Microsoft Beyond the Numbers

I was fascinated to see that Microsoft this week provided some cold, hard data aimed at refuting recent sentiments in the tech press that the software giant is somehow no longer a driving force in the technology arena. The figures, provided in a post to the Official Microsoft Blog, follow recent news that the company's latest OS release, Windows 7, had just passed the 150-million-licenses-sold mark.

"We live in a hyper-competitive industry, with loads of challenges to go along with loads of opportunity," Microsoft Corporate Vice President Frank Shaw wrote. "All the same, with Windows 7, Office 2010, Bing, Xbox 360, Kinect, Windows Phone 7, our cloud platform, and many other products, services, and happy customers, 2010 is shaping up as a huge year for us."

Shaw never mentions Apple or Google, but it's pretty clear that he has these companies in mind, since they're generally the companies that many people assume are beating Microsoft in various ways. The Windows 7 sales figure, for example, amounts to 600,000 units sold per day. Meanwhile, Apple's latest hypetastic product, the iPad, sells one third that number each week. And yet, every time the iPad sells another million units, Apple issues a press release and the compliant press corps promote it for them.

Why is this important? Apple and its CEO Steve Jobs are carefully promoting the iPad as the product that is ushering in the so-called post-PC era. But the facts refute this notion: PC makers are on track to sell more than 350 million PCs this year, and they collectively sell one million PCs every single day. Microsoft sells one million copies of Windows 7 each day and a half. But it takes Apple five weeks or so to sell just one million iPads. Sure, it's a successful business, but it's not replacing the PC. Not that most people in the press would ever pause to consider dulling down an Apple promotional story with such inconvenient details.

Even the lowly netbook will outsell the iPad dramatically in 2010. Shaw points to an estimate of 7.1 million iPad sales for this year, though the figure could end being as high as 8.5 million units. But PC makers are projected to sell 58 million netbooks in 2010. These figures refute other recent claims—baseless, but highly promoted—that the iPad was somehow eating into netbook sales and would one day replace the netbook. As it turns out, netbook sales—like PC sales overall—are actually growing pretty dramatically this year, iPad or not. And another bubble bursts.

Shaw even addresses Microsoft's lack of an iPad-like slate computing device solution—a fact that many industry observers have used to prove that the software giant is doomed because it doesn't foresee market trends. Noting correctly that Windows was on less than 10 percent of netbooks when that market began just four years ago, he also explains that Windows now dominates this market, shipping on 96 percent of netbook computers today. The message is clear: Windows might not have a major presence in the iPad's new market now, but there's no reason to think it can't relegate the Apple entry to niche status in the future. After all, they did it to the Mac, which is still mired with sub-4 percent market share in the PC market.

You have, no doubt, heard the hype about Google's Gmail and Google Apps somehow running away with the cloud computing market. Then you'll be surprised to discover that Microsoft's Hotmail service has 360 million active users, compared with just 173 million for Gmail and 284 million for Yahoo! Mail. There are also almost 300 million active Windows Live Messenger accounts worldwide, making Microsoft's IM offering—not Yahoo!'s or Google's—the number-one IM service.

Want to talk financials? After all, Apple just exceeded Microsoft's market cap. But Apple's net income of $5.7 billion for its last fiscal year is lower than the $6.5 billion Google earned, and well under the $14.5 billion Microsoft earned. That's right: Microsoft's net income is almost three times as high as Apple's.

There are other interesting numbers. Although only 16 million people subscribe to the 25 largest newspapers in the United States, 25 million people subscribe to Xbox Live. (Note: Many of them aren't paying customers, however.) The company's Bing search service got 21.4 million new users in its first year on the market. Linux market share in the server market fell from 24 percent in 2005 to 21.2 percent by the end of 2009, despite predictions that it would exceed 33 percent market share by that time. And while the Apple sold 8.8 million iPhones in the first quarter of 2010, smartphone leader Nokia sold 21.5 million smartphones then, and there were 55 million total smartphones sold in the same time period. With global smart phone sales expected to hit 439 million units in 2014, there's plenty of room for growth for everybody. Including, yes, Microsoft's late-to-the-party Windows Phone entry.

Shaw doesn't explicitly argue these points; he just provides the numbers. But these are the arguments I've been making in the face of an increasingly antagonistic crowd who are simply convinced that Microsoft is doomed, facts be damned. Microsoft doesn't often move as quickly or aggressively as I'd like—a decade of antitrust investigations will do that—but it is most definitely still a force to be reckoned with. Yes, there are examples of markets in which Microsoft has yet to make much headway (its Zune platform has never made a dent in the iTunes juggernaught), but the company continues to plug away and, bucking conventional wisdom, even innovate in ways its competitors don't.

Microsoft has a lot of work to do. But doomed? Come on.

TAGS: Windows 8
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