Windows has fallen behind Apple iOS and Google Android

Windows has fallen behind Apple iOS and Google Android

Summary: According to a Goldman Sachs' private report , Microsoft's share of the computing device operating system market has declined to a mere 29%. Above it? Apple's iOS and Google's Android. Windows could make a comeback but faces "an uphill battle."

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By Goldman Sachs' numbers, Windows isn't losing the end-user operating systems war, it's already lost it to Apple iOS and Google Android.

Windows may still be winning the desktop operating system war, but according to a Goldman Sachs report, Clash of the Titans, that doesn't matter because Microsoft has been badly losing the far more important computing device war to Apple iOS and Google Android.

Why? Because, "The compute landscape has undergone a dramatic transformation over the last decade with consumers responsible for the massive market realignment. While PCs were the primary Internet connected device in 2000 (139mn shipped that year), today they represent just 29% of all Internet connected devices (1.2bn devices to ship in 2012), while smartphones and tablets comprise 66% of the total. Further, although Microsoft was the leading OS provider for compute devices in 2000 at 97% share, today the consumer compute market (1.07bn devices) is led by Android at 42% share, followed by Apple at 24%, Microsoft at 20% and other vendors at 14%."

Goldman Sachs' analysis isn't in a vacuum. Mary Meeker, once a superstar Wall Street analyst, and now a well-respected venture capitalist, recently presented a Kleiner Perkins Caufield & Byers report titled Internet Trends Year-End Update. The report found that tablets and smartphones were out-selling PCs in 2010's 4th quarter and have since left them in the dust. By 2013's 2nd quarter, Meeker predicts, the Apple- and Android-dominated smartphone and tablets installed base will be greater than the Windows PC installed base. Today, by Meeker's numbers, Apple iOS and Google Android have 45% of the market to Windows' 35% .

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Mary Meeker, a partner at Kleiner Perkins Caufield & Byers, also sees Windows already behind other operating systems.

 

Goldman Sachs, like Meeker, sees this trend away from Microsoft-dominated PCs to Apple and Android mobile devices only growing stronger. "Platform stickiness is set to drive convergence of OS share in tablets and smartphones as tablets increasingly become an anchor device, given users more for content on these devices. If left without a meaningful competitor in tablets, Apple's dominant share is likely to pull its smartphone share steadily upward over time. Thus, a credible tablet becomes a strategic imperative for Google, or they run the risk of a steady decline of Android smartphone share starting in CY13."

While Google and Android, thanks to Android-powered tablets such as the Nexus 7 and the Amazon Kindle Fire HD, is challenging the iPad, Microsoft, with little presence in either smartphones or tablets, even after the arrival of Windows Phone 8, Windows RT, and its Surface tablet/notebook hybrids, has a far harder row to hoe.

"Microsoft faces an uphill battle (though not insurmountable) given it lacks meaningful share in either tablets or smartphones and as such will need to rely on its appeal to knowledge workers to help drive adoption as its complement ecosystem will remain behind the iOS and Android platforms at least over the next 6-12 months." observed Goldman Sachs.

2013 will, according to Goldman Sachs, determine if Microsoft can reverse its sharp decline or become a company relying upon the shrinking PC legacy business. "After watching its market share of total consumer compute fall from 93% in 2000 to 20% expected in 2012, we expect the recent launches of Windows Phone 8 and Windows 8 tablets to help the company reclaim some share in coming years. This transition is particularly meaningful given the Goldman Sachs view of the health of the consumer PC market, which we forecast will be flat in 2013."

This will not be easy since [my emphasis] "Microsoft would have to sell roughly 5 Windows Phones or roughly two Windows 8 RT tablets to offset the loss of one traditional Windows PC sale, which we estimate has an overall blended selling price of $60 for business and consumer."

The bottom line is that "It took a compute revolution to unseat Microsoft from its dominant market position." It was not that Linux-based Android or Apple ever managed to knock Windows off its desktop throne. They haven't. It was that the smartphone and tablet rebellion has unseated the desktop. "Fundamentally, Microsoft’s business was disrupted by other vendors who successfully introduced compelling new device categories" But, "thus far, Microsoft has failed to establish a meaningful foothold in [these new] key growth categories."

So, "With Microsoft on the sidelines up until recently, the consumer compute OS market had come down to two key vendors: Apple with iOS and Google with Android. Apple’s strong market presence (we estimate 24% share of total consumer compute in 2012) is the result of its role as a successful pioneer of key new compute devices, including the smartphone and tablet."

Apple hasn't managed to keep its first-mover advantage.

"The company’s software and application ecosystem is tied to its hardware devices, there was a need for an alternative cross-platform operating system to enable competitive form factors. Google met this need with the introduction of the Android operating system (open source) in November 2007, which has proliferated across smartphones in particular, but tablets as well. In fact, May 2012 data from OpenSignalMaps suggests there are more than 4K distinct devices running Android with Samsung, HTC, Sony and Motorola as key device vendors. "

Thus, "with an estimated 42% of the total consumer compute market in 2012, Google/ Android has captured the dominant position, largely driven by Android’s success in the smartphone category, where attractive device form factors have been introduced by Samsung and others." Still Goldman Sach expects " Android share to tick down slightly to 41% share of total consumer compute in 2013/14 partly as Microsoft captures incremental share with Windows 8 and Windows Phone 8."

Can Microsoft catch up? Goldman Sachs views "the success of Microsoft’s Surface tablet as critical to its ability to compete in this new compute paradigm... Microsoft’s tablet offerings will likely be the key anchor in determining pull through of Windows-based smartphones. Further, we would not be surprised to see the company release a Microsoft-branded smartphone at some point, following in its lead of developing its own tablet offering, Surface. As such, we would expect Microsoft to increase its share in both the tablet and smartphone markets, but at what level remains to be seen."

If Microsoft really needs Surface to be a smashing success, Microsoft is real trouble.

Leaving aside Windows Surface RT's poor quality, until recently Microsoft made it difficult for users to buy Surface devices. It's hard to gain market share with a new kind of device, a hybrid tablet/laptop, unless users can see and handle it. 

True, the far more powerful Windows 8 Pro-powered Surface will start shipping in January. But I foresee a good deal of customer confusion between it and the Windows RT models since they look alike but come with very different capabilities and price-tags. This, in turn, will lead to slow adoption at the exact time that Android and iOS-powered devices will be passing Windows PC in the total number of legacy devices.

Very quietly, and without many of us even realizing it, open-source Android and Apple iOS have become the world's top personal operating system leaving Windows in the dust of computing history. Short of a smartphones and tablet Microsoft miracle, Windows' day of the dominant end-user operating system is almost over.

Related Stories:

Topics: Windows, Android, PCs, Tablets, Smartphones, Operating Systems, Mobility, Mobile OS, Microsoft, Laptops, iPad, iPhone, Hardware, Google, Apple, Microsoft Surface

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149 comments
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  • Certainly the trend is unfavorable for Microsoft OS usage rates world wide.

    However, it is a tremendous leap of faith to conclude Microsoft will not reverse that trend but continue downwards towards worldwide OS irrelevance.

    I think only you, Steve, would make such a conclusion from this one snapshot in time.
    kenosha77a
    • He desparately needs a "win" of some sort.

      I wonder why he never brought in Symbian, PalmOS, ect in the past. Surley those where all computing devices to a particular level?

      I guess he needs some money.
      William Farrel
      • Mercy

        Mr. Farrel, if those other OS were added in, then , Microsoft would look to be doing even worse.

        However, the source Steven is quoting (most of the Article is a quote of another article from another source, something you would know if you had read it.) doesn't list those OS. PL1 and CP/M are not mentioned either.

        Unix isn't on the list. Linux is only a closely related version of that. But, if all versions of Unix and it's varients are included, then Microsoft is simply not really important. Microsoft is currently being squeezed by Linux at the top and the bottom of the stack. Microsoft is the king of a shrinking mountain.

        That's all true, but, Microsoft isn't dying, and probably won't be any time soon. It's just another competitor now.
        YetAnotherBob
        • Windows tablet fail

          why the windows will not work on tablet :
          http://www.youtube.com/watch?v=N1zxDa3t0fg

          where is the button: Ctrl Alt Del
          Henrique Dourado
    • Wow

      Love my job, since I've been bringing in $5600… I sit at home, music playing while I work in front of my new iMac that I got now that I'm making it online(Click on menu Home)
      .......http://goo.gl/97KvG
      MirandaAdele
    • The trend is drastic upswing for MS in both smartphone and tablet

      Regardless of SJVNs crap link about poor surface quality, the surface in it's very first incarnation is an order of magnitude better for both sw and hw than the ipad and a couple orders of magnitude in both above every android tablet. Same with the WP8 htc 8X and Nokia 920. Combine that with the fact that none of these analysts has the slightest clue what the android "installed base" is or will be. 80+% of all android phones that ever sold will be in a landfill by 2014. Same for non kindle android tablets.
      Johnny Vegas
      • Orders of Magnitude?!?

        Don't use terms whose meaning you don't know.
        .DeusExMachina.
        • To the flagger: Are you claiming he used the term correctly?!?

          .DeusExMachina.
        • Orders of Magnitude?!?...dumbing down of America

          Likely the user of the "order of magnitude" term has some concept of its meaning (if not exact) but obviously is speaking with greatly subjective hyperbole. I can't imagaine the Surface can beat the iPad in any objective benchmark by a factor of 10. If a Surface were 2-3 times faster or "better", it is still the same order of magnitude. With text messaging & twitter, our society is evolving an attention span of about the length of a text message. Politicians, advertisers, and newcasters have been training us that everything is very binary or bipolar: Black/white, Good/Bad, The Greatest / The Worst, Leading Edge / Obsolete, Futuristic / Archaic, ....no shades of gray. Hence something that is deemed marginally better in some aspect for some user becomes "orders of magnitude better".
          BBix
    • Re: However, it is a tremendous leap of faith to conclude Microsoft will no

      Not at all. Just look at Microsoft's own responses to that trend over just the past two years, if not further back: everything they've done has been simply accelerating the trend. They are just flailing about, with no clear sense of direction at all.
      ldo17
      • idiot

        "no sense of direction"...what a stupid comment.

        Microsoft have clearly been taking time to align all of their products and ecosystem over the last few years, and we're now seeing the first real fruits of that effort: same OS on phones, tablets, and PCs with a unified UI designed around scalable, modern design principles (this has also shown up on the Xbox); huge leaps of improvement in the ecosystem with Skydrive embedded in everything, Xbox Music/Video available on all kinds of devices; continued and rapid expansion of services and products into new geographical territory.

        No other tech company has a clearer sense of direction. Apple is still struggling for PC marketshare and has become lost in its rapidly ageing mobile OS; Google is eating up marketshare but has a very fragmented ecosystem.
        allusernamestaken
        • Clue

          First, when you start your reply with ad hominem right off the at, to a post that had none, you discredit your argument. Not that you had one in the first place. To wit:
          Sorry, but the "fruit" of MS's effort is the sales, and they had had a very dismal few quarters. With the Surface NOT selling to even MS's expectations, your claims are absurd.
          As to Apple, they are hardly struggling. While slow, their PC marketshare has been steadily increasing quarter over quarter, year over year, while MS's has been falling.
          Nor is Google "eating up market share". In fact, iOS beats Android on smart phones on EVERY carrier that carries both.
          .DeusExMachina.
          • Aha

            Probably, this is why Android has 70% market share globally and iOS has 14. Oh, wait..
            soltesza
          • Oops . . .

            Sorry, Deus ex Machina messed up there. poor Deus can't see any difference between 14% and 70%. Well, after all, he is an Apple Fanboy.

            By the way, translating from the Latin, he is claiming that God is not a machine. But, I don't think that he is really God. I guess that he and I will just have to disagree on that.
            YetAnotherBob
          • Facts and Latin

            First, if you wish to prove I am wrong, name a single carrier anywhere on the planet that carries both where the TOTAL number of Android headsets sold is greater than the number of iPhones sold. You can't because there aren't any. The only chance you had at this argument was when Verizon first added the iPhone in the U.S.. However, in less than a year, the iPhone quickly climbed to be its number one selling phone, the number of which was greater than the total number of all Android headsets sold, COMBINED.
            This is the case with EVERY carrier that carries both. Again, the only reason Android sells more overall is because they ar available on more carriers. Period.
            As to your Latin, you have no idea what you are talking about. First, the term is a theater term referring the the ancient Greek technique of sorting out a muddles plot by having a god descend from the rafter to explain all the mixups to the audience, and sort out the loose ends.
            Second, the term in Latin does NOT mean "God is not a machine"! It means God FROM the machine, stemming from the elaborate winch system used to lower the character from the proscenium.
            But congratulations on your ignorance.
            Bully for you, Bob.
            .DeusExMachina.
          • Well I can tell you that

            Maybe in the USA people like the iPhone, but I cannot see it outselling all other phones, because that would make it have the highest marketshare, in which case it does not. Also the GS3 outsold the iPhone by itself, so there again your points are invalid.
            I recently traveled to Romania, and I can tell you that here, almost everyone has an Android. After speaking with several international friends, they confirm the same trends where they are. Most people have Androids.
            Jimster480
          • No, Android has higher sales numbers because it is on more carriers.

            So, instead of posting (irrelevant) numbers out of context, how about you post something that actually has some bearing on the point, namely, a carrier anywhere on the planet that sells both the iPhone and ANY Android device, where the iPhone does not sell more. In fact, again, there is not a SINGLE carrier on the planet where the total number of iPhones sold is not greater than ALL the Android devices they sell, COMBINED.
            .DeusExMachina.
        • Re: Microsoft have clearly been taking time to align all of their products

          No they haven't. They have fragmented their platforms into Windows Phone 7 versus Windows Phone 8 versus Windows RT versus Windows 8, with no commonality of functionality, APIs, build systems or deployment.

          The only thing they have vaguely in common (apart from the rapidly-descending-into-meaninglessness "Windows" brand name) is some superficial UI conventions that are not even consistently applied, as anybody who has tried to use Windows 8 will attest.
          ldo17
    • Why be insulting?

      >>I think only you, Steve, would make such a conclusion from this one snapshot in time.

      >> I guess he needs some money.

      One thing that I don't understand is why the comments on zdnet are so belittling. Often I see these after reading a well reasoned opinion piece.

      First of all, it's not a snapshot in time. Look at the graph - it's a trend. Second, I look at that graph and see only one "platform" that has recovered - Apple. Apple did it by reinventing the game. Now Microsoft is trying to do it by evolving a better solution. That's the point of the article.

      If you really think Microsoft has what it takes to recover it's past glory, cite some evidence or provide some quality analysis. No need to insult the author. He's making a living writing and you're uh, who are you again?
      jsperson@...
      • Only an arrogant fool believes his opinions are always correct, jsperson

        That observation was not meant for you or SJVN or anyone else commenting on this topic - directly. It was meant as a reflective reminder to myself.

        I can make mistakes and I am constantly reminded of my fallibilities. Conversely, I don't suffer from false humility either. I never wrote for a living, directly, but I did author more than my share of corporate briefings in my career. Although I wore many hats, I primarily analyzed both statistical data (sample sets) and complete data populations and from that analysis, I had to make decisions that affected the careers of "quite a few" persons at a North American Automotive manufacturing company. I've seen many a chart in my day and I have gained some insight into what those "snapshots" mean or how to interpret them.

        Look at the second chart. That spans "how many years or decades" again? That trend you speak about is simply that - a trend over a small percentage or snapshot of time compared to the segment of time that chart covers.

        Notice the last four bars or years of the first graph. That first graph is an exercise in crystal ball gazing. My experience is to discount any speculation that far in advance. For example, the year the first iPad was first introduced coincided with the height of the netbook market penetration. Future projections by Intel and netbook manufactures for the netbook market share failed to anticipate actual market realities even two years into the future from that fateful date.

        Further, to ignore SJVN's bias towards open source initiatives or his "recent" postings regarding operating systems from Microsoft or Apple is to erroneously treat his opinions as objective and impartial.

        To be fair, I also respect his years publishing and his open source acumen, especially his knowledge of Linux and Android system.

        When I state it is my belief that SJVN takes a "leap of faith", it is not meant in an insulting way. Although I admit my statements are condescending towards Steven in this matter - maybe because I interpreted data for a professional living - and he didn't. So you see, I viewed his conclusion that Windows would soon be part of computing history dust as unjustified just based upon the graph data presented. There is a "human or dynamic" element to data and he ignored it or doesn't realize it exists. Who knows what human or technological factors will affect that trend of yours in the future. Miracles don't need to take place in order to reverse that OS market share trend. Not for a company processing the talent or size of Microsoft and it's affiliated global manufacturing partners.
        kenosha77a