Microsoft turns forty this April but the celebrations will be muted because the company is staring at a serious mid-life crisis. Of course, Microsoft is still the third-most valuable company on the planet and has a $90 billion cash pile.
But there’s no denying that some serious clouds hang over Redmond’s future. Is it on a slow but steady path to irrelevance in a “consumer-first, cloud-first, mobile-first” world?
A couple of charts illustrate how the ground is shifting for Microsoft.
Figure 1: Microsoft marketshare of desktop operating systems. Data Source: Net Applications
As you can see Microsoft still lords over the desktops with a 91% marketshare. So, where is the problem?
In the good old days when a personal computing device was synonymous with a desktop (or a laptop), that was awe-inspiring and Microsoft was more or less the software sheriff of the universe. Cut to today: where a personal computing device more likely means smartphones and tablets. Now, here is the new platform marketshare picture:
Figure 2: Platform marketshare for all personal computing devices currently in use. Data Sources: Benedict Evans and RSG estimates
You can see that Microsoft has already lost its crown. What should be even more worrisome for Microsoft:
- Smartphones outsell PCs by a wide margin
- PC sales are falling but smartphone sales are sky-rocketing
- Microsoft is shipping less than 3% of those smartphones.
Certainly, the future ain’t what it used to be.
So, everyone (including Redmond) knows that Microsoft has a mobile problem the size of Mars. The new leadership in Redmond has been more proactive than before but the big question is whether their initiatives on the mobile front will amount to little more than a rearguard action.
As we all know, people don’t typically purchase a mobile phone for only the hardware. We buy into the apps and ecosystem around the mobile platform. But that’s a chicken-and-egg situation for Microsoft and its Windows Phones platform.
Despite some serious courting by Microsoft, less than 10% of app developers target Windows Phone as the primary platform.
Figure 3: Primary platform for professional mobile developers. Data Source: Vision Mobile
Understandably so, for they make next to nothing from developing for the Windows Phone platform.
Figure 4: Median monthly revenue per app by mobile platform. Data Source: Vision Mobile
A classic Catch-22: You don’t want to buy a Microsoft mobile device because of the limited availability of apps; but because there aren’t a significant number of users to target, developers won’t build for the Windows platform.
The risk to Microsoft is that even the currently loyal developers (however few they may be) may abandon ship. If that happens Microsoft won’t at all be able to revive it’s fledgling franchise in the mobile space.
So, how can Microsoft break out of this vicious cycle? Indeed, that’s one of the key KPIs for Microsoft CEO Satya Nadella. There are no easy answers and I’ll take a shot at it in a future article.
Meanwhile, please chime in with your thoughts on if or how Microsoft can ever become a mobile powerhouse.
This is a modified version of an article originally published yesterday on http://www.realstorygroup.com