Despite its lack of a "rocket like take off" when the new Windows 8 was launched in October, I believe Microsoft (MSFT) isn't doing too badly. Putting all its energy into the mobile market, MSFT is slowly chipping away at mega-giants Google (GOOG) and Apple (AAPL) who have a lion's share of the industry. The company hasn't been embraced with hordes of buyers, but something new usually takes time to catch on. Let's take a look at the company's progress.
Windows Phone 8 Shows Progress
I am not saying that Microsoft is bursting at the seams with Revenue streams, but since the Windows Phone 8 came out, the tech giant has seen app downloads double and a 140% increase in paid app revenue. If this isn't a sign that the Windows Phone 8 is doing well I don't know what is. I'm not saying it's doing as well as android or Apple but this shows that people are interested in the phone. It is attracting many first-time phone buyers and has picked up its share of smartphone sales by 2% compared to this time last year.
Watching how the company aggressively attacks the market, there is no question that Microsoft is serious about market share. Payout to app developers has grown to 122 countries including new additions in places like Iraq, Serbia, Ukraine, and Afghanistan just to name a few. There are 15 new mobile operating billing partners bringing the total number of partners to 25, which is more than Google has. Consumers continue to get more options from the company as the Nokia Lumia 720, 520/521 are being shipped globally, so now there are more choices from price points to the capability of the phones.
The Lumia 521 that Wal-Mart (WMT) will be selling will have a price of under $150 and that's unsubsidized. This is an inexpensive phone for a smartphone that operates with up-to-date software. It has been embraced with much fanfare on the Home Shopping Network where it sold out and some updated features like a 4-inch screen and five megapixel camera with high definition video display are quite appealing for this price. At $30 per month with unlimited data and texting, this T-Mobile phone will be picked up quickly by people looking for cheaper alternatives than subsidized iPhones and Androids.
Honestly though, there was no other way for Microsoft to get into this market but to do it aggressively. With Google's Android (52%) and Apple (39%) dictating the market, it was either all or nothing for the company. It is nowhere near competitive with the two big players yet but it is slowly chipping away its market share.
Tablet Identity Becomes Crystallized Around Students & Professionals
So how successful has the "Surface" been in the tablet market so far? Considering the market is brand new, I'm going to withhold my judgment about the numbers. Microsoft shipped about 900,000 tablets in the first quarter of this year, which is a 1.8% piece of the tablet market pie. Tablets with the Windows OS totaled a 3.3% share, which is a large increase over the year before. The Surface has been out since October and I am wondering if consumers have fallen in love with it or not.
Tooting its own horn, Microsoft called the Surface a "crossover" between the tablet and the PC because it can be used for everything from work to play and nothing exists on the market like it yet. Could it be that this "crossover" is closer to a laptop than it is a tablet? There are a growing number of people from students to businessmen who still use Microsoft Office that like the Surface. But there are a lot of people out there who use a computer on more of a surface level (no pun intended) and don't delve very deeply into a computer's capabilities. They just don't need a full-fledged computer they use tablets, which are convenient for recreation more than anything. This is where the iPad has been so popular whereas the Surface appears to be finding ground among those looking for deeper uses than recreation.
Where iPad might be media driven, the Surface Pro gravitates more toward an Ultrabook usage. Maybe the company should focus on demographics that are picking up the tablet for deeper usage and build its clientele that way. The functionality of the Surface appears to be keeping the deeper familiarity that Microsoft has of being a functional computer. When people buy these, they might be looking for something that is used for much more than simple media and recreation.
Making Windows 8 Better
As Microsoft punches through the opposition to claim its market share, it is to no surprise that bugs and other anomalies found in Windows 8 are being addressed. Whenever something new comes out there are always complaints about things that need to be looked at. An overhaul will take place and a new software package is expected to be released later this year.
I don't think it's unexpected that something as different as Windows 8 is met with fanfare and opposition at the same time. It was new for Microsoft when it was released in October and those unfamiliar with its interactive tiles and touch controls were uncomfortable because they were challenged with "change." Change is never met with open arms because it makes us work at something we're unfamiliar with; for this reason I am not surprised at the people that are impressed and those that weren't.
A lot of the changes that have come to Microsoft have been recent and the acceptance or rejection of these things take time and I don't believe measuring them in six months is logical. The Windows Phone 8 is inching its way along. Windows 8 OS is being tweaked as I write and will continue to find acceptance throughout the industry. I also believe the Surface will find an audience because it is unique. I don't believe it's going to outsell the iPad but it will find its audience and I believe it will find a good share of the tablet market as time progresses. With all this in mind, I don't think that we need to feel sorry for Microsoft because they will do just fine.