Microsoft’s share of the consumer market has dropped from 95% to 20% in 8 years

This chart says it all: From 2004 to 2012, Microsoft’s share of the consumer computing market has plummeted from 95% to 20%. For 20 years, thanks to the desktop PC, Microsoft enjoyed an almost complete monopoly of consumer computing — and yet today it is a minority stake holder, languishing behind Google’s 42% and Apple’s 24%.

Never has Microsoft’s precarious position been so starkly illustrated. Of course, we’ve known that the PC market has been basically static for a few years, and Microsoft’s smartphone and tablet offerings aren’t exactly exploding onto the market — but 20%? I don’t think anyone would’ve guessed that things were that bad for the 800-pound gorilla of consumer tech.

Taking a closer look at the graph, it’s easy to see that 2005 was the turning point: In one year Microsoft drops precipitously from 95% to 49% of the consumer compute market. Unfortunately, Goldman Sachs, which produced the chart, doesn’t elaborate on these figures. It isn’t entirely clear what happened in 2005: The iPhone didn’t come out until 2007, and the chart doesn’t show Apple’s market share moving at all in 2007. To be honest, I have no idea what caused Apple (or “Other”) to shoot up in 2005. Sachs says it is due to “mainstream adoption of non-PC consumer computing devices,” but I am hard stretched to think of a device or breed of devices that could cause such a monumental shift in market share. Perhaps Sachs got its dates wrong, and 2005 is actually meant to be 2007.

For a few years, the Microsoft/Apple/Other status quo is preserved, and then from 2008 to 2012 Google grows from 1% to 42% of the market. As of today, Apple has a 24% share of the consumer market (iOS and OS X), Microsoft has 20% (Windows, Windows Phone), Other accounts for 14% (smart TVs, e-book readers, etc.), and Google absolutely dominates with 42% (Android, Chrome OS). Looking forward, Goldman Sachs paints a slightly rosier picture for Microsoft — gaining from 20% to 26% by 2016 — but it’s fairly safe to say that Microsoft will never again have a 95% share of the consumer market.

There is no doubt that Microsoft’s dizzying decline is due to its seriously late entrance into the smartphone and tablet markets. Windows Phone 7 crawled out of gestation in October 2010, a full three years after the iPhone and two years after the first Android devices. The touch- and tablet-oriented Windows 8 and Surface RT tablet came out in October 2012, two and a half years after the iPad. Unless you’ve been asleep under a rock for the last decade, you will have seen how the entire tech landscape can change in a year. It was bad enough that Microsoft was caught with its pants down with the iPhone, but it’s almost unforgivable that it also missed the tablet train. This is probably why Windows chief Steven Sinofsky was let go, incidentally.

Short of praying and plowing billions of dollars into marketing — and I’m sure Microsoft is doing both — there isn’t really anything else that Microsoft can do. Generally, if you’re late to a tech party, you might as well not turn up at all. Microsoft has to innovate dramatically and lead from the front — and if the behemoth can’t let go of its Desktop and Office baggage, this simply isn’t going to happen. Realistically, I think it will be very tough for Microsoft to change its ways — it’s too big, too old, and too expensive to suddenly change its entire consumer strategy. The tech industry is all about the fast-moving innovator or fresh-faced debutante, and Microsoft is neither of those things.

Microsoft’s share of the consumer market has dropped from 95% to 20% in 8 years