The boys at Microsoft Corp. must be shaking their heads and saying “et tu, HP?” following reports that Hewlett-Packard Co. plans to release a high-end tablet running the Google Android operating system.
Earlier this week, ReadWrite reported HP’s Android tablet will be built around Nvidia’s Tegra 4 quad-core chip based on ARM’s new Cortex A15 design. No specifications are available. HP isn’t commenting, but speculation is this tablet could be the most powerful in terms of computing capacity and performance on the market.
Currently, HP’s tablet portfolio is confined to the ElitePad 900 and the hybrid tablet-notebook, Envy x2, both running Microsoft Windows 8.
While there are dozens of Android tablets on the market — most notably Samsung’s Note and Tab series — this is the first time HP is venturing away from its Microsoft relationship since launching the ill-fated TouchPad running WebOs in 2001. And the reports come just weeks after HP announced it would follow Samsung Electronics Co., Acer Inc. and Lenovo in developing Chromebooks, ultrabooks running Google’s Chrome OS operating system.
Microsoft could be facing the most serious threat to its operating system dominance yet. While other OS vendors have tried to challenge Windows, none were able to overcome Microsoft’s huge marketing and market share advantage. Only recently, Google’s Chrome and Apple Inc.’s iOS together have all but relegated Microsoft to a distance third place in the mobile market.
Windows 8 to the Rescue?
Windows 8, the operating system designed specifically for mobile devices, was supposed reignite the franchise. However, Windows 8 has thus far failed to kindle widespread interest among PC and tablet users. Microsoft has shipped more than 60 million units of the new OS since October, but the downstream impact on PC and tablet sales has been negligible. Consumers are buying tablets, not PCs; enterprises and midmarket businesses are steering away from Windows 8 because most have only recently finished migrating to Windows 7.
Surface, the first Windows tablet developed by Microsoft, is selling with respectable numbers; analysts estimate Microsoft sold as many as 900,000 of the devices running Windows RT, the version built around ARM processors, in their first three months on the market. However, that number is insignificant to the 22.5 million iPads Apple sold during the same period.
According to a recent IDC report, Apple’s iOS dominates the tablet landscape with 54 percent market share to Android’s 43 percent. Windows stands with just 3 percent market share. Over the next four years, Apple’s market share is expected to fall to just under 50 percent and Android’s share will fall just below 40 percent as Windows grows to roughly 10 percent of the market.
While Microsoft will legitimately be able to claim the title of fastest growing tablet in terms of market share, it will remain a distant third for the foreseeable future.
Part of what’s hindering Surface says, analysts say, is an inconsistent and uneven channel strategy. Microsoft sells most Surfaces direct; only in December did it open Surface for sale through a handful of retail partners. Microsoft says it will expand retail sales of the Surface tablet, but has made no mention of if or when the tablet will be released to the B2B channel.
Steady Partner Drift
Microsoft’s OEM partners are drifting away. Many PC vendors — particularly Acer — were tweaked by Microsoft’s decision to develop its own tablet rather than continuing to license operating systems and leave hardware to partners, as it’s done in the past. This may be part of the reason some PC companies are embracing Android as a Windows alternative.
Some analysts speculate the reason Microsoft is loaning Dell $2 billion to support its buyout to go private is to gain leverage over the hardware company and keep it from defecting to the Google OS, productivity apps and cloud services.
Microsoft may be struggling to find its footing in the tablet and mobile device market, but it’s not giving up. At the Goldman Sachs Technology and Internet Conference in San Francisco earlier this week, CFO Peter Klein said Microsoft remains committed to tablets, smartphones and PCs, and will continue to press for market share despite setbacks and challenges.
“We have a long history of participating and supporting the ecosystem and that takes different forms. Oftentimes it takes the form of co-marketing, sometimes in helping with development,” Klein said, according to Reuters. “In a very dynamic industry, our ability to support the ecosystem — particularly the ecosystem that is innovating on our devices and platforms — is a good thing and something we will continue to do.”
Weak Windows Impact on the Channel
The larger question is whether the continued diversification of operating systems will hurt Microsoft’s ability to maintain its state among OEMs, reseller partners and customers. Given the continued success of Apple and Samsung, the inclination of partners and customers may be to embrace more non-Windows products.
At the ConnectWise user group meeting in London this week, UK managed service providers said it didn’t matter what operating system or devices their clients use; they will support any platform or even multiple platforms with the variety of remote monitoring and management (RMM), mobile device management (MDM) and cloud-based resources at their disposal.
Even some parts of Microsoft are reportedly grappling with this issue. The core of the company rests on the success of Windows, but the Business division (which controls the popular Office suite) is seeing sales slip. It’s reportedly developing an Android version to capture the business of users defecting from Windows.
Ten years ago, a group of security researchers led by fame cryptologist Bruce Schneier wrote a paper decrying the insecurities created by Microsoft’s market dominance and the de facto monoculture of Windows. The market may now be witnessing the permanent end of that monoculture and the rise of multiculturalism among OSes.
In some respects, a plurality of OEes may create opportunities for solution providers and MSPs, as they will have greater latitude in selling and supporting devices and platforms sought by their customers. However, Windows’ decline also means losing a longstanding standard by which the channel has built proven, repeatable and stable systems.
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