This story ran in the print edition of The Seattle Times on Dec. 13, 2010. -Sharon Pian Chan
In its first year on the market, Microsoft's Windows 7 has made a killing. The operating system has sold more than 240 million copies. It is the fastest selling OS Microsoft has ever made. At one point, Microsoft was selling seven copies per second.
Windows continues to dominate the computer market, with more than 90 percent share. But at least one company is planting a stake in the ground: Google.
Last week, the search giant announced a pilot test of netbooks running its new operating system, Chrome OS. Conceptually different from Windows and Mac OS, Google's operating system is built solely to surf the Web and run Web applications like Google Docs.
Some analysts expect Chrome to have little or no impact on the competitive landscape in 2011. Still, the proliferation of other computing devices where Microsoft does not dominate �?? smartphones and tablets �?? show Windows' dominance as a computing platform point may be slowly eroding. That slight, glacial decline in growth is in part dogging Microsoft's stock price, which has remained relatively unchanged for the past 10 years.
Still, the market for PC operating systems is enormous and continues to expand. From 2009 to 2014, the market is expected to almost double, from 299 million units to 590 million units, according to IDC, a research firm in Framingham, Mass. "That is pretty substantial growth," said IDC analyst Al Gillen.
Microsoft Windows owned 91 percent of the PC operating system market in 2009, and IDC expects it to drop by 1 percent by 2014. Mac, which had 4 percent in 2009, is expected to increase to 5 percent by 2014. Linux is expected to hold steady at 4 percent.
Even with a 1 percent drop in share, Microsoft is still expected to sell hundreds of millions more operating systems than it is selling now.
One analyst, Wes Miller, at Directions on Microsoft, says he expects Windows 7 to hit a record next year.
"I anticipate that, from a client perspective, that Windows licenses are going to stay strong and potentially get stronger," said Miller, a research vice president at the independent firm in Kirkland. "You'll get a Windows 7 sales record."
Demand for Windows 7 has been pent-up over the past few years because many companies stuck with Windows XP instead of upgrading to Windows Vista, which is Windows 7's immediate predecessor. Microsoft plans to stop supporting the last version of Windows XP in 2014.
Meanwhile, driven by consumers, Mac sales have grown over the past few years. "Honestly, it's the trend of consumerization more than anything else," said IDC's Gillen. "Most of the Mac OS X deployments are typically being acquired by consumers. They may be used in a business environment, but they are not being purchased by business customers."
Doubts about Chrome
Chrome OS, Google's new entrant, faces an uphill battle, analysts say, because it requires a continuous connection to the Internet and it does not use a hard drive to store files on the computer, a trade-off Google said it is making for speed. When the computer boots up, the only screen that comes up is the Web browser.
"To presume you can exist in a Web online, cloud-only environment right now is just not realistic," said Bob O'Donnell, another analyst at IDC.
Eric Schmidt, Google's chief executive, said the technology is ready. "In my view, when you play with it and hopefully use it every day, you will realize it does in fact work," he said at a news conference last week.
PCs vs. tablets
Windows is entrenched on PCs, and for now the competition is negligible. The competition instead is coming from other devices.
Research firm Gartner in Stamford, Conn., recently downsized its forecast for PC shipment growth in 2010, from 17.9 percent to 14.3 percent, which comes out to 352 million PCs. The reason? Tablets.
By 2014, Gartner said tablets such as the Apple iPad could displace 10 percent of PC sales.
Apple has sold 7 million iPads this year, and computer makers are selling tablets that run Google's mobile operating system, Android, this holiday season.
While some tablets that run Windows are on the market, a computer maker has yet to make a Windows tablet that can compete with the size, battery life, price and breadth of applications available for Apple's iPad.
Microsoft, which declined to comment for this story, said in an earlier earnings call that it does not see tablets displacing PCs. Rather, the company says people are buying tablets in addition to laptops and desktop computers.
Microsoft Chief Executive Steve Ballmer has said that the Oak Trail processor Intel is working on will make it possible to build a competitive Windows tablet.
Chief Operating Officer Kevin Turner has dismissed the tablet market as tiny. Microsoft, he said, is interested in markets for devices that sell in the hundreds of millions, like the PC.
Parallels, a Renton company, builds software so that Apple devices can work in corporate environments. CEO Serguei Beloussov said people may not be throwing their PCs away for iPads. But if "they do 80 or 90 percent of work on iPad versus coming back to PC or Mac from time to time, that's what's very interesting," he said. "I think it's a relatively significant number."
This story was corrected at 3:58 p.m. on Dec. 13, 2010. An earlier version of this post incorrectly stated that Microsoft at one point was selling one copy of Windows 7 every seven seconds. The statistic, provided by a company representative, was incorrect. Windows 7 was selling at a rate of seven copies per second earlier this year, according to the company.
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