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Microsoft Corporation (MSFT)/Research In Motion Ltd (BBRY): A Glimpse into the Post PC World

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In a recent report, IT research firm Gartner provided an interesting insight into the future of the device business. Highlights included more warnings about the death of the PC, the rise of Google Inc (NASDAQ:GOOG)‘s Android, and alarming troubles for Microsoft Corporation (NASDAQ:MSFT) and Research In Motion Ltd (NASDAQ:BBRY).

Microsoft Corporation

Welcome to the post PC era

Worldwide device shipments are projected to grow 9% in 2013 to 2.4 billion units and 2.9 billion by 2017. However, the composition of those shipments are changing drastically.

Traditional PCs like desktops and notebooks shipments are expected to decline 8% in 2013 to 1.9 billion units. Of course, this isn’t a temporary event due to troubled economic conditions but a secular trend driven by changes in consumer behaviorAs we’ve seen echoed in other reports, sales are under pressure as customers choose to delay replacement and increasingly substitute PCs for smartphones and tablets.

Tablet shipments are projected to dominate, growing nearly 70% in 2013 to 197 million units driven primary by lower prices and increasing capabilities. Emerging market customers are also increasingly choosing tablets over traditional PCs as a companion to their smartphone.

Mobile phone shipments are projected to grow 7.5% in 2013 to 1.9 billion and to 2.1 billion units by 2017.

There’re also signs of increasing consolidation in the operating systems powering these devices. By 2017, Gartner projects a three-player oligopoly led by Android, Windows, and iOS.

The Androids are here

The number of Android devices are expected to grow 73% in 2013 and Gartner projects to total number of devices shipped could hit 1.5 billion annual by 2017. By 2017, Android could power 50% of all devices.

Why is Android so well positioned? Last year, more than 50% of U.S. mobile subscribers had a smartphone and penetration has hit similar levels in other developed economies. This means most of the industry growth will be driven by price sensitive late-adopters. Android is attractive to these customers because the platform is the cheapest in the marketplace. Google gives away the operating system for free and the hardware can be easily commoditized by manufacturers.

Mr. Softy treading water

Gartner projects Microsoft Corporation (NASDAQ:MSFT) will continue to pick up market share from smaller rivals as the industry consolidates to three operating systems. Microsoft Corporation (NASDAQ:MSFT)’s market share, as a portion of global device shipments, is projected to grow from 15% to 20% by 2017.

There’s some evidence this is occurring already. Earlier this week, Kantar Worldpanel announced Windows had taken third place in the U.S. smartphone industry based on February sales data. The platform also made noticeable gains in Britain, Australia, and Italy.

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