Last week, as I explained why Google is really a media stock
, I cited Microsoft (MSFT) in comparison. I later ran across a startling number that should set off alarm bells for Microsoft shareholders. Pay attention if you are one.
Microsoft is still a top-ranked tech player for one overriding reason: Windows. According to data collected by tech researcher Benedict Evans, as recently as 2009, Windows software powered some 90 percent of all Internet-connected devices sold on the planet. However you define "monopoly," 90 percent ought to qualify. Microsoft had one just four years ago.
Absent governmental protection, monopolies rarely survive for long. Competitors see the profit margins and try to grab market share. Microsoft is no different — and seems to be losing the battle.
Between 2009 and 2013, Microsoft's share of Internet-connected devices dropped from 90 percent to less than 25 percent. This isn't simply a loss of market share. It is total collapse.
What happened? The mobile revolution happened. Microsoft's cash cow Windows product is necessary only to the extent you own a PC. Information and applications don't have to stay in desktop boxes anymore. They live in the clouds and don't care how we reach them.
In 2007, Steve Jobs revealed the first Apple iPhone. A variety of other devices followed. Google joined the game with the Android operating system.
As innovation left the desktop, PC owners found they no longer needed to upgrade so often. If you don't buy a faster computer, you also don't buy another copy of Windows.
Microsoft is not oblivious to the trend. Windows phones and Surface tablets were intended to keep the company in the game. They didn't.
None of this means Microsoft is doomed. The company is still competitive in certain segments. The cash generated by Windows finances more-promising divisions like the Xbox. More ideas are in the works. Maybe one of them will prove to be a game changer. It better be — because a game changer is what Microsoft needs.
Unless the rules change, a few years from now the last Windows screen will have two very lonely words.
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