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4/5/2013
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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
4/5/2013 | 2:47:56 PM
re: Microsoft's Influence Fading Fast: Gartner
Bill Gates needs to hustle and steal some other smart peoples' ideas, like he did for DOS, Windows, and Internet Explorer, if he wants to stay relevant and have his Washington cronies control our lives through high taxes on the middle class, and regulation.
Gussy2000
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Gussy2000,
User Rank: Apprentice
4/5/2013 | 3:19:41 PM
re: Microsoft's Influence Fading Fast: Gartner
I think it may just be too late for MS to portray itself as software/hardware that advocates for the user as Apple and Google have been able to do. For so long, MS was the monopoly that forced the use of its products through bundling them with its OS. Products that were not necessarily innovative let alone easy to use and secure. All that may have changed with recent products (I do like Windows 7) but it took too long. Companies like Apple, Google, Mozilla, Amazon and Dropbox moved faster in listening to what users want in their digital products. Most of what MS offers today seems like a reaction rather than the result of a long intended goal. I donG«÷t like Windows 8 on the desktop at all. I plan on keeping with 7 for as long as possible. Right now the only true need I have for windows is support for the MMO I play though it is now available for Mac OS.

I still like laptops and desktops. I do more consumption on the go than I do productivity, so my phone works well enough for that (though viewing photos saved to my Dropbox account is much nicer on our Kindle FireG«÷s 7G«• screen). I still prefer to read and do purchase research from the desktop. I can type and click through navigation and searches much faster than I can on a phone or a tablet. However, my phone is old (2+ years) and our Fire is 1st gen. Maybe IG«÷d change my tune with one of the slightly larger, sharper and brighter screens, faster processors and faster data connections available on the last round of smartphones and smaller tablets.

Today though, my needs are driven by my MMO which no tablet or phone can handle at full graphics acceleration. For that IG«÷m eyeing something with an i5 or i7 and that means a laptop or a desktop. I COMPLETELY understand that I am probably niche tech consumer and someone like my wife is more likely to try to do something on her iPhone before ever going to the laptop.
johnitguru
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johnitguru,
User Rank: Apprentice
4/5/2013 | 4:16:25 PM
re: Microsoft's Influence Fading Fast: Gartner
This is indeed the beginning of the end for Microsoft.
History is unfolding before your very eyes.

Consider these poignant facts:

1. Users are aware that they have a choice now. The world is no longer
dominated by Microsoft and its inferior technology.

2. Microsoft has no mobile market share. That ship has sailed.
Windows 8 phone and all its tablets are confirmed as a complete failure.

3. Cloud computing makes the OS agnostic, so why would any
sane person buy a pc or laptop they know has a slow Windows virus trap OS on it,
if they were not forced to?

Recent Google Chromebook sales are proof of this.
Again choice is driving users away from Microsoft.
The more choice the faster Microsoft revenues decline.

4. Microsoft is only capable of making money by forcing their inferior OS onto
the public through OEMS who are presently very pissed off at Microsoft.

5. When a fully configured user friendly commercial Linux operating system is released with all the drivers you need, Users will see that they have a modern virus free choice and they will gladly embrace it and run away from Microsoft, because they have years of experience using a rock solid Google Android Linux operating system on their phones and tablets. Users now know that Linux is everywhere and it is far superior when compared to any Windows device.

6. Google docs is gaining momentum as a viable less expensive M$ Office alternative.

7. What's left for MicroKlunk to sell? X-Boxes?
Will that cover their multi-billion dollar payroll?

I think not.

8. Microsoft has posted 3 consecutive quarterly losses.

It's over for Microsoft. They will downsize as fast as a lead balloon
falling from the sky. This will happen in 2014.
Laurianne
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Laurianne,
User Rank: Author
4/5/2013 | 4:50:07 PM
re: Microsoft's Influence Fading Fast: Gartner
As more people decide they can make do with a tablet or small tablet, Apple will face lower Macbook sales, too. But Apple has the iPad mini to take up the sales slack, whereas Microsoft has nothing in that segment. And as Android tablets rise, time is not on Microsoft's side in this race.

Laurianne McLaughlin
InformationWeek
Deirdre Blake
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Deirdre Blake,
User Rank: Apprentice
4/5/2013 | 4:51:06 PM
re: Microsoft's Influence Fading Fast: Gartner
Wow, there's a lot of the standard stealing gripes here, but I never thought I'd hear Bill Gates being blamed for higher taxes and regulation, ha! I suppose he's also an African Muslim communist as well!
murjo08
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murjo08,
User Rank: Apprentice
4/5/2013 | 5:14:00 PM
re: Microsoft's Influence Fading Fast: Gartner
You know, I always thought Steve Ballmer looked a lot like a ventriloquist's dummy. Now we know why we never see Bill Gates drink a glass of water while Ballmer is talking...
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
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 | 5:40:40 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.
majenkins
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majenkins,
User Rank: Ninja
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.
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