Domination

I nearly fell off my chair reading these lines in a story about M$’s stagnant market cap:
“Google, the leader of the Internet era of computing through the aughts, now has a $200 billion market capitalization and is on the verge of passing Microsoft’s market cap of $215 billion. Microsoft was the leader of the PC era of computing and continues to dominate the desktop, notebook, and server software market for Intel-based x86 computers.”

Close but no prize. M$ was never close to dominating on servers, playing catch-up for years. Certainly they did make a dent in business databases, and authentication but there is so much more that servers can do. Apache has always been ahead of IIS:

See Netcraft.

Then there’s High Performance Computing where M$’s share is so tiny you may not see it on this chart:

Operating System Share of High Performance Computing Top500.org 2011-11

The desktop share was probably as high as 95% at one time but many measures put is as low as 76% these days. M$ is boasting of selling 50 million licences per quarter while PCs are selling 90 million units per quarter. That means the share is shrinking rapidly. If the world’s stock of PCs is 1500 million, 40 million PCs lost to M$ per quarter is about 10% decline in installed base per annum. That does not include older XP machines migrating to GNU/Linux and thin clients. M$ is at the point of losing monopoly power with ISVs, OEMs and retailers. That partly explains the success of Android/Linux.

M$ did have a successful network of enforcers who bullied ISVs, OEMs and retailers into extending the monopoly granted by IBM into every corner of IT but governments were able to curtail the excesses a few years ago and competition is returning to IT. M$ has grown fat and uncompetitive in its monopoly so it will decline for the immediate future. Deals with Novell, Nokia and bullying over software patents are desperate measures of a dying monopoly and they merely slow down the process of freeing IT. They cannot stop it.

About Robert Pogson

I am a retired teacher in Canada. I taught in the subject areas where I have worked for almost forty years: maths, physics, chemistry and computers. I love hunting, fishing, picking berries and mushrooms, too.
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2 Responses to Domination

  1. Kozmcrae says:

    “That’s a zero return after one or two years although there are some wild rides available for anyone who wants to hop on board.”

    So Google has about 9 years to go to equal Microsoft’s record for stock shares flatness.

  2. Clarence Moon says:

    With 50% of the revenues and 75% of the unit volume of servers being sold in the world, how can you continue to claim that Microsoft is struggling to catch up in the server market? Linux with Apache servers dominate in the web server arena, it is true, but that is a minor part of the overall market. The Oldman apparently is an IT manager for some large organization with a lot of servers. Ask him how significant web servers are versus line of business servers that do the rest of the work.

    As to the rest, time will be needed to tell if the 50/90 ratio that you are espousing is anywhere near correct. Meanwhile, their businesses involved with personal computers continue to generate huge profits and are even increasing slightly as time marches on.

    Their stock is rather stodgy, I would be the first to agree, but it is fairly stable these days and is yielding some 3% return in the form of dividends while others, such as GOOG, pay nothing, relying on growth to fuel interest.

    One interesting factoid that I have noticed is that GOOG, while pretty much out of my price range at $600 per share, has been at essentially the same price point, $620 or so, today, one year ago, and two years ago. That’s a zero return after one or two years although there are some wild rides available for anyone who wants to hop on board. I would advise waiting for the next dip, though, they seem to be at a traditional high at the moment.

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