Is Microsoft slowly killing Windows off?

Buggy in nature, Microsoft Windows has always been constantly changing and evolving its User experience ever since its first release in 1985. But why is Windows not seeing any major updates in recent times? Is Microsoft slowly ditching its flagship OS off?

Windows has been the most popular OS among desktop enthusiasts with over 85% market share ever since. One of the main reasons for its dominance was OEMs shipping Windows with their cheap hardware and sole availability of major industry grade products. Be it Adobe suite or Autodesk CAD or Microsoft’s own Office suite, everything is available for Windows. Mac OS X, being the main competitor for Windows, though has most of these software, ships only with Apple’s proprietary hardware. Linux only dominates in the Servers and Supercomputer market and never had known presence in desktop market. (I have been an Arch Linux user for past 3 years, ever heard of that name?)

In 2015, Microsoft announced that there will be no Windows 11 as Windows 10 will exist as Software as a Service. This move was not unique however. Apple had chosen this model to deliver Mac as a Service with its OS X release long ago. A brief history of Windows, ever did they introduce something new they forced customers migrate to a new environment but the new policy will mean once a Windows user, forever be a Windows user with a single license. Here’s what happened to Microsoft in recent years which forced them change their business strategies completely.

The cloud: Microsoft Azure

Microsoft Azure was officially announced in 2010 as Windows Azure and since then, it has only seen a gradual rise in its revenue. Here is a screenshot taken from Statista categorically emphasizing on how Cloud and Business computing are generating Microsoft more revenue than their Consumer or OEM Licensing of Windows and Phone businesses.

Microsoft’s revenue from 2012 to 2020 financial years, by segment (in billion U.S. dollars) [Statista]

This growth is more apparent after 2013 because of the rise of a number of software startups taking place whose strategy was solely based on cloud. Even the existing businesses have been migrating to a separate cloud provider instead of their in house implementations. Being one of the top 5 cloud providers among AWS, Google Cloud, Digital Ocean and IBM (the list is not exhausted), Microsoft Azure has seen one of the highest number of migrations after AWS.

The next chart shows how badly Microsoft’s revenues through Windows have been affected in recent years. Windows License sales, be it Commercial license or OEM, have not gone past 10% increase in any of the quarters in last 3 years. On the contrary, Azure saw growth of about 90% in 2018 which fell to 55% in 2020 largely because of the pandemic situation. Office 365 and Xbox services have been the other major growth areas for Microsoft after Azure. Xbox contributed about 1.3 Billion USD (YoY 64% growth)* while Office 365 user subscription base surpassed 45 Million*. Bing ad services, as always, has only seen downfall.

Microsoft Services and Products growth [CNBC]

The market dominance of Desktop PCs is falling and so is the popularity of Windows. The main reason for this downfall can be attributed to drastic spike in Smartphone users which is largely dominated by Android followed by iOS. The net revenue through Personal Computing, including Windows, Gaming and Surface, grew to 11.8 Billion USD with an operating cost of 4.75 Billion USD. Though the numbers sound astonishing, they are not up to the par of the earnings generated through cloud based services.

The retraction to base the business completely to cloud, however, has largely been successful. The consolidated revenue has seen double fold rise from 22 billion USD in 2014 to 44 billion USD in 2020.

Microsoft’s net income from 2002 to 2020 (in billion U.S. dollars) [Statista]

Microsoft had been releasing some of the astounding product linings under the Azure brand. ML based Microsoft Cognitive Services, CDN Coverage by Metro and Azure Machine Learning Studio are some of the new offerings under Microsoft Azure.

Abandoned Windows Phone

The long running Windows phone and eventually Windows Mobile was announced dead just few years after Satya Nadella’s appointment as Microsoft CEO. Microsoft had good selling of its Nokia Lumia devices and then Microsoft Lumia (after Nokia’s fall) at one point in time but eventually it died with Samsung, Apple and Chinese manufactures building more robust hardware and Android/iOS based smartphones. In 2017, when Microsoft announced a predictive decision of killing Windows Mobile platform, it’s intent became clear that mobile platform was no longer a profitable business for Microsoft. Windows Phone lived for about 15 years after its first introduction in 2000 as Pocket OS in the form of PDA.

Popularity of Linux

If a contraction of growth was not enough, Microsoft’s internal news have created hype for its competitors’ advancements. Last year a ZDNet article stated that Linux rules all the clouds, even on Azure cloud surpassing the use of Windows Server. In the recent years, the Windows market share is seeing only downfall as against the uptrend of Unix based OS like OS X and Linux distributions.

Desktop OS Market Share [dazeinfo]

Linux distributions are gaining more hype among youngsters and enthusiasts. Ubuntu based distributions are well known among newbies where distributions like Arch Linux, Gentoo and LFS are only popular among enthusiast users and advanced users. Red Hat and Ubuntu server has always dominated the server space followed by the custom implementations of most of the cloud providers like Amazon Linux AMI. Chrome OS has also seen a fast growth in Desktop and Notebook OS trends.

On the contrary, Apple has made its unfluctuating dominance in enterprises with about 15% market share and the growth is just rising sharply. Windows has always been termed as buggy, frequent updates only make user experience poor and Microsoft’s strategy of forceful updates have only degraded its reputation. Mac OS X, however, is known for its stability and with the increase in per capita income, Apple products have become more affordable to middle class family than ever.

Final thoughts

With a gradual decline in popularity of Windows based PCs, Microsoft is already basing off their business strategy away from Windows. Windows 10, however, is guaranteed to survive in market for next 10 to 15 years while Linux will continue keeping its up trend. Though Windows will die soon, Microsoft has a long time before declaring it complete dead. But from my perspective, internally, its already deemed as unworthy and hence dead.

Thank you for stopping by.

Written by

Computer Engineer (B.E.), Qt Qml Developer

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