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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.

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  • http://rendion.myopenid.com/ render

    This article is a reprint of another article…so who wrote it? Same graphs, same verbiage.

    • actualbanker

      Asymco’s material appears all over.

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

      I wrote this. What reprint are you referring to?

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  • romainl

    I don’t know how this would change anything, but what kind of devices do you count as “Windows units” on the Microsoft side? What about Tablets ? Windows phones ?

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

      The value for Windows was derived as the total PCs shipped according to Gartner minus the number of Macs shipped according to Apple.

  • Paulo Silva

    Another signal of Windows advantage dismantling is that this past june Objective-C overtook C++ in popularity, as measured by the Tiobe Index (http://www.tiobe.com/index.php/content/paperinfo/tpci/index.html).
    C++ is used to write native Windows applications while Objective-C is used to write Mac and iOS native apps. Thus the Windows plataform is also loosing traction among developers.

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

      Though to be perfectly fair, C++ has also been losing some of its historical users to C#. I know a fair number of guys who write software for Windows for their living. None of them use C++; they’re all taking advantage of C# and WPF (as well they should). Since the API is perfectly accessible from C# and you no longer have overhead of memory management, it’s just sensible. So the comparison isn’t really quite right. Still, the growth in Objective C is impressive. (I’d venture that almost all of that gain is the shift to iOS rather than to OS X, though.)

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  • Philip Widing

    The most important distinction between Microsoft and Apple is that Apple is focused on platform-agnostic operating systems. The transition from PowerPC to Intel was almost unbelievable in smoothness: very few bumps. And iOS is just OSX tailored to run on less powerful, and less power consuming, ARM processors. But Microsoft is producing only a crippled ARM version, Windows-RT, that is restricted from running regular Windows apps. Can it even be included as Windows platforms if it has a distinctly un-Windows platform ?

    Microsoft seems focused on checking off boxes. Intel? Check. ARM? Check. Phone? Check. Tablet? Check. Apple seems focused on giving the device user the best experience, on each device type. And delivering months to years ahead of Microsoft.

    • http://www.benzado.com/ Benjamin R.

      It’s a little unfair to say that iOS is “tailored” while WinRT is “crippled”; neither mobile platform can (or should) run desktop apps. WinRT just looks like it can, because they included a desktop mode.

      You are right about focus, however. Microsoft has been riding a wave, and they are only recently coming to grips with the fact that you need to keep paddling if you want to ride the next one.

      • Space Gorilla

        Depends what you call ‘desktop apps’. The iPad can run some pretty powerful apps, and that capability will only increase. If we’re defining ‘desktop apps’ as those apps which require a mouse and keyboard, I think that’s an outdated definition.

      • http://www.benzado.com/ Benjamin R.

        I was using “desktop apps” to refer to apps designed for desktop operating systems, specifically Mac OS X and Windows 7. But you are correct, if we define “desktop apps” to mean something completely arbitrary, such as “a type of poisonous snake” then it’s easy to say we should or shouldn’t expose our iPads (or children) to “desktop apps”.

    • anon

      The first Macbook Pros including mine were basically melting and had too many issues. Fixing OS X with Bootcamp didn’t yield such greater experience than PC with Winows as fanboys claimed, as Bootcamp never left beta.

      After iPhone and iPod with similar abysmal experiences I’ll have to say: Never Apple again.

      • ex2bot

        I had one of those early MacBook Pro’s with no issues. I have also had two unibody MBP’s with no issues. The surveys indicate that Apple’s laptops are about as reliable as everyone else’s. And most Apple owners love their hardware, more so than HP/Dell/etc. owners. So if you’re trying to paint a picture of horrible hardware melting down on suckered Apple owners, it’s inaccurate.

    • ex2bot

      Apple wouldn’t have done the transition between PowerPC and Intel unless it absolutely had to. And it did. The PowerPC’s were too hot for laptops (G5) and not being improved quickly enough (G4 and G5). That said, the transition was the one of the most amazing feats in computing I’ve ever seen. Platform emulation software doesn’t work well. Until Rosetta / Transitive.

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  • PF

    Its pretty clear at this point that everyone else has woken up to the fact that Apple has eaten their lunch. Hardware is just hardware and if Microsoft and Google bring their A-game to the hardware, there will be alternatives. The actual hardware is pretty competitive already, but its for geeks putting their own flavor of Android onto them. To compete with ‘dumb’ users, the software needs to work right out of the box.
    Wait a while, that big target on Apple’s chest will get tested.
    The consumer market is all about mobile devices, its marketing hype that the package deal that get things sold.

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  • http://www.studio-orione.com/ Emilio Orione

    If you are a Microsoft competitor and you feel the bleeding, you could attack.
    Google Nexus 7 seems more a defensive move against amazon’s fork, but still could be a pain for Microsoft.
    And an iPad 7″ at 200$? And a Mac Mini at 400$?
    What about Android notebooks?
    Business market will be with windows for a while (but likely 7 not 8), but consumer’s market is in great danger for Microsoft and we will see the outcome in a year or so.
    Ballmer will be a genius or gone by the end of next year?
    Meanwhile HP announced they will make w8 tablets only for business, leaving consumer’s market. Uhm I wonder why?

  • Jaded Consumer

    Does the “Windows Units Sold” graph reflect all versions of “Windows” (e.g., Windows Phone and other WinCE-derivations) or just the versions that would run on a “PC” (notebook/desktop)?
    Thanks for the charts!

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

      No. The question I’m trying to answer is: “What is the inherent advantage that Windows enjoys because of its dominant position?” I’m unsure of the benefit that Windows CE had to the Windows hegemony. Neither the code, nor the applications nor the way it was used made Windows better or more powerful, though I admit that’s a judgement call.

  • Suddy

    Hi Horace, Could you please share your thoughts on the new iPad mini? not on the rumor, but on the strategic +/- ive’s and what its impact will be to iPad (current form factor) and Apple post Steve Jobs.

    I personally think this is a bad idea to launch a small iPad just to compete with AMZN and MSFT/ GOOG, and thereby lose the higher margins that the current form factor iPad provides to AAPL.

    Would love to hear your analysis on this in a post sometime.

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

      I don’t usually comment on speculation. I did tweet however that I hoped such a device would fall under the iPod brand because it might be more appropriately positioned as a media consumption device.

      • Suddy

        Wow! that is a brilliant insight. Makes perfect sense as an iPod w/ media consumption.

  • http://www.facebook.com/profile.php?id=690232720 Charles Bouldin

    As someone who bought a Mac 128K in 1984 and has used them ever since, this is so utterly gratifying to see. It’s also a very interesting study in the progress of technology for computing. Mainframes were supplanted by mini-computers (DEC), then minis were supplanted by desktops, (Compaq bought DEC, an unthinkable proposition a few years earlier.), desktops are now undercut by tablets and phones and the whole system is now being abstracted away into the cloud.

    Apple has succeeded, but we also must note that Microsoft has failed, and failed starkly. Their CEO is, as SJ noted, “the sales guy” and his mission in life is to protect the two cash cows: Windows and Offices. This is not a viable strategy in the face of disruptive changes. Ballmer recently stated, “We are in the Windows era. We were, we are now and we always will be.” Fine, you can ride that one right into the ground.

    With the dismal failure of Windows phone, Microsoft remains tied to the legacy desktop box and back office servers in the enterprise. They’re not going away, and they remain immensely profitable, but they’re now the Walmart of computing. The recent decision to sell Windows 8 upgrades for $40 is an admission of how much trouble they’re in.

  • Matthew Ward

    In on of the comments David Illig says “So the iThingies and my Macs remain analogous to my stovetop and my microwave oven. I pick the one I need for the job at hand.” This brought to mind a structural engineering illustration of the angle of repose. Once you incorporate the iOS devices into the chart you start to see the unstable (read “available”) segment of the market shifting to the new platform. It is good enough for a lot of tasks. Most tasks that most people do on an average day. Even the MS Surface appears to acknowledge some of these assumptions (good luck running Solidworks on the Surface). Some people still need a tower. Some people still need a large internal RAID. But that market is heading towards its angle of repose. The mainframes are there, waiting …

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  • kaelef

    I agree with most of the comments here. Just another thought to add to the pile: The Internet was not built on Windows. Both Windows and Mac OS arrived as newcomers and client devices, which, I think, served as another equalizer where Microsoft had become complacent in owning the playing field.

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  • http://twitter.com/res08hao1 Uncle Bernie

    Every windows computer I owned was total crap. They all failed and were a miserable experience.. I bad mouth Microsoft/dell whenever possible.

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  • http://mechanism.name/ Eugene MechanisM

    Hi, I’m on Ubuntu! Even when I buy Mac(iMac or Macbook Pro) – I’m replacing Mac OS with Ubuntu.

  • Joeguide

    Our company which is has been a Windows only just bought over 500 iPads, and will probably buy several fold more. With Citrix, it’s is seamless. Will still need Windows, but not so much. This is not the future, this is the present. Change is coming very quick. Blink and it is too late. Ask RIM and Nokia.

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  • El Tritoma

    how do you get to 0x on the y-axis???

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

      You don’t.

  • Watcher

    So, if I read the last paragraph right, you are saying 2015 is the year of Linux?
    =)

  • Bill Coleman

    I’m missing something here. How can the MacBook engineer a comeback in 2004, when it wasn’t introduced until mid-2006?

    The switch to Intel processors definitely accelerated the acceptance of Macs after 2006, but clearly something else was at work. Very likely the iPod halo effect, as well as the excellent engineering and design.

  • Bill Coleman

    I’d wager these graphs look even bleaker if we consider only US, instead of world-wide shipments.

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  • gpurcell

    Small changes off of a small base can lead to superficially large percentile changes. This is a deeply misleading graphic.

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

      There are no percentiles or growth data in the graphic.

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  • http://www.facebook.com/beaupre Todd Beaupre

    I plotted the same market share the normal way, and the point you’re attempting to make doesn’t look so strong: https://www.facebook.com/photo.php?fbid=10150943744137992&set=a.98109102991.90408.503097991&type=1&relevant_count=1&ref=nf

    • unhinged

      So what you’re saying is that “the normal way” doesn’t show anything interesting happening.

      Your graph shows that Windows has roughly the same market share it always has (declining slightly) and that Apple has improved slightly. Horace’s graph is different because it reflects the growth in size of the overall market – which according to other reports is tapering off.

      Two ways of looking at the same situation, and arguments (sorry, “meaningful discussion”) can be made upon viewing both analyses. But Horace’s, being “not normal”, provides extra information that could be useful.

      I wonder what other forms of analysis could be performed to increase our understanding of the situation?

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

      My point is about market leverage which is a multiplicative force of numbers. If seen only as market share, signals of waning market dominance will be easy to miss.

    • OpenMinde

      You look at what you have right now (market share). Horace looks at what changes (sold per Q). Yours is static view frozen in time, Horace’s is dynamic view. I guess NOK and RIM were using static view back 3-5 years ago. Good luck to you and your business if you manage one.

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  • DNA

    1. One, and maybe the most important reason why PC manufacturers are continuing to sell less hardware in comparison to their previous years is not direct competition from Apple, but hardware itself. Apple market share in terms of desktops is the same or maybe slightly bigger than it was 10 years ago. However, majority of Apple computers you see are fairly new. With PCs, once Intel offered Xeon processors and Microsoft came out with Windows XP there was no reason to buy new computers. Industry stats are showing that XP is still the dominant OS and most of it is running on computers built almost 10 years ago http://news.cnet.com/8301-10805_3-57464853-75/windows-7-hot-on-xps-tail-as-top-operating-system/

    As a result slower sales of the PCs allow people to claim that any platform is outselling Windows. It does, even coffee grinders right now outsell PCs with Windows 7, because more people drink coffee today than 10 years ago. However, it is completely unrelated to how many Windows computers are out there in use.

    2. Comparing mobile devices with desktop OS is to expose lack of any understanding of how the business world works. There are no offices where one would come in and turn on 20 iPads or 50 Galaxy Tabs to do the work. Mobile devices are designed for consumer market, so far. Give iPad to an engineer to complete his work and within minutes you will see a calculator app running on it, while more complex applications will sit on their 30″ screen helping them to complete the work. In fact, the title for the article should read “Apple is building and dismantling its desktop OS advantage by selling more iPads and iPhones.”

    3. Apple attempts to capture the business world did not bring any results for a very long time. Their withdrawal from manufacturing the backend OS and hardware left many hard core Apple customers up in the air. Not a single IT manager will consider Apple as a backbone of their IT system. Many people would love to see Macs in their offices, if they would be able to run the applications from PC world, however it may only take place if Mac will crawl out of 15% of the market share. Current numbers suggest 5% – 6%.

    While the author produced some interesting facts, piling them all up in a single article shows how far away he/she is from the real world. iPad, iPhone and desktop Macs are competing with each other. People at home who used to have desktop now settle for a slate in their hands. On top of that majority of the applications are entertainment apps. Netflix, games and Facebook are consumer apps. Don’t get me wrong, there are serious businesses behind each app. Guess what do they use to produce them?

    Apple got a head start with better hardware and exceptional marketing for their iPhone. They also told people that it is OK to get a slate to e-mail, read some books and watch some movies. Innovation is what drives the IT industry. With Jobs ideas of closed ecosystem and nuclear war over their devices and inventions will help their competitors to bypass Apple in a very short time. Microsoft 8 solutions look very promising. You don’t have to like them, just try Windows Phone 7 and get yourself a preview of Windows 8. It’s good, it may even give you the same sense as the first time when you got your iPhone. It feels right at home. Things do work now better, much better even in the corporate (Microsoft) world.

    If you think I like Microsoft, no I don’t. Close to 80% of our hardware runs Linux of some flavor, but that is a different story. However, in the last 15 years it never crossed our mind to write an app for Apple. 5% market share? If our costumers (they are all businesses) want to use our solutions they must have Windows on their side.

    • http://www.noisetech-software.com/Home.html Steven Noyes

      What I find intresting is how out of touch you seem to be with what is happening in the real world. My guess is your business, if it fails to adapt, will be not so healthy in the coming years. As an engineer, I am using iPads more and more for presentations and on The fly content creation during meetings. My smartphone has a better on the go interface for exchange than outlook and gets used more than my desktop for that purpose. The company I work for (20,000+ employees) is shifting internal tools development fron .NET/desktop to mobile with an emphasis on iOS.

      I am betting Horace is seeing the real world much better than you. Just a guess.

      • dna

        I think we are on a different sides of IT. Products of our company do not require “emphasis on iOS” they work on any platform using browser, so I think we are just fine in terms of being in touch. No apps, no installation, and our customers don’t have to choose between desktop vs mobile. There are features that will run only on desktops and that’s where Apple units are out of question.

        Professional engineer is using iPad for presentation. That’s the idea Apple introduced to the market. Very, very successful idea (for Apple).

        .NET is development platform. If software engineers and programmers know how to use it the final product will work on all devices. What you are witnessing in your company is migration to the cloud.

      • http://www.noisetech-software.com/Home.html Steven Noyes

        Nope. .NET does not run on all platforms and is very easy to target only to Windows (and generally does as you admit yourself in having Windows only web clients). There is a strong migration to custom apps installed through the enterprise that provide a much nicer/faster/productive interface than most craptastic interfaces that are web based (have you used the new DOORS interface?). In this case, there is a stronger emphasis on supporting iOS than Android. WP7 is not even considered. So yes, there is a shift in trends that will leave your company behind.

        The term Cloud is so overused as to have lost its meaning.

    • Noah Berlove

      This is not a binary market. It is not desktop OR smartphone and it’s not desktop OR tablet. Companies are using all 3 in various combinations. It should not take that much imagination to see how having access to different computing devices can increase productivity. Similarly, its not a single choice between Apple and Windows. Companies can and do use both.

  • http://twitter.com/Lab41_ Alex

    Awesome! Now we all just use both…

  • keke

    Macbook is too expensive in Europe. Apple must reduce the price of maschine….

    • xynta_man

      It’s the european taxes, stupid.

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