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'2013 is going to be ugly' for Microsoft as it shifts to Windows 8, Forrester predicts

It's already lost its once-dominant spot in operating systems, firm argues; now it's all about holding on to what it has

October 23, 2012 06:40 AM ET

Computerworld - As Microsoft launches Windows 8, and with it, an attempt to stabilize a precipitous decline in its share of operating systems for "personal devices," 2013 is going to be a tough, very tough year, research firm Forrester said today.

"This is a pivotal movement for Microsoft," said Frank Gillett, an analyst at Forrester and the lead on the report "Microsoft: The Next Five Years," that was released Monday. "But 2013 is going to be ugly."

Gillett based that on a rapid drop in Microsoft's share of operating systems since the debut of Apple's iPhone in 2007.

When traditional PCs, tablets and smartphones are combined -- Forrester dubs the three as a category called "personal devices" -- Microsoft's 2008 share of all operating systems, a whopping 95%, has fallen to 30% in 2012. The exploding growth of smartphones, where Microsoft has little traction, and tablets, where it has essentially none on the eve of Windows 8 and its offshoot Windows RT, have not only negated Microsoft's gains in Windows users of traditional PCs, but put it in the hole.

For the next five years, through 2016, Forrester's said, Microsoft will retain that 30% share. But it's lost the dominance of this "personal device" category -- that ship has sailed -- and has virtually no chance of getting it back.

What Microsoft can do -- what Windows 8 and its successors must do, said Gillett -- is hold on to what it has.

"Microsoft will lose incremental share [between now and 2016], but they'll stabilize at 30%," said Gillett. "Unit sales will increase ... by 2016 they'll be ahead of where they are now in terms of users. Microsoft will survive, but we don't see a way they can reclaim lost ground."

The two companies that Microsoft faces -- and with which it now shares the personal device OS market -- are, of course, Apple and Google. Both California firms have large shares in smartphones, with Google's Android leading Apple by a wide margin in 2012 and going forward, and Apple's iOS the dominant tablet operating system.

Microsoft's Achilles' heel is smartphones, where it has a very minor share currently, and by Forrester's estimate, will have no more than a 14% in 2016. "Smartphones are their weakest link," said Gillett.

In tablets, Forrester is predicting a 27% share for Microsoft in four years, while it will hold onto nearly 90% of traditional personal computer operating systems.

"The growth in tablets and smartphones will help offset incremental PC losses [for Microsoft] through 2016 [but] it can't grow much more without a much stronger showing in smartphones than we expect," the report stated.



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