Microsoft's (NASDAQ: MSFT ) popular operating system turned 30 on Monday. Windows 1.0 was announced to the public on Nov. 10, 1983. It would take two more years for it to be released, and another decade for it to truly catch on, but at its peak, Windows powered more than 90% of personal computing devices.
Microsoft's operating system still dominates when it comes to traditional PCs, but the rise of mobile devices running operating systems from Apple (NASDAQ: AAPL ) and Google (NASDAQ: GOOG ) has thrown Microsoft's operating system business into disarray. Will Windows survive another 30 years?
Microsoft still struggling when it comes to mobile
Mobile devices may never replace traditional PC form factors entirely, but for some people, tablets and smartphones may just be enough. Certainly, shipments of traditional PCs have been plummeting in 2013 (down 8.6% just last quarter) while shipments of tablets have continued to grow — Gartner anticipates 53% growth this year.
Unfortunately for Microsoft, it matters little when it comes to tablets — since the release of Windows 8 last year, tablets running Windows have sold poorly; most recently, IDC reported that Windows tablets "continued to struggle" in the third quarter.
Instead, Google and Apple are dominant. Apple's iPad created the market, and according toNet Marketshare, Apple's iOS still accounts for more than 50% of mobile market share. Google's Android took a few years to catch on, but has exploded in popularity — tablets powered by Google's operating system are estimated to have finally outsold Apple's iPad this year.
Could Microsoft lose its core market?
Microsoft might never catch up when it comes to mobile, but as long as the traditional PC is in demand, Microsoft will always have a market for its operating system — right?
Probably, though it's far from guaranteed. Both Apple and Google remain token players when it comes to desktop and laptop PCs, but both companies are making inroads toward taking a bigger chunk of Microsoft's core market.
Apple has begun to reduce the cost of Mac ownership, offering free operating system updates and free software, while cutting the starting prices of its Macbook Pros. Apple's Macs remain expensive, but further price cuts are rumored to be on the way. Given Apple's tendency toward premium pricing, the Mac probably won't ever replace the Windows PC entirely, but if Macs get cheap enough, more consumers at the high-end could make the switch.
And while Apple captures consumers at the high-end, Google could steal Microsoft's customers on a budget. The demand for Chromebooks, laptops running Google's Chrome operating system, is growing, despite the general negative trend in PC sales. This is likely because Chromebooks are very cheap (as little as US$200) and easy to use. They have some major limitations — they're completely dependent on the Internet — but as more computing shifts to the cloud, Chrome OS is slowly becoming a viable alternative.
Imaging Windows in 2043
Certainly, with all the advancements in the world of computing, any version of Microsoft's operating system that exists in 2043 is likely to be unrecognisable from the one today. But investors need not think so far in advance.
Windows, far removed from its glory days, is facing real challenges from Apple and Google, both on the mobile front and even on the traditional PC. Analysts at Gartner don't expect Windows to survive another 10 years, let alone another 30, as the growth of alternative operating systems — most notably, Google's Android — will simply overwhelm Microsoft's Windows to the point of irrelevancy.
