
Microsoft's Real Problem: The Second Coming of Apple - nickb
http://www.alleyinsider.com/2008/7/microsoft-s-real-problems-cloud-computing-and-the-second-coming-of-apple
======
aneesh
> "Apple (AAPL) shipped 1.4 million computers in the US during Q2,
> representing 8.5% market share and 38% year-over-year growth. Mac shipments
> grew 9 times faster than the overall U.S. PC market (4.2%) in Q2."

Is basic mathematical literacy too much to ask for? When your market share is
small, it's easy to grow faster. Apple can cut in to a tiny fraction of
Microsoft's market, and growth is huge. But even if Microsoft converts all
Apple customers to PCs, the percentage growth will be small. When your market
share is 90%, it's _impossible_ for your market share to grow more than 11%,
and pretty difficult for your sales to grow at 38% (unless people buy new PCs
every 6 months, or you find a big new market). While it's true that Apple's
growth is faster, it's hardly as surprising as the article makes it out to be.

My company's computer shipments grew over 10x faster than Apple's -- so about
90 TIMES faster than the overall market. I increased by sales 400% by selling
computers to 5 of my friends, since I only sold 1 computer last year. Get my
point?

Yes, Apple's growing, but this whole "9 times faster", while true, is
misleading, meaningless hype.

> "But at the rate Apple is gaining share, it won't be long before Microsoft
> begins to feel a real bite."

Yes, but as Apple grows, they can't keep growing at that rate!

For example, MSN/Live search market share grew about 27% from May to June
([http://seekingalpha.com/article/85321-msn-live-only-major-
se...](http://seekingalpha.com/article/85321-msn-live-only-major-search-
engine-with-higher-volume-in-june)). But you don't see anyone making a big
deal about this, because _it's impossible to expect Google to grow at that
rate_. This situation is no different.

~~~
DavidSJ
Actually, the article did explicitly distinguish between unit growth and
percentage growth, noting that:

> More surprisingly, Apple outgrew HP--the world's largest PC vendor--on a
> _unit basis as well_ :

...

> Q2 U.S. Mac sales grew by 386,000 computers year-over-year, handily beating
> no. 2 HP, which sold just 222,000 more computers in Q2 2008

...

> Looked at differently, the Big Three sold 1,165,000 more computers in the US
> in Q2 than they did last year...and _Apple sold a third of these additional
> units_.

~~~
aneesh
Agreed, but that's not my point. The article claims amazing percentage growth,
and then uses that to say that if Apple keeps growing at this rate, Microsoft
should be scared. It's ridiculous to expect long-term growth at this rate.
Maybe the next couple quarters, but not the next couple years.

~~~
demallien
Sure, but don't you think Microsoft should be scared long before Apple starts
to hit saturation limits? I mean, major growth is still possible when you have
about a third of the market, but I doubt Microsoft wants to see Apple holding
33% of the OS market share...

------
mdasen
I love Apple. I've used Apples since grade 2 (first computer ever touched was
a IIc). I went through the whole gamut of Macs - LCs, Performas, Quadras,
PowerMacs, iMacs, G3s, G4s, MacBook Pro. Apple is going to grow in business,
but they aren't going to threaten Microsoft.

Why? Many reasons. Companies don't like being beholden to a single provider.
With Windows, at least for the computer, they get Dell, HP, and many others to
buy from. There is a huge ecosystem around Windows. I work at an office that
uses Exchange for email/cal. Entourage always has little weird anomalies. We
have constituent management software that only runs on Windows and we're not
going to switch because we have too much data (and it's a terrible,
proprietary format).

Plus, the biggest thing, businesses like ABI stability. It's why MS has done
so well. While others would break compatibility on both the ABI and API level,
MS has kept it stable for over a decade for the most part. It's made Windows
cludgy, sure, but customers like it (mostly). Often, when Apple releases a new
OS X, there are little things that need changing in programs. Apple seems to
have put this more in the past and I'm really excited about Snow Leopard.
However, if Apple goes the MS route and demands forever backward
compatibility, it's likely that OS X's advantage disappears.

Apple is poised to make inroads, but part of MS' problem is also its greatest
feature - backward compatibility. Should Apple follow suit, the pace of
development would slow and OS X would get more cludgy. And if Apple ever
displaced MS, MS would have the option of breaking compatibility and then
leapfrogging Apple like Apple has done to them.

Part of the reason I love the Mac is that Apple is willing to break
compatibility to make things better/more stable/more lovable. OS X is at a
really great place right now and I'm also glad Apple is going for more
stability than in the past, but businesses really want MS-style ABI stability.
I definitely see Apple displacing a good amount of MS in the home, but
businesses can be more conservative.

I guess I'll see what happens. As someone who was in the fold during the
darkest times, I'm just glad to know the company is stable, profitable and
growing.

~~~
chaostheory
"However, if Apple goes the MS route and demands forever backward
compatibility, it's likely that OS X's advantage disappears."

Apple doesn't have MS's infinitely hard task of dealing with n variants and
combinations of PC hardware and drivers. They also already dealt with major
issues of backward compatibility through emulation.

------
mattmaroon
"It's also probably safe to say that most won't be running Excel, Word, or
Outlook, either."

Umm, no. The fact that Office programs are written for Mac is one of the prime
reasons Apple is able to make inroads into corporate.

~~~
Anon84
Very true. But the quality of Apple's own replacements (like Keynote) and the
ease with which they can interoperate with Microsoft Office (Keynote is a
better Powerpoint than Powerpoint) makes the transition very easy. Add
competitive pricing to this and Microsoft has a real problem even here.

~~~
mattmaroon
I would think free alternatives like Google Docs/Zoho probably scare MS more
in the long term. I'm still skeptical anything will replace MS office in the
foreseeable future (that's just my nature I guess) but I imagine if anything
does, it will be something free.

~~~
demallien
The challenge of iWorks for Microsoft is that Microsoft can no longer hold a
gun to Apple's head, threatening the removal of Office from the Mac platform
if Apple doesn't play ball in other areas (licensing Exchange for the iPhone,
for example). Or rather, they still can at the moment (iWorks is not a perfect
drop in replacement for Office... yet!) but as time goes by, that threat
becomes less and less impressive.

Of course, Google Docs/Open Office also have a role to play here. Microsoft is
slowly but surely losing it's hegemony.

~~~
mattmaroon
Is it? Apple went ahead and implemented exchange for the iPhone, not because
they have a gun to their head, but because businesses can't live without it.

It's easy to point at all of the new Office competitors and say MS is doomed,
but none of them have any significant market share yet. OOO has been around
forever, and even Google Docs and Zoho are past the stage where we'd call them
new.

~~~
demallien
When Apple implemented Exchange support for the iPhone, you will have noticed
that they introduced at the same time another way of getting push email to the
iPhone - they explicitly created an escape route if people want to leave
Windows. Apple will ot fall into the trap of depending on Microsoft again in a
hurry.

As for the various office productivity packages - sure, they've been around
for quite some time now without really making much of an impact, but things
starting to change. Firstly, Microsoft dropped the ball on the Mac platform by
dropping VBA support for the Mac. If you want to use VBA on the Mac now, the
best option is OpenOffice, not MS Office.

Secondly, those packages have been steadily improving - for me, it's only
really been in the last year or so that OOO has got to the point that it could
be considered a serious competitor to MS. You have surely noticed the massive
discounts that MS has had to give for Office to keep it installed in large
organisations recently - there have been plenty of examples in the press.

------
tx
_Google, Yahoo, Amazon, and other web-based services companies offering
functionality and apps for free that Microsoft currently charges a boatload
for._

What are they smoking? What exactly do Yahoo and Amazon offer that equals to
Windows or Office?

And no, Microsoft does not charge anything for Wordpad (equivalent of Google
Docs). In fact, Wordpad is open source - it's been shipping as "RichEdit
control code sample" since Visual Studio 4.0 (1996 if I'm not mistaken).

How many years need to pass for people to realize that no, a browser isn't an
OS, and no, browsers don't represent any "paradigm shift", simply because
winword.exe can learn to do HTTP much easier than browser can learn an
equivalent of Win32 API.

~~~
schoudha
I don't think Microsoft even agrees with your statements.

------
m0nty
"with the rise of cloud computing, Google Apps, and cloud-based email and IM,
choosing Mac is an ever more viable alternative"

I can't see much of a link here. Most businesses I've worked for over the last
five years are still wedded to PCs and Windows, and wouldn't ever change --
too much risk, too much potential expense, etc. I would guess that most of the
growth in Apple's sales are to home users or very small businesses, not
corporate.

I'm a Mac enthusiast, I'm a Linux enthusiast, but I wouldn't recommend most
businesses switching to those platforms (on the desktop, at least) except in a
very limited set of circumstances.

------
chaostheory
No, MS's real problem is not fixing Windows from the ground up, instead of
just giving people crappy patches to bloated software. Apple wouldn't be a
problem if they kept their past promises with Longhorn.

