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Microsoft's Influence Fading Fast: Gartner

Given an exploding universe of tablets and smartphones, Microsoft faces an entirely new competitive situation. Windows 8's "schizophrenic" user experience hasn't helped, Gartner analyst says.

Microsoft Surface Pro: Is It Right For You?
Microsoft Surface Pro: Is It Right For You?
(click image for larger view and for slideshow)
According to Gartner, the PC market's historic 2012 decline wasn't just bad timing; it was the start of an avalanche. According to the research firm's newest predictions, published Thursday, PCs will continue to bleed consumer market share over the next five years, weakened by an exploding tablet field that could add six new devices for every laptop or desktop the PC industry loses.

PCs aren't dead yet. The machines will remain fixtures in the workplace, and Gartner expects more than 270 million units to be shipped in 2017 -- a steep 20.4% decline from 2012's disappointing 341 million, but a huge number nonetheless. Even so, the projections portend a major realignment to the tech world's pecking order, with one company particularly primed to lose ground: Microsoft.

Microsoft's vulnerability is simple. The company's empire is based partly on the fact that nine out of every 10 computers in the world run some version of Windows. If people start using other devices for tasks that used to fall to PCs, Windows will cease to be a dominant OS outside the workplace. Microsoft hasn't yet shown that it can contend in the new, mobility-oriented bring-your-own-device (BYOD) market, and with iOS and Android already entrenched and alternatives such as Chromebooks entering the field, Redmond could face a marketplace in which it is a player but not a global superpower.

Gartner's prognostications align in many ways with an IDC report issued late last month that forecasts tablets will soon surpass PCs in total sales. That said, IDC was as of early March still predicting that PCs would return to modest growth by 2014. Gartner's harsher prediction could therefore be taken with some skepticism -- but given that PC outlooks have grown progressively worse over the last six months, it's difficult to dismiss the latest projections.

[ What do we know so far about Microsoft's upcoming Windows update? Read Windows Blue: What We Know. ]

Some industry watchers had initially interpreted 2012's faltering PC sales as a byproduct of unfavorable economic conditions. Those conditions were supposed to improve once Windows 8 hit the market and once consumers began buying new computers for the holidays. When neither Microsoft's new OS nor the holidays managed to reverse the PC's downward trajectory, analysts began viewing the industry's recovery prospects with increasing pessimism. Sagging PC popularity, in other words, has come to be seen less as an economic condition and more as a shift in user preferences.

In an interview, Gartner research VP Carolina Milanesi said that PCs have suffered from the popularity of cheap, small tablets, which she said satisfy most users' primary computing needs, such as Web browsing, social media interactions and reading the news and other content. She predicted that as traditional PCs become relegated primarily to work-related tasks, many will view the machines as less and less a part of their daily lives. Such consumers, Milanesi said, will feel decreasing pressure to regularly upgrade PCs, opting instead to replace tablets and smartphones while allowing desktops and laptops to grow long in tooth.

With more devices vying for attention, Microsoft thus finds itself in an entirely new situation. "In the good old days, if you walked into a store to get a PC, guess what -- you were going to get a Microsoft device 90% of the time. There wasn't a conscious choice," Milanesi noted. Now, she says, customers will be greeted not only by Windows offerings but also by Chromebooks, Android and iOS tablets, OS X PCs and more. Windows isn't the default option it once was.

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jhkjhk
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jhkjhk,
User Rank: Apprentice
4/6/2013 | 6:41:12 PM
re: Microsoft's Influence Fading Fast: Gartner
It seems I made my point. Nobody, even the Obama supporters posting here, can deny that Gates favors taxing and controlling, at the expense, not of the elite class to which he belongs, but of the middle-class techies, journalists, and average citizens who buy his products. Carbon tax to a guy who flies private jets and lives in 50,000 square foot homes, is nothing. But thatG«÷s okay, heG«÷s a good Democrat. Bill Gates has never created anything himself, whether or not he actually G«£stoleG«• his technology. Unethically, if not illegally, he took advantage of his collaborators and competitors and Microsoft thrived. Cell phones, notebooks, interfaces, music players, operating systems, or browsers, all he has done is copy other peoplesG«÷ ideas. Sorry if you canG«÷t handle the truth.
johnitguru
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johnitguru,
User Rank: Apprentice
4/6/2013 | 3:51:51 PM
re: Microsoft's Influence Fading Fast: Gartner
Indeed you have just proved my point on the PC side of the equation, I explain exactly why below:

Firstly you have ignored the mobile market which is the stimulus that caused Microsoft's impending but imminent demise that is about to permeate the PC side of the business very soon. Keep reading and you will see the blue print.

Microsoft's demise has been caused by "Choice" There never ever was a perceived choice until the mobile market emerged which is owned by Linux and Unix. aka Google & Apple.

Here is why you proved my point:

The early adopters are as you say the "IT and tech people" who the 2nd wave and 3rd and final wave of buyers, who are called "The late adopters" get their advice from on what to buy next.

Have you read the Marketing book "Crossing the Chasm", which explains how all technology is fundamentally sold.

The early adopters are the ones who already discovered that there is indeed a plethora of non Microsoft choices available and I can assure you that they are indeed embracing the new choices wholeheartedly. There are now over 75 million Linux users worldwide. Those are the early adopters.

Therein is the reason why Microsoft is in serious trouble now.

Had Microsoft been on the ball, which has never happened since their inception, and they had entered the mobile market with good products, on time before the market matured to the point where the 3rd wave was buying the products in mass volumes, then they could have had a chance to compete even though there was choice. This would have kept them in the game for the future which is by the way moving rapidly.

Do you know what the existing 600 million XP Users are going to do on or before April 8th 2014 when Microsoft Windows XP security updates support ends?

Those 600 million WalMart people [Well not in Europe and Asia as there are no WalMarts there] have choice, albeit as you say even though they don't know it. They sure are lucky though, because Windows 8 will require all new hardware. By the way NO ONE LIKE'S Windows 8, [that includes all the early adopters: "The IT and Tech people" as you call them].
When the Late Adopters find out that they can't upgrade to Windows 7 or 8, that's when they will run to their IT buddies asking for help.

Here is exactly what the early adopters [The IT and tech people] are going to tell them:

You have two choices:

1. You can throw away your pc or laptop you paid a lot of money for and then spend at least $500 plus and buy a Windows 8 PC or laptop which no one likes.

or

2. You can download a rock solid fully configured user friendly commercial Linux operating system which has all the drivers you need, installs instantly, including all updates with no reboots in less than 10 minutes, and will run way faster than XP and won't get viruses ever, so you no longer have to pay for Norton or Mcafee anti virus software again. That choice exists today, I am an IT expert and early adopter so I know these things. That very cool, fast as a jet, modern 3D Linux OS which replaces Windows is called:

Robolinux

Since that Windows XP user already owns a Google Android phone or an
Apple iPhone which their IT friend suggested they buy a few years ago, and apparently they bought at WalMart, they know they can trust their IT friend again, especially since he is saving them hundreds and hundreds of dollars and they love their Android or iPhone, which the IT buddy will explain to them
is a Linux or Unix device so you can trust a commercial version of Linux which replaces your dead Windows XP.
rhoffman037
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rhoffman037,
User Rank: Apprentice
4/5/2013 | 11:00:07 PM
re: Microsoft's Influence Fading Fast: Gartner
I've built systems with every generation of Microsoft's tablets, all the way back to Windows for Pen Computing, and Microsoft's latest efforts are a perfect example of history repeating itself -- these things get consigned to vertical markets (warehousing, etc) because Microsoft Doesn't Get The Consumer Space (other than for XBox). Never has, possibly never will. This applies to marketing as much as product -- some of the ads for Surface were painfully embarrassing, kind of a parody of cool.

As the article astutely notes, Microsoft needs to find a way to successfully transition to a world where they are one option among many. They have enviable strongholds (Office, Exchange, etc), and their enterprise desktop marketshare is still strong, but Gartner's prediction that 2013 is the year when Apple sells more devices than the total number of Windows devices sold (as well as having already been much more profitable for a while now), should make anyone take notice.

Richard Hoffman
http://www.informationweek.com...
jhkjhk
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jhkjhk,
User Rank: Apprentice
4/5/2013 | 9:09:02 PM
re: Microsoft's Influence Fading Fast: Gartner
" I never thought I'd hear Bill Gates being blamed for higher taxes and regulation". And you call yourself an editor? Well, I don't know what Dr. Dobbs is, but I do know what carbon taxes are, and who benefits directly from them. And it ain't you or me.
jhkjhk
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jhkjhk,
User Rank: Apprentice
4/5/2013 | 9:03:54 PM
re: Microsoft's Influence Fading Fast: Gartner
What about Windows? How he was able to get away with such blatant copyright infringement, namely Apple's desktop icons, can only be explained with knowing the right people...wink wink. And giving away IE to put Netscape out of business. You can apologize all you want, and of course call it hate since you really can't debate without resorting to name-calling, but Gates is all about taking other peoples' ideas and leaving the creators in the gutter. And he really cares about the little people, his customers. He favors a carbon tax! Talk about control and screwing the middle class!
twilliamson423
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twilliamson423,
User Rank: Strategist
4/5/2013 | 8:54:57 PM
re: Microsoft's Influence Fading Fast: Gartner
While this may be true for IT and tech people, the average user doesn't know anything about Linux and, in many cases, Apple (in PC's, not including phones or tablets.) Your typical computer users, at least the ones I know, go to Walmart or Best Buy and buy off the shelf, and only when their current computer stops working and they have a little disposable income, which is still kind of tight for some people right now. I think the talk of Microsoft's end is still a wee bit premature.
majenkins
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majenkins,
User Rank: Moderator
4/5/2013 | 6:01:19 PM
re: Microsoft's Influence Fading Fast: Gartner
Gates did not steal DOS, he bought it for $75,000. True he did not tell the folks he bought it from that he had IBM on the hook to license it but then he wasn't obligated to. If you have something for sell and I buy it at a price you and I both agree to then I turn around and sell, or rent it, and get rich I still did not steal from you.

You sir or madam need to get a life, or get treatment, your hate is clouding your judgment.
Michael Endler
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Michael Endler,
User Rank: Author
4/5/2013 | 5:40:40 PM
re: Microsoft's Influence Fading Fast: Gartner
One other Apple vs. Windows tidbit of note: It didn't make it into the article, but Carolina Milanesi mentioned that a lot of IT managers would still prefer to keep iPads out of the enterprise, if they can. BYOD forces make doing so difficult in some cases, but some companies are evidently promoting the Surface Pro largely so they have an excuse to simultaneously discourage iPads. Some business vertical also like the Surface Pro because it offers unique uses cases, but the use case motivation is, or so Gartner has found, much less pervasive than the anti-iPad one. Goes to show that Microsoft still has a lot of leverage due to its massive and often loyal customer base-- but I think the point is that this leverage, while still substantial today, is diminishing over time, and that if Redmond doesn't show some signs soon, it might never re-attain its previous, unparalleled influence.
Michael Endler
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Michael Endler,
User Rank: Author
4/5/2013 | 5:33:09 PM
re: Microsoft's Influence Fading Fast: Gartner
Agreed. I obviously have no idea what kind of strings Gates might be pulling behind the scenes, and I suppose you can trace the company's culture in some ways to whatever customs Gates originally instituted-- but I don't see any particular reason that current gripes should blow back on Gates.
Michael Endler
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Michael Endler,
User Rank: Author
4/5/2013 | 5:30:17 PM
re: Microsoft's Influence Fading Fast: Gartner
It's a good point. Apple isn't immune to the PC slowdown either. Cupertino's hardware is less commodified than the PCs at most businesses, and the company released several shiny, new Retina-equipped laptops this year-- but it nevertheless lost business, just like almost every other company.

That said, Apple still managed to increase its market share in the U.S., and its rate of decline was close to being flat, much better than the industry-wide average. But even in the U.S., where Apple is strongest, it only accounted for about 1 in 9 computer purchases last year-- which represents a lot of money, but only a fraction of the company's overall revenue. Apple's worried about the mobile market share it's losing to Android (hence the much-rumored "cheap" iPhone for developing markets), but Cupertino is still making money hand over fist in that market (have you seen the margins they get from SSDs alone?!). As a result, the company is better positioned than most Windows partners to endure a PC slide.

Microsoft seems intent to enter the iPad Mini's market, given all the rumors about OEMs being incentivized to make 8-inch tablets. But as you point out, Microsoft is pretty far behind. It would take something pretty compelling to make up all the lost ground but I think Redmond can still make strides if it executes on the next waves of devices.

It's easy to be skeptical about Microsoft's chances, given that the Surface RT, ostensibly an iPad competitor, was priced way too high. At $200, it would be an awesome device with killer build quality for its price point. But at more than $500 for the tablet and the (more or less mandatory) keyboard, the device just doesn't deliver enough, especially given its current app selection. I think RT's native Office apps count for something-- but for its intended market, they don't count for enough. The next wave of RT devices need to be much cheaper while still maintaining reasonable build quality. I'd still like to see Microsoft illustrate some compelling use cases for both Windows and Windows RT. So far, the company's advertising has largely assumed that the "tablet and computer in one device" convenience is persuasive enough-- but customers have already shown that it isn't, at least not with the current UI and price structure. But even if those use cases don't show up until after Windows Blue, some affordable, well-designed RT tablets would be a step in the right direction.

Michael Endler, IW Associate Editor
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