Microsoft’s Achilles heel?

By Jed Murphy – Carlson Marketing

Only a matter of a year or so ago it would have been almost impossible to see the nature of Microsoft’s demise. Sure, Google was the new force dominating the world of search & display advertising with the will and resources to keep pioneering: ..Maps…Earth…Docs…Analytics …Wave. The list goes on.

Although Microsoft has tried and failed to compete in some of these areas, most especially in the search market with Bing, there has been no real threat to their overall stranglehold of the desktop operating system market with about 90% share (and with that, dominance in the office software market). But things are not quite as rosy in the mobile/handheld operating system market. Recent figures from Gartner show that Microsoft’s Windows Mobile lost 28 percent of its smartphone market share between the third quarter of 2008 and the third quarter of 2009. Microsoft is really being squeezed by open source operating systems (such as Symbian and Google’s Android) and the core proprietary smartphone operating systems of RIM’s Blackberry and Apple’s iPhone. To put this in context Blackberry gained a 20% market share in Q3 this year and the iPhone 17% .

However it’s the open source platforms that Microsoft has most to worry about. These are predicted to grow to around 62% market share by 2012, according to Gartner – and Android proves possibly the biggest threat. In under a year it’s grown it’s marketshare from zero to 4%. Handset manufacturers such as Samsung are attracted to Android as there are no software license fees – and this may ultimately limit Microsoft’s ability to charge license fees in this market. Considering around 80% of smartphone purchases are private, rather than corporate, Microsoft cannot bank on revenues from the lucrative business market here.

And it’s not only in the smartphone market that Microsoft faces a challenge from Google. Last week Google announced the open source launch of its Chrome Operating System (OS). Chrome OS will be based on the look & feel and architecture of the Chrome web browser. Chrome OS is specifically designed for notebooks and plugs into Google’s cloud computing vision – with applications and data stored on the internet.

The beauty of the Chrome OS is that again there are no license fees. Considering that the hardware manufacturers largest direct cost is the the Microsoft Windows license how long will it be before Google launches an assault on the Windows market?

Yes, this is a long way off. There’s no doubt about that.  But looking at the way the mobile operating system has evolved in the last 12 months, I wouldn’t bet against it.


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