The diverging PC market
The computer market is diverging. There is a large group of people (mostly consumers) who are able to accomplish all of their computing-related tasks with just a tablet or a smartphone. For these people, a $500 iPad or $250 Nexus 7 represents a far better value than a $1000 Surface Pro.
On the other hand, there is a smaller group of people (mostly business users) that still need the raw power of a traditional computer — it can be hard to develop software or write articles on a tablet.
Are there enough people that want a single device to handle both? That’s what Microsoft Corporation (NASDAQ:MSFT) appears to be betting on, and so far, the bet has not paid off.
Sales of traditional PCs continue to decline, while sales of Microsoft’s own tablets have been poor. Analysts at Gartner expect Android to overtake Windows by 2017.
The new operating system winners
Certainly, both Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG) appear to be better positioned in the operating system world than Microsoft Corporation (NASDAQ:MSFT), at least going forward. Combined, the companies have a stranglehold on both tablets and smartphones.
iOS and Android account for about 95% of the tablet market and about 92% of the smartphone market. Windows is gaining, but is in a distant third.
Smartphones have already passed the 50% saturation point in the US; tablets are just over 33%. If it hurries, Microsoft might be able to catch up, but without the robust app ecosystem, it’s certainly fighting an uphill battle. The company is reportedly planning a program to start paying over $100,000 for developers of Windows Phone apps — it remains to be seen if it will work out.
As for how Google Inc (NASDAQ:GOOG) and Apple Inc. (NASDAQ:AAPL) benefit from their operating system dominance, it’s drastically different. Apple controls iOS and profits from the sale of every device. On the other hand, Android is open source, and Google develops Android for free. That isn’t to say that Google derives no benefit — Android users may be more likely to use Google Inc (NASDAQ:GOOG)’s online services (gmail, Google+, etc).
What to expect from the Windows Blue launch
There might be some buzz around Windows 8 once the update becomes available to consumers. Yet, despite the return of the start button, Windows 8 remains fundamentally broken, a hybrid operating system targeting a group of consumers that largely does not exist.
Windows won’t disappear overnight — traditional PCs will have their place for many years — but mobile devices should soon far outnumber them. And in the world of mobile operating systems, Microsoft Corporation (NASDAQ:MSFT) can’t hold a candle to the combined power of Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG).
Joe Kurtz has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple Inc. (NASDAQ:AAPL), Google Inc (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT).
The article Windows Blue Can’t Save the PC originally appeared on Fool.com.
Salvatore “Sam” is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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