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Microsoft’s woes: It’s a Windows-eat-Windows world

Microsoft WindowsPardon the wordplay on “dog-eat-dog world,” but as you’ll see it applies perfectly to what is going on with Windows in the desktop OS space.

Because there are several interesting things going on. Some quite expected, others not so much.

First of all, the situation now is that Windows 7 has made a real splash. It’s already passed Windows Vista and is getting closer and closer to that clunky old workhorse that refuses to die, Windows XP.

This is how the different versions of Windows were divided one year ago, versus now:

Distribution of Windows versions

As you can see, Windows 7 has gone from being on 9% of the Windows machines out there to over 30%, while both Vista and XP have gone the other way.

This is a natural development for two reasons:

  • People are upgrading to Windows 7.
  • Most new PCs are sold with Windows 7 preinstalled.

That’s not exactly rocket science, but you may start to see where we are going with that dog-eat-dog analogy.

The thing is that Microsoft has called Windows 7 the fastest-selling OS in history. They have published some amazing stats. For example, Microsoft reported in October 2010 that they had sold more than 270 million Windows 7 licenses (it was launched in October 2009).

Amazing, but…

The dog-eat-dog part

This graph should give you a pretty good idea of what’s going on.

Windows market share over time

There are a couple things we’d like to point out here:

  • Look how Windows as a group (i.e. Windows 7 + Vista + XP) hasn’t gained any market share at all in the desktop OS space. That’s the blue line at the top.
  • Then look how Windows 7 and the combined Windows XP + Vista lines mirror each other. One is increasing at the same pace the other is decreasing.

And that’s the really interesting part. Windows 7 may be a huge success and selling like crazy, but it isn’t growing the overall market share of Windows as you might have expected. It’s cannibalizing the other versions of Windows.

In part this is what Microsoft wants, they want people to use the latest version of Windows, they want existing Windows users to trade up, they get to sell product, but you can bet that they also want the overall Windows market share to grow. And that part is failing.

Granted, more and more people have computers, so even if the market share stays the same, the volume increases, but it’s not exactly promising for the Windows platform.

Windows is actually losing ground

There’s one interesting little detail left that you can’t really see in the graphs above. It’s not just a dog-eat-dog world, other animals are coming in to have a bite as well.

Let’s take an even closer look at how the desktop OS market share of Windows has changed over the last year.

Windows market share change

Again, it’s clear that the increase of Windows 7 closely matches the combined decline of Windows XP and Vista.

But note also the overall decline of 1.4% of Windows as a group. So, in spite of the success of Windows 7, Windows’ overall share of the desktop OS market is decreasing, albeit slowly. (Perhaps we should say “still decreasing,” because it’s been doing so for years.)

So, where did that missing 1.4% go?

Let’s just say the people at Apple are probably quite pleased with themselves. Last year, Mac OS X increased its desktop OS market share by… 1.4%.

Quite a coincidence, isn’t it?

Mac OS X now has 6.6% of the desktop OS market, which is still tiny compared to the massive 91.6% that Windows has, but these numbers strongly indicate that while Microsoft has gone cannibal, Apple is gaining new users from the Windows crowd.

Data source: StatCounter Global Stats, based on visitor stats from 3+ million websites.



12 comments
Mayor
Mayor

Yes, I would love to see the PC stats, especially as Microsoft rolls out cloud computing alternatives to the desktop while mobile class devices proliferate.

Dan Thies
Dan Thies

I'd imagine Microsoft is actually quite pleased with these figures, because they've been in a "turnaround" since Vista was released. Step One in that turnaround was "release something that doesn't suck a**" and "get people to buy it. Windows 7 accomplished that. When you have a bullet hole in your leg, and some dude is pulling money out of your wallet, the bullet hole is more urgent. Windows 7 fixes the bullet hole. Step Two is harder - and I don't think "growing Windows market share" is a reasonable goal for Microsoft at this point. I think Microsoft's working to put a new floor underneath their market share. Apple started this game with a single-digit market share. Even if MacOS' share is 10% - all Apple needs to do, to take market share from Windows, is get more than one out of 10 buyers to choose a Mac. For Microsoft to grow, they need more than 9 out of 10 to choose a Windows machine. With brand-new $999 Macs on the market, the "Mac tax" isn't such a great argument any more, especially when the $999 Macbooks (including the 2-pound 11" Air) are so much more appealing than any Windows system on the market. Laptops have been Apple's biggest growth area for a long time. Apple's market share will continue to grow for some time. Microsoft's job right now is to slow that down. Apple's never going to get to 100%, Windows is never going to zero. The equilibrium point is probably closer to 80% Windows market share. Microsoft's problem in slowing Apple's growth isn't Windows - it's the hardware, and the developer ecosystem. There's a "Windows tax" too - application software costs more on Windows on average, and there are a lot of things people buy Windows software for, that the Mac just does right out of the box.

WG Hubris
WG Hubris

When you have 90% market share, growth is not your objective. Name another industry where any company has a 90% market share. Of course Win7 is canabalizing other Windows OS, Microsoft has designed it that way by ending support (and sales) of the other OSes on purpose. Every Windows XP computer is dead money to Microsoft. They've already collected on those licenses and/or collect much less than they do when someone installs Windows 7. Sure, what company wouldn't like to see more domination, but adding market share is not their focus now. Microsoft's sole concern with Windows 7 is stemming the losses caused by customers attempting to avoid Vista and get the current version of Windows back to be the "standard" operating system that you buy on a new computer. Mission accomplished.

Jeffree K Lassitter
Jeffree K Lassitter

There are many thousands of PC assemblers that find it most expedient to use the Windows OS in their products because Microsoft's business plan from day one has been to push the software onto anyone's cheap or even free hardware ... and reap $billions and $billions in the versioning process. But there is ONLY ONE Apple PC assembler and it has ALWAYS KNOWN that it would be a niche player in the PC market because it had chosen from day one to design and build both the hardware AND software together and NOT to release its OS for inclusion in non-Apple crap hardware. The Apple PC products are for a different aspect of the PC-user personality; the part that deems style and pride-of-product (pride-of-place) more important that sheer expediency. But the Apple approach is more fragile from a business sense because it requires that the hardware is always as superbly designed and executed as the software. So far so great. Yet Apple's approach also brings it 100% of the profit associated with each of its PC sales, whereas Microsoft's share is only a licensed portion of the cost of a typical PC ... 90% market share says nothing about profit share. [But cleverly, Microsoft makes its money up front even if the PC containing its OS is sold at a loss]. Just-in-time manufacturing efficiencies have made Apple's approach even more profitable. However, one wonders what the PC marketplace would be like today if Apple had chosen to compete directly with Microsoft by building only OS software and only on the Intel-type chip architecture instead of the PowerPC architecture that it originally chose, and made it available to any manufacturer. Though it seems like Apple has reluctantly moved to Intel-type chips, benefits have accrued to it, its customers, and to Microsoft, because Apple hardware can now bootcamp up into Windows OS mode. Fwiw, running Windows OS and selected Windows OS apps on Apple hardware is a surprisingly pleasurable experience.

AKaasjager
AKaasjager

@Pingdom Ah darn, /me silly. And yes, please provide us with the article on the number of active personal computers (related to these growth numbers), that might make this even more interesting :-)

ken1w
ken1w

And soon, we'll all be counting iPad (iOS) as a "computing" platform.

AKaasjager
AKaasjager

Now, nice as it is you've actually made a mistake and no small one at that: - if Windows loses 1.4% of its customers - doesn't mean that that equals 1.4% of Apple growth. Assuming 1%, simplifying, i.e. "It's only a model": - Microsoft has 1000 customers, Apple has 100 - MS loses 1%, equals 990 (minus 10) - Apple gains 1%, 101 (plus 1) Now have left 9 unaccountable for, so 9 have moved over to something else completely (Linux? ReactOS? AROS?) Extra plus on this is that you didn't count in the growing number of people worldwide using computers, so actually even more people are using something not-Win-nor-Mac. Got any stats on that?

Hmmm
Hmmm

Food for thought: Microsoft is fine with losing a bit of marketshare to Apple. The monopoly lawsuits of the 90s are not that far in Microsoft's rearview mirror, and Microsoft makes plenty of money on Office for Mac. I know this goes against the established narrative, but consider it. Microsoft has bigger concerns than 1.4% OS market share, especially since most of those switchers are home users, not lucrative enterprise licenses.

AlanLindsay
AlanLindsay

Well, if you analysis took even the slightest notice of things like month-by-month variation, statistical significance and so on maybe it might be believable. But actually if you look at the numbers in more detail you see that there is as much as a .5% total variation from month to month. Doesn't sound like a lot until you realize that it is 35% of the 'growth' by OSX. An alternative way of discussing these numbers is that at the current rate of 'growth', OSX will take the place of Windows in slightly over 60 years. Or about 50 years longer than it took Windows to get there in the first place.

john mitas
john mitas

you forget that ALOT of macs out there dual boot or have a windows license. You may want to find out that stat and put that in your analysis

Pingdom
Pingdom

@AKaasjager: No problem. One should always look at data with a critical eye, so that's good. This was just a simple misunderstanding. :) We'll see if we can find some good stats on overall personal computer usage in the world. Might be difficult to find reasonably reliable numbers, though.

Pingdom
Pingdom

@AKaasjager: No mistake made. We were talking about changes in market share, not relative growth. You're assuming relative growth. We're talking shares of 100%. And we also pointed out that yes, the market as a whole is growing, which of course means each market share percent represents more users. (No, we didn't look for stats on how many active personal computers there are in the world, although that might be interesting for another article.)

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