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.
Sunday March 16, 2014