Microsoft’s real problem: Apple

“As Microsoft continues to waste time and resources figuring out how to win a sideline game it has already lost–Internet media–its shareholders have bigger things to worry about. Namely, the future of the Windows and Office cash cows,” Henry Blodget writes for Silicon Alley Insider.

Blodget writes, “It has been so long since Microsoft had anything real to worry about in these businesses that it’s easy to take their perpetual domination for granted. Don’t.”

Blodget reports, “SAI’s Dan Frommer recently noted a startling statistic: In personal computer sales in the US in Q2, Apple outgrew HP and Dell by a wide margin, continuing to regain market share it lost in the late 80s and early 90s. More surprisingly, Apple outgrew HP–the world’s largest PC vendor–on a unit basis as well:”

• Apple (AAPL) shipped 1.4 million computers in the US during Q2, representing 8.5% market share and 38% year-over-year growth. Mac shipments grew 9 times faster than the overall U.S. PC market (4.2%) in Q2.

MacDailyNews Note: Not 9 times, 20 times. You have to first remove Apple’s numbers from the PC market to make a proper comparison. (No, the PC market does not get to use Apple’s Mac numbers to prop up their faltering numbers.) The U.S. market as a whole (without Mac) in Q208 grew from 14,810 to 15,094 or approximately, or a paltry 1.9%. Mac grew from 1,011 to 1,397 or 38.2%. In other words: in Q208, Mac growth in the U.S. was more than twenty times (20x) that of the rest of the U.S. PC market. Contact:

• Q2 U.S. Mac sales grew by 386,000 computers year-over-year, handily beating no. 2 HP, which sold just 222,000 more computers in Q2 2008 (4.17 million total) than it did during Q2 2007 (3.94 million). Dell outsold HP and maintained its top U.S. market share; it shipped 5.25 million PCs last quarter, up 557,000 units/11.9% year-over-year, and representing 32% of the U.S. market. Meanwhile, HP (HPQ) maintained its no. 1 position worldwide

Blodget reports, “Looked at differently, the Big Three sold 1,165,000 more computers in the US in Q2 than they did last year…and Apple sold a third of these additional units. It is safe to say that the majority of these units won’t be running Windows. It’s also probably safe to say that most won’t be running Excel, Word, or Outlook, either.”

“Apple still has small market share (8.5% US, much less globally), so Microsoft is not going to fold up the tent overnight,” Blodget writes. “But at the rate Apple is gaining share, it won’t be long before Microsoft begins to feel a real bite. It is this threat, combined with the increasing attacks on its Office franchise, that Microsoft and its shareholders should really be worrying about.”

More in the full article here.

“There’s one more battle he wants to win. It has nothing to do with money, fame, or glory. Like all the best fights, this one is personal. Steve Jobs is going to best Bill Gates. This fight is Shakespearean, elemental, and emotional; watching it unfold should be the most fascinating business story of this young millennium,” Jeffrey S. Young and William L. Simon, co-authors of iCon Steve Jobs: The Greatest Second Act in the History of Business.


  1. Guys, its nice to get excited about Apple succeeding, but lets not forget the biggest obstacle of all. Microsoft Monopoly in the business world. As long as that is allowed to exist, Apple can only get ahead by so much. Look how many Vista ( downgraded to XP ) were shipped/sold/moved/registered…. 180 Million. If they release another crappy OS, it will still ship/sell/move/register 200 Million the next time.

  2. Blodget also asserts the old line that Microsoft once “saved” Apple buy becoming a shareholder.

    Somehow, though, he still manages to read the writing on the wall and see that Microsoft is in trouble.

  3. In the short term, Apple has already won the “cool” war.

    I don’t think it is Apple’s strategy to “beat” Microsoft, if the metric is just sales. Basically, as the sole seller of Macs, Apple is structurally limited to no more than 20% or so of the market. But that still leaves a lot of room for growth.

    On the other hand, iPhone is a whole new platform and it is clear that Apple intends to use it to redefine smartphones and own that market. The consequences of that are HUGE.

  4. I doubt that most Macs won’t be running Office as the author claims. Office is still very important in the business world, and Pages simply isn’t able to translate Word docs completely.

    That said, with no significantly different version of Windows being releAsed for several years if not a decade, Apple has a golden opportunity to take back a large amount of market share.

  5. Just for some perspective from an older person that followed all this history as it happened …

    When Simon said that Steve Jobs wants to “win the battle” against Gates, it’s not about market domination or how many folks use Office. It *is* personal.

    From the very beginning there were always two main, competing, computer visionaries Steve Jobs and Bill Gates. Steve had the better product, and was there “first” with most of the main innovations like mice, graphical interfaces, USB and a bunch of other things. Bill Gates, for some unknown reason, gets all the glory and is looked at as sort of the “father of the desktop computer” when in fact he never had a good idea in his life.

    This pisses off Steve Jobs (rightly so) and has for years. He will not quit until he has “bested” Gates, and by that I mean when you read the history books in 2100 it will be Steve Jobs and Apple that you will be reading about, and it will be “Bill Who?” and “Micro-what?” if you mention anything else.

    That’s what Steve Jobs wants before he bows out because he actually deserves it. He will get it too. ” width=”19″ height=”19″ alt=”wink” style=”border:0;” />

  6. will be when Microsoft really FEELS the fear and starts to flail even more wildly and inefficiently, ruining (and failing to launch) their own products in ever more random ways like a bull in a china shop.

    We’ve already seen their best. Heaven help us when they start cranking out the rest.

    And long live Linux, so that there remains some semblance of competition for Apple in 10 years.

  7. Jubei,

    yes, but when Apple starts going into double figures and cloud computing becomes more widespread, Microsoft’s bottom line is going to start to hurt.

    Nobody’s talking about overthrowing MS . . . not just yet.
    When a company is completely dominant it looks impregnable; take IBM for example. Not many people thought ‘Big Blue’ would decline so rapidly.
    I think MS is going to decline even faster than IBM did.

  8. I posted you proper math on the article. Jst FYI though, it’s not Blodget’s math that’s faulty, they simply get the blame for not knowing basic math and checking well. SAI’s Dan Frommer is the one lacking basic math skills.

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