Steve Ballmer is in trouble. Any Wall Street analyst that tells you Microsoft’s record breaking profits are a sign the company is stronger than ever doesn’t understand the current landscape of Silicon Valley. Microsoft has become an institution, one that almost every company and every consumer uses when interacting with their laptop or desktop. This reality, while being their biggest strength for the past 2 decades, has begun to cripple the giant.
To understand Microsoft’s positioning one only has to look at their revenues. Windows is oozing with profitability. Climbing back from the failures of Vista, Windows 7 is their fastest selling OS of all time and has vastly improved where the previous version fell short. The problem is that these two products are largely under assault, and while competition is partially to blame, the reality is that the PC empire Windows is based off of is slowly becoming more and more obsolete.
For the sake of your time, I will not discuss the Enterprise market. Corporations get a discount for buying in bulk and IT departments are slow to upgrade, let alone change operating systems all together (my laptop at work is currently running XP). Because Windows infrastructure has been used and perfected for so long, I do believe they will still maintain a majority stake in 10 years. The consumer market however, is a completely different story.
Windows is already beginning to lose the war in consumer purchases. If we first examine the existing laptop/desktop market, Apple has made amazing gains recently. Arguably more important than the growth in Macbook and iMac sales are the demographics being drawn towards Apple. A recent survey found 70% of college freshman are bringing Macs to school. These are the consumers that will be filling up newly purchased homes with various pieces of technology in a few years. These are the consumers that will define what piece of hardware is “cool.” When you considering that in 2009 Steve Ballmer claimed Apple AND Linux combined had about a 6% market share, it really seems like major disruption within the market for laptops and desktops is rapidly approaching.
But traditional computing methods are the least of Windows worries. The bigger threat is the potential for consumers to stop using these machines all together. Everyone knows that smartphones and tablets are being purchased by more and more people each month. These devices are the first examples of what will eventually build into the entire computing industry. What happens when people don’t buy a tablet and PC…but instead simply opt for just a tablet? In a few years an iPad may be more powerful than your current Macbook Pro, so why would you need both? Microsoft’s foray into the smartphones has been commendable (I’m a fan of Windows Phone 7’s Metro UI), but their market share is still pathetic when compared to iOS and Android. Not to mention two years after the first iPad was released, they still don’t have a full tablet OS.
So what are the Engineers up at Redmond, Washington going to do about this? Windows 8. Anyone who has watched the D9 demo knows this is not simply the natural evolution of Windows like the past 15 years. This is a fundamental reimagining of what computing will look like in the 21st century and I have to say, it looks very nice. To all the people who say it’s going to be buggy or the interface won’t work intuitively; wait and see. Microsoft is not just betting big on the new design, its betting the whole pie. If consumers decide that a tablet OS shouldn’t run desktop apps or a desktop interface shouldn’t look like a tablet’s, this could very well mark the beginning of the end for the software giant. As I write this last paragraph on my Dell XPS 1530 within Microsoft Word I have to wonder, what will I personally be using in 5 years, in 10 years….in 2 years?