Windows
Windows 7 is Microsofts best shot to undercut Apple, which has grabbed its biggest share of the home-computer market since the 1990s, said Roger Kay, an analyst at Endpoint Technologies Associates in Wayland, Massachusetts. The program is Microsofts first “worthy competitor” to Apples OS X, he said.
Microsoft, the worlds largest software maker, gets about 25 percent of its $58.4 billion in annual revenue from Windows. The companys effort to entice consumers to upgrade to new Windows machines is getting a boost from a computer market that is recovering after three quarters of declines. Apple may still be able to make gains because the iPhone and iPod buoy Mac sales, said Al Gillen, an analyst at market research firm IDC.
“Right now, theres a lot of good karma for Windows 7 — that will help Microsoft stem some of the movement to Mac, but thats only part of the story,” said Gillen, whose firm is in Framingham, Massachusetts. “The other dimension thats made Mac attractive is the surrounding ecosystem of iPods and iPhones. Theyve done a good job putting together a sexy and interesting story for consumers.”
The rebound in the economy may also help Apple, which lost some market share during the recession as customers avoided pricier Macs in favor of Windows PCs, according to researcher Gartner Inc.
Apples Share
Apple will end this year with 8.1 percent of the U.S. home-computer market, down from 10.3 percent in 2008, according to Stamford, Connecticut-based Gartner. By the end of 2010, Apple will rise to 9.9 percent, Gartner predicts. The rest of the market is almost all Windows.
The global picture for Windows is brighter, because Apple doesnt sell in many developing markets, Gartner said. The Mac will have 4.4 percent share at homes globally by the end of 2009, according to the research firm.
Customers switching from Windows are a “major part of our growth,” Apple Chief Operating Officer Tim Cook said in an interview this week. The companys Mac versus PC ads, featuring John Hodgman as the bespectacled face of the Windows personal computer, mocked Vista as being prone to crash and vulnerable to computer viruses.
Fantastic Opportunity
“Whether its Windows 7 or Windows 10 or Windows 95 or 2000 or all the Windows, people are just sick of all the headaches that go along with it,” Cook said. “And so I look at their Windows 7 announcement as just another fantastic opportunity to grab more share.”
To win over consumers, Microsoft and partners are offering seven days of special deals on Windows 7 machines. For example, Best Buy Co. will offer a package that includes a Hewlett- Packard Co. desktop, netbook, wireless router and home setup, “all for the price of a Mac,” said Tami Reller, a Windows vice president at Redmond, Washington-based Microsoft.
Apples increasing market share will still leave room for Windows 7 to thrive, IDCs Gillen said.
Tremendous Success
“While Apple has had arguably tremendous success, its a 1 to 2 point shift, not 5 to 10 percent,” Gillen said. “Anything like that does set off alarm bells in Redmond, but its not threatening Microsofts core business.”
About 80 percent of companies surveyed by New York-based brokerage ISI Group plan to switch to Windows 7 in the next two years. Microsofts Windows sales will increase 9 percent to $16.3 billion in 2010, the first full year Windows 7 is on sale, compared with a 10 percent drop this year, according to Sarah Friar, an analyst at Goldman Sachs Group Inc. in San Francisco.
Microsoft rose 21 cents to $26.58 yesterday in Nasdaq Stock Market trading. The stock has climbed 37 percent this year. Apple, which has more than doubled this year, advanced $6.16 to $204.92.
Brand Rehab
Microsoft can put a new shine on the Windows brand, which was tarnished because of Vistas shortcomings, said Al Ries, chairman of Ries & Ries, a marketing strategy firm in Atlanta.