Here’s the real problem for Microsoft

October 3, 2014

Microsoft’s announcement of Windows 10 this week drew derision for the company’s seemingly tenuous grasp of the concept of counting, but that could be the least of its worries.

The Seattle software giant envisions their new OS, due out next year, as being a single solution to serve all computing needs. “Windows 10 adapts to the devices customers are using, from Xbox to PCs and phones to tablets and tiny gadgets,” said Terry Myerson, Microsoft’s head of operating systems.

Windows is still the operating system of choice for 90 percent of the world’s personal computers, but these Reuters’ graphics show that the rise of smartphones and tablets means that PCs now represent only 14 percent of the computing device market, with tablets sales projected to overtake PCs by 2015. And although Microsoft doubled its share of the tablet market in 2013, that amounted to a mere 2.1 percent of sales; Windows Phones comprised just 2.5 percent of those sold last quarter.

The jump from Windows 8 to Windows 10 seems odd, but Microsoft’s real problem with numbers lies in the dwindling number of devices that run its software.


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Tablets are useful for checking email, browsing the web, doing presentations.
They are *not* serious computers. They are *not* designed for business or gaming. You can’t do serious writing on them. You can’t do graphics layouts. You can’t do *actual work*.

What Microsoft and the stock analysts are worried about is an illusionary share of profits. They’re looking at ‘what we could have had’ rather than focusing on what they have. That’s why Windows 8 was such a disaster. They assumed that businesses would *get rid of* their working desktop computers for tablets, which is such a complete misreading of the market Windows 8 immediately failed.

Posted by Burns0011 | Report as abusive

Trouble with mixing phones and PC’s is that the lifecycles don’t mesh. People use PC’s for 5+ years, but only use their phones for 2 years or less. The replacement cycle of phones is much higher than PC’s, but the usage cycle for PC’s is much better than phones. Microsoft makes Windows which runs on more PCs for longer.

Comparing these things would be like comparing houses to cars…Cars have overtaken the housing market as there are far more cars sold each year than houses. Houses should be concerned that they will be obsolete soon.

Posted by gomigomijunk | Report as abusive

The middle is getting hollow. We’re seeing growth in million-processor data centers (Linux or Unix) and pocket gadgets (Android=Linux). In the eighties and nineties the middle ground was the sweet spot and Msoft owned it. Now it’s drying up and blowing away. What I have difficulty figuring out is what has happened to the people who once depended on the middle ground. Handheld pocket gadgets have way more power than any individual would need for anything, ditto storage, but they’ve got (with the exception of sound) awful user interfaces. You can’t “work” with them. Has everyone gone back to working on dumb terminals hooked to mainframes?

Posted by WCTopp | Report as abusive

Stupid article, with stupid numbers.

My PC has the computing capability of 1000 phones or 250 tablets. My OS cost is some multiple more. The raw number of devices is not a meaning full number. What matter is gross dollar value of the OSes, and what OSes have for dollar value of installed software, which basically says how valuable the machine is. Nobody is buying an OS upgrade for a phone.

Posted by Bookfan | Report as abusive

The Windows OS has grown bigger with each incarnation. How will Windows 10 fit on a cell phone? Will the cell phone OS install lack Windows’ full functionality? Or will the phone have a minimal Win10 app installed for synchronization? Are they planning its use for specific hardware in the future (thus forcing people to upgrade in order to have Win10 phone connectivity)? Also, the “cloud computing” aspect hasn’t been elaborated on, so it’s unknown how that will figure into the picture. The information released by Microsoft isn’t nearly specific enough.

Posted by I_Am_The_Answer | Report as abusive

Excellent analysis. With this in mind it’s possibly a good idea to learn a little about Linux – Linux is the underlying Operating System in Android. Trouble is, there’s no “root access” meaning other people have better access under the hood than the user.

Int he meantime these are the good old days; not all computers have wireless and video cameras. In the near future (unless something drastic changes), everyone will be quite monitored.

The Beast is learning us and appropriating means of profit…

Posted by JoeSchmoe123 | Report as abusive

No one denies the explosion of phones and tablets at the expense of laptops. But it would be useful to see a comparison in dollar terms, and not just unit terms. My observation is that a laptop still costs more than a tablet, and so it’s possible that laptop sales (in dollars, not units) will continue to surpass tablets next year. This would put Microsoft’s situation in greater clarity for at least this reader.

Posted by From_California | Report as abusive

I think the metric oversimplifies the case a bit… the pie of “computing devices” has grown enormously with the arrival of smartphones and tablets, but I suspect that most people who used PCs at home or work extensively before these new devices came along still use PCs now. I don’t think that so many PCs have been displaced or supplanted by new devices. Rather, I think the new devices are mostly additive, and compete as much or more for time and attention with TVs, cable, print, and wired telephone service as they do with PCs. There is a new pie. You can’t directly compare it to the old pie.

Another factor is that while phones and tablets are advancing at a great rate and being replaced every year or two with the latest model, PCs are in a sort of technical doldrum… even though semiconductor R&D proceeds, Moore’s law is no longer obsoleting last year’s PC as ruthlessly as it did a few years back. This is one reason PCs aren’t selling as briskly… they have a longer effective life.

Microsoft still owns PCs for now, and PCs still matter (again, for now). They may matter less, but I think not to the extent the chart above suggests.

Posted by mhaz | Report as abusive

And probably 90% of that 90% are on windoz 7, with no plans for migration to 8. They keep seeing windoz as a moat that defends their fortress, and they keep trying to drag other devices inside the moat. It locks them in, and the outsiders out, but they are not interested in breaking in because they own the countryside where the food is. Old story, Ballmer should have learned it from IBM and SNA. Wonder when the mass layoffs will start, ’16, ’17, maybe, ’18 at the latest.

Posted by ARJTurgot2 | Report as abusive

The real problem is the team of people who gave us Windows 8 are making really bad decisions. There should have been people on that team to speak up against an OS forced on people, that did not really work with mouse or a touch pad. How can they not see this would cause them problems? I am testing Windows 10 now. It is now where Windows 8 should have been. It is a beta version, and not performing well yet, but it is organized in a fashion everyone will understand. I have to think that this one size fits all approach seems cumbersome. I seriously question the people who have come to make the decisions for Microsoft. They are not living in the real world. This is why sales are down and there is no other reason. They are making changes to drive all end users to the Microsoft store and cloud and are not thinking of giving them a faster, leaner, autonomous, computing experience. They don’t seem to understand the traditions that Microsoft developed in its users over the years. There is something very totalitarian in their new approach that is really off putting. We do not want to be controlled. We want choices. Ubuntu seems to be doing that.

Posted by tpvero | Report as abusive

Microsoft thought 2000AD was 1800, and 2015 was sometime in the 19th century. Ironic that one of its competitors is Steam OS.

Posted by circlethewagons | Report as abusive