Categories

Building and dismantling the Windows advantage

Jul 4, ’12 3:06 PM
Author Categories Theory

When the Macintosh was launched in 1984, computers running the MS-DOS operating system were nearing a dominant position in the market. Having launched in 1981 as the IBM PC, they were quickly cloned and four years later “PCs” were selling at the rate of 2 million/yr.  The Mac only managed 372k units in its first year.

In other words, PC was outselling the Mac by a factor of nearly 6. It turned out to be a high point. The ratio by which the PC outsold the Mac only increased from there.

When Windows 95 launched in 1995 it negated most of the advantages of the ease of use of the Macintosh and the PC market took off. The ratio reached 56 in 2004 when 182.5 million PCs were sold vs. 3.25 million Macs.

During the second half of the 90s it was already clear that Windows won the PC platform war. Windows had an  advantage that seemed unsurmountable.

I should point out that this ratio between platforms is not just an exercise in arithmetic. It’s a measure of leverage. The advantage of dominance is realized in an ecosystem which creates lock-in and additional economies in marketing. Ecosystems become self-perpetuating and there is a tendency toward monopoly. The stronger you are, the stronger you get.

 Then, in 2004, something happened.

Although PC volumes continued to grow, they did so more slowly and the Mac grew faster. What coincided with this was the emergence of portable computing. The MacBook became easily differentiable as a “better” laptop. It was not faster, did not have more storage or any key metrics being used to sell PCs. It was just better as an integrated product. The integration manifested itself through a sense of quality and robustness as well as intangibles like aesthetics and “feel”. I wrote about this a few years ago.

As a result the Mac began to whittle down the advantage Windows had. The ratio  of Windows to Mac units shipped fell to below 20, a level that was last reached before Windows 95 launched. It’s as if the Mac reversed the Windows advantage. This was an amazing turnaround for the Mac.
But the story does not end there.

If we consider all the devices Apple sells, the whittling becomes even more significant and the multiple drops to below 2. Seen this way, Post-PC devices wiped out of leverage faster than it was originally built. They not only reversed the advantage but cancelled it altogether.

Considering the near future, it’s safe to expect a “parity” of iOS+OS X vs. Windows within one or two years. The install base may remain larger for some time longer but the sales rate of alternatives will swamp it in due course.

The consequences are dire for Microsoft. The wiping out of any platform advantage around Windows will render it vulnerable to direct competition. This is not something it had to worry about before. Windows will have to compete not only for users, but for developer talent, investment by enterprises and the implicit goodwill it has had for more than a decade.

It will, most importantly, have a psychological effect. Realizing that Windows is not a hegemony will unleash market forces that nobody can predict.

← Older Comments

  • Pingback: Reality check: Has the iPad turned PCs into trucks? It’s looking that way… – Lucrative blog

  • Rutherware

    I wonder what the ratio is when you add the iPod Touch?

  • gpurcell

    Disqus is being odd, so I can’t respond directly. There most certainly are percentiles in this data–the ratio is an inverted percentile, one that, in this case, deeply obscures what is going on in this market. 54:1 would be roughly equivalent to 2 percent of computer sales being Apple. 18:1 is roughly equivalent to 5 percent of computer sales being Apple. If you used a proper measurement scale the very marginal change in Apple’s fortunes would be immediately apparent.

    • http://www.chriskrycho.com/ Chris Krycho

      2% to 5% isn’t marginal, though. That’s pushing to edge into the top 5 of all personal computer manufacturers, period, if not actually there. Wikipedia has total PC sales in 2010 at 351M, in 2004 at 189M. Those numbers mean Apple went from selling ~3.78M computers/year in 2004 to ~17.55M computers/year in 2010. That’s in the GLOBAL market. Almost 5x as many units sold, when the market itself didn’t even double. And their profitability on those units is much higher than any of their competitors. Not marginal at all, especially if the trend continues – which I suspect it will.

      The numbers in America are, I would guess, much stronger for Apple. On college campuses, the proportions are just unbelievable: Apple may have close to 50%, at least on the basis of what I saw in the classroom a few years ago.

  • BigShotRob

    ummmmmm since Macs have gone to Intel chips several years ago, the Macs are now really “PCs”

  • Pingback: Mac vs. PC: der Mac holt langsam auf | Apfelpage

  • Pingback: Der iTag am 6. Juli: Unser News-Überblick | iTopnews.de

  • Andrew Sheppard

    Horace,

    Thanks for an excellent article, and for putting numbers and charts to a phenomenon that we have all been aware of but could not explain.

    Clearly, Apple’s hardware was improving and its OSX was making considerable software improvements since the turn of the century, while Microsoft wasn’t able to provide much innovation after Windows XP.

    But if you look at the timeline, I think you will see that the introduction in 2003 of Unibody Aluminium MacBooks was the turning point. By that time, most tech savvy people knew that a Mac could do most of what a Windows PC could do, maybe more maybe less, but they had no reason to change if they were comfortable with a Windows laptop. The peak of your graph is in 2004, but the chamfer starts in 2003 when the Unibody MacBook was released.

    The Titanium G4 was an excellent laptop, but did not seem affordable enough. The hardware excellence of the Unibody Aluminium MacBooks was, I believe, enough reason to switch, for journalists at first but eventually for everybody. The Unibody MacBook, I believe, turned the corner for Apple.

  • Joe_HTH

    This is an idiotic article. Since when are the iPhone and iPad even remotely comparable to the full blown OS market. Windows is as dominant as ever, holding 90+ percent of the market. OS X still hovers around 6% market share, give or take a percent in either direction.

    What the iPhone, iPod, or the iPad does is completely irrelevant, as they are different markets entirely. If you’re comparing Windows versus Macs, Apple has gained nothing.

    If you want to talk about the mobile market, get back to me in a couple of years after Windows 8 tablets and Windows Phone 8 has been on the market a year or two.

    Just another insipid article from a clueless idiot. There’s an old saying. There are lies, damn lies, and statistics. Statistics are the worst. You can make statistics say anything you want to.

    • Kizedek

      @Joe_HTH, Adas Weber, Damon Sanchez:
      Do you honestly think the point of the “exercise” is for Apple fans to pat themselves on the back that Apple isn’t a failure after all these years after all, because, look guys, Apple has 15% share not 6% if Horace is allowed to count it a certain way!

      Who cares? This is not a retrospect conducted to console ourselves that Apple was only a “bit of a failure” vs a “complete and abject failure”. We know Apple’s doing fine — it’s the most valuable company on the planet, and the iPhone business is worth more than the whole of Microsoft.

      No, this article is another look by Horace into understanding the nature of technology industries and how they get disrupted over time; how adept businesses are at disrupting themselves before someone else does it; how agile they are at spotting opportunities and creating new business opportunities.

      LOL? laugh it up: Ballmer’s done a fair bit of that himself; and the CEO’s of RIMM; and Michael Dell; and…perhaps most of your heroes. Everything DOES look fine for MS, and Windows will be dominant as ever (for all the right reasons, I’m sure) …until it falls off a cliff. This is fascinating stuff, if not a bit tragic like watching a trainwreck in slow motion. This stuff hasn’t been tracked like this before, and many many people here appreciate Horace’s insights (However, it’s probably the ones that don’t appreciate them that could really benefit from them).

      But I do think someone at MS must be taking note of the postPC computing trends, even if you’re not, because here we are anticipating the launch of Windows on ARM (arguably 5 years late). It is precisely the different approaches to what you protest are wildly different markets that is of interest here: identifying areas for disruption and finding the underlying jobs to be done. The skill is in recognizing it when everyone else is complacent and incredulous. A year or two? come back in a few months as this stuff is unfolding now. Grab some popcorn as we learn how well MS makes use of any “windows” of opportunity remaining to them.

    • symbolset

      The answers to your questions will be explained later son. These are grown-up matters. In time you will understand why.

    • http://www.asymco.com Horace Dediu

      I am noting that you are expecting the eighth major version of mobile Windows to be a winner.

  • http://ARMdevices.net/ Charbax

    Android has overtaken Windows daily sales since last year.

  • http://twitter.com/darkriderdesign Damon Sanchez

    LOL yeah….all these numbers show is the current “WORLD ECONOMIC CRISIS”…nothing more…nothing less…

    to postulate the decline of PCs into these numbers I think is a bit far fetched.

    you could wrap any industry into the “WORLD ECONOMIC CRISIS” and it would look the same.

    “NEWS FLASH….. brand – x ….is on a slow decline!!!”

    I give you that within this world crisis Apple is selling more mobile devices, but this isn’t a PC replacement.

    -
    Darkriderdesign

    • http://www.asymco.com Horace Dediu

      I did not suggest that it is a replacement.

  • http://www.facebook.com/people/Adas-Weber/622729281 Adas Weber

    I think that if you’re going to make a true comparison, you really need to include XBox, Windows Mobile,
    Windows Phone 7, other embedded Windows CE devices, Windows Servers, Windows
    tablets, and also include Macs running Windows as Windows PCs. Otherwise the comparison is kind of pointless!

    • http://www.asymco.com Horace Dediu

      The comparison is a review of the leverage Windows has over its nearest competitor. It’s not clear to me that Xbox offers a greater advantage to Windows itself. Windows Mobile has not had an appreciable impact on Windows itself and its volumes have not been significant on a yearly basis. Windows tablets and servers are included in the data. But including all you ask for would not change the primary argument: the Windows hegemony and hence market and ecosystem leverage it could obtain due to ubiquity is eroding rapidly. What we lack is a metric of exactly how to measure this erosion. This is my proposal.

  • capablanca

    Horace, I find myself wondering whether this chart would be even more meaningful on a log scale. Did you look at it that way, before deciding to present it as linear?

    • http://www.asymco.com Horace Dediu

      I did look at it many ways. For the way I wanted to narrate it, I chose the stack area as the key construct. But that means I cannot use log scale.

  • upwut

    You can’t compare Windows Unites (read PCs) to iOS. Saying that it’s dire is ridiculous. If you include the ratio including iOS then one should include Android operating systems as well. It’s comparing apples to oranges, then all of a sudden you throw a banana into the mix.

    • http://www.asymco.com Horace Dediu

      I am measuring the leverage that Windows has in terms of ubiquity relative to its nearest competitor historically. As Android has emerged only recently the graph would include only three data points for it.

  • Pingback: Tux Doc » Apple Could Overtake Windows Platform in Two Years, Analyst Says

  • Pingback: THE APPLE INVESTOR: The ‘iPad Mini’ Could Have A Larger Market Than The Current Model (AAPL) |

  • Mario Kadastik

    I find the graph with Mac + iPad and Mac + iPad + iPhone a bit weird. The iPhone was introduced in 2007 and iPad in 2010 yet the sharp dropoff in the graph seems to indicate iPhone eating into Win based sales starting from around 2005 and iPad since 2009. If the graph is to be shifted 2 years, then things make a bit more sense, but the exponential growth of iPhone and iPad shouldn’t be so sharp initially and leveling off as it is. I think there’s some small issue there with the numbers (and I do understand it’s a ratio so also PC sales would impact this).

    • FalKirk

      Mario, Windows on the desktop continues to dominate OS X. But in 2006, 95% of all Personal Computers ran Windows. Today, Android has already surpassed Windows and iOS is well on it’s way. What’s even more startling is that desktop and notebook sales are flat or diminishing while phone and tablet sales are enjoying meteoric growth.

      Window’s is becoming a minority player. And unless they’re able to transfer to tablets (and phones) their OS share will fall dramatically in the next few years.

      It’s a sea change that few saw coming and that most don’t see even now as it’s happening before our very eyes.

  • Pingback: Na Era Pós-PC, a Microsoft não pode ser coadjuvante | Consultoria Jr

  • tjamesjones

    good old apple v microsoft comment war. this one’s pro-microsoft, so you can start marking me down now, don’t waste any time thinking! I got on the mac bandwagon via an iphone & then macbook etc. But I’ve gone back to using my old PC desktop and I think in a simple head to head, Windows is a better system for creating documents on. It may or may not be a hegemony, but after spending time with both, I think it’s the best system for working on.

  • http://www.cannedcat.it Roberto Marsicano

    Launching the iPad, Steve Jobs killed the PC, because we do not need a computer with a “local” computing power and local heavy disk capacity.
    Computing power and storage capability are now in the cloud.
    What we need now is a mobile thin client: a tablet or a smartphone.
    So either the PC or the MAC are almost dead.

    MAC survives because it is a luxury product: well designed and very expensive, like an Armani dress or a Chanel bag, targeted to the people that works in communications, media, design, advertising.
    But, in the end, the concept of a personal computer will vanish and IBM take it all.

    • http://www.chriskrycho.com/ Chris Krycho

      For the general user, perhaps. They’re not going anywhere, though, because someone still has to write the software that lets us have this conversation… and you’re just not going to do that on an iPad. Now, the guy who is just consuming content, or even creating at a more basic level? Sure. The iPad and its competitors will fill that niche just fine. But you’re not going to see serious software developers, designers, writers, etc. doing major work on the iPad anytime soon, or probably ever. The laptop isn’t perfect for everything, but it’s pretty darn close for some of those tasks.

  • Pingback: 从1984到2012，苹果与微软的河东河西 | 云动态

  • Pingback: Apple could overtake Windows in platform war within two years - Macworld Australia

  • Fred

    That chart is a t-shirt I’d like to have. I owned a NeXT Cube. In the bubble, Microsoft paid us well to develop for I.E. but we suffered NT server/db update hell. In 2001 I moved a whole company to OS-X 10.1 and watched each and every successor OS-X generation run perfectly and *faster* on the oldest hardware. It has been a long, long, long time. Nothing like an overnight turnaround. Our business culture mostly treats Apple as the freak outlier, the one bright kid in class ruining the curve for everyone else. Let Apple be a model of perseverance and integrity. Not enough people believe this “new,” apparently golden in every sense rule, applies to them: build a product as you would have it for yourself.

  • $igma902

    I think chart 3 needs to be the next t-shirt (á la “It’s not rocket science”).

  • Pingback: Ventas de Mac recortan su distancia sobre las de PC

  • Pingback: OS X Mountain Lion ma status Golden Master, premiera 25 lipca? | Cały czas zycie gra ja nawijam

  • Pingback: Tecno-Advance | Ascesa e caduta di Windows

  • Maurya

    Mind you, Microsoft is now addressing this very issue – Windows 8 is meant to give all the advantages of what Apple products offer while maintaining the dominance in the enterprise market. What has pushed Apple up is the consumer market in which Microsoft products never had any appeal. Apple might not be able to dent Microsoft’s deep foundations in the enterprise sector. It has almost become like the English Units being too expensive to convert to in the US while other countries have switched over to the Metric system. It would be prohibitively expensive for enterprise market to move away from the Windows platform. They do not care much for looks or finish. They want their investment to be minimal and have a tested and tried platform that they can use. Consumer market is more volatile compared to the enterprise sector. Apple might find its sales fluctuate based on how economy goes. Enterprise purchases are part of an investment to improve productivity. Microsoft might gain some ground here with its new Metro based phone, tablet, laptop and desktop integration. Within five years, Microsoft will be in a much stronger position than it is in now. Unless Google and Apple come up with something radical that the Enterprise sector can adopt quickly, Microsoft cannot be shaken off its foundation. That is the biggest market there is. And Microsoft is not going to sit quiet in the meantime. It is company well known as the survivor against odds and the most underestimated one. The future will have Apple, Google and Microsoft on equal terms. Amazon is the fourth one in the race. I don’t think one company will get to dominate everything like it did before. Apple’s dominance is due to its introduction of radically different products. But others have almost caught up with it. Now they will need to do something new to stay ahead. I do not see anything in the horizon. For sometime, each company will focus on cutting as much inroads into other others’ territory. The next two years will see Microsoft gaining some ground and Apple flattening out a little.

  • Pingback: In Flex We Trust » Tech Talk News: Apple Could Become The Number 1 Platform In 2 Years!!!!

  • Pingback: T=Machine » Rise and fall of Microsoft’s hegemony over Apple

  • Pingback: Mountain Lion: The MacStories Review | AVORAH - Geek Lifestyle Reviews And Views - TECH, GADGETS, STYLE.

  • t8ankyun

    With these was obviously a easy gown to build up some thing fantastic, fascinating flirtatious. Females really like totes having, particularly if they may be brand. In some way, make all of them really feel much more gorgeous as well as appealing. Much more all of them really feel advanced and incredibly womanly. And the are simply several reasons why females tend to be crazy about totes as well as wallets and handbags. The actual comparison could be costly, particularly luggage Isabel Marant Sneakers of those females, that are created by popular creative designers. This could be accessible to everyone who is a specialist within the least expensive offers. But if http://www.isabelmarantshoex.com you act like you have no idea Isabel Marant Sneakers an ideal location for the journey: Alexa band Isabel Marant Shoes along with genuine Zoysia grass Mulberry versatile fish investigation, see the €-hand wallet with regard to fashionable females just like you to provide. € ladies Isabel Marant online handbag is surely a ladies handbag with an online shop which has belief as well as totes. These types of totes are manufactured from leather-based diverse because snakeskin, Isabelle Marant ostrich, lizard, Isabel Marant is definitely the, package leg, Togo and also the item. Every females desires to appears beautiful. With this these people buy numerous stylish points including garment

  • Pingback: Anonymous

  • Pingback: CHART OF THE DAY: One Of The Biggest Stories To Watch In 2013 (MSFT, AAPL, AMZN, GOOG) | Digital Wealth

  • Pingback: Microsoft Corporation (MSFT): Is The Tech Giant Headed On The Correct Trajectory? - Insider Monkey

← Older Comments