Microsoft Corporation (MSFT): How Windows 8 Can Still Be a Success

Page 1 of 2

Microsoft Corporation (NASDAQ:MSFT) Windows 7 and Windows XP are still very popular. According to Net Market Share, Windows 7 and Windows XP operate 46% and 37% of desktop PCs, respectively. Microsoft Corporation (NASDAQ:MSFT) could have just stuck with that proven formula, but it gambled on some big changes in the user interface with Windows 8. While the changes in the OS continue to be met with criticism, the results are actually mixed.

Microsoft Corporation (MSFT)


There is no doubt that Windows 8 has struggled in the desktop PC market. Almost eight months has passed since Windows 8 launched. Both Windows 8 and Windows 7 launched in the month of October. In over the same span of time, Windows 7 climbed from 2.18% desktop market share to over 14% market share. Check out the following chart (data source: Net Market Share).

Windows 8 is still below 5% market share.

However, the OS is not completely dead in the water. Windows 8 recently passed Windows Vista and is actually gaining market share at a solid rate. Still, it is struggling to gain large market share.

Furthermore, Windows 8 so far has failed to restore growth in the PC market. One of the most notable things about Windows 8 is that it was designed for tablets and PCs. This is a different strategy from Apple Inc. (NASDAQ:AAPL), which has two separate OS’s. OS X is for Macs and iOS is for tablets and smartphones. One strategic advantage to having Windows run both tablets and PCs is the legacy programs. Windows has been popular for years so being able to run these legacy programs is definitely an advantage.

However, the new user interface has done nothing for the PC market, which is still in a huge rut. According to IDC, PC shipments declined 14% year-over-year in the first quarter. It is the biggest decline in one quarter and the fourth consecutive quarter of decline. IDC states, “At this point, unfortunately, it seems clear that the Windows 8 launch not only failed to provide a positive boost to the PC market, but appears to have slowed the market.”


Still, it is a mistake to just look at how Windows 8 is doing in desktops and the state of the PC market and declare Windows 8 a failure. Windows 8 was designed with touch in mind and tablets are a big part of that. The tablet market is exploding. According to IDC, worldwide tablet shipments increased 142% year-over-year to 49 million units in Q1. IDC expects that tablet shipments will surpass the PC market by 2015. While those are just projections and the desktop PC is still important, tablets are definitely here to stay.

In Q1, Windows tablet (excluding Windows RT) shipments climbed to 1.6 million units from only 200 thousand units in the same quarter of the previous year. Microsoft Corporation (NASDAQ:MSFT) shipped about 700 thousand Surface Pro tablets so its hardware partners shipped 900 thousand Windows tablets. In terms of market share, Google Inc (NASDAQ:GOOG) Android controlled 56.5% of the market, Apple Inc. (NASDAQ:AAPL) 39.6%, and Windows (excluding Windows RT) 3.3%.

Page 1 of 2