really comfortable keyboard, and you can’t go wrong with a BSD based operating system.

      Wayne

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s