MS Hardware Announcements - will it change the market ?
On October 6, MS had what many described as their "Big Bang" event around Microsoft hardware specifically focused to support Windows 10.
There were two new laptop/tablet devices in the Surface Book and Surface Pro 4 as well as 3 new phones the Lumia 950, 950XL and 550. Finally there was the new Microsoft Band and Hololens VR headset.
There have been many reviews and specs released so I'm not going to drill into them all here. The focus of this post is on the question will the combination of new Microsoft branded gear and Windows 10 change the market and as well the perception of Windows.
Microsoft recently announced that since it's release in July - that over 110M devices have been activated with Windows 10 and they expect 1B devices activated by 2018.
Overall the new devices have really nice specifications and are more powerful and more effective than any of their predecessors.
But will be combination change the market ?
So let's first look at Surface. Microsoft first got into the hybrid tablet space with the Surface brand back in June of 2012. During the first two years of the line's existence it lost money. It was not until the Surface Pro 3 release in June of 2014 and the Surface 3 in 2015 that MS started to make money with the product line.
According to most recent figures MS attributes $888M in revenue to Surface. Do some simple math at the $799 / Surface - you can estimate that MS sold about 1M Surface devices last quarter. The actual number is probably less since most folks end up buying keyboards, etc as well raises the Average Selling Price (ASP) to probably somewhere closer to $1,000.
In comparison - last quarter Apple's revenue from Mac was $6.4B. Now this includes a whole range of Macs and Apple did not publish specifics on the Surface's biggest competitor the Macbook Air - but overall Apple sold about 4.8M Macs.
The overall PC industry sold 68.4M units in Q2 2015. So Surface Market share is 1/68 or 1.04%. Apple's is 7.05%. The leader in the space Lenovo sold 13.4M units and carries a 19.7% market share. Followed closely by HP, then Dell.
So MS would need to increase sales by nearly 500% to catch-up with Apple and be in the top ten.. What was interesting last month was the MS announcement that both HP and Dell could sell the Surface. Obviously an attempt to boost sales.
But let's face it - Surface was never intended to be a market leader in terms of overall sales. It's original intent was to help showcase first Windows 8 and now Windows 10 with the hope it would inspire the PC industry to create more competitive devices to the iPad which by the way sold 10.1M units in Q2.
In fact some of the new devices coming from Dell, Lenovo and others have been influenced by Surface and I suspect that the major PC vendors will leapfrog Surface Pro 4 specs before too long.
Now to phones. As of today IDC states that in Q2-2015 341.5M Smartphones where sold. Windows OS based phones have a 2.6% market share worldwide. Samsung is the market leader with 21.4% Market Share followed by Apple with 13.9%. Apple sold 47M iPhones in Q2. Microsoft by comparison sold 8.2M units at a much lower average sales price than either Apple or Samsung.
In fact MS as a smartphone device builder has yet to make money. As was well documented this summer - MS had to take an over $8B write-down to cover the Nokia purchase in 2014.
The new 950/950XL and 550 seem to be really nice devices from a hardware standpoint. But the market as a whole and even Windows Phone enthusiasts are skeptical about moving forward with these devices. And at their price point will probably only sell to small fraction of the current Windows Phone base. MS made market growth even more limited by only providing these new devices on 1 wireless provider AT&T.
Bottom line - will these new Microsoft branded devices change the market. My answer is no. They are just too small of overall market share to move the needle for either the industry or Microsoft themselves. And as nice as these devices seem - neither will grow so dramatically as to put MS in the leaders column for overall device sales.
So to me it raises the question - why is one of the long time leaders in software in the PC and Phone business ? Do MS feel that the best way to provide a premium experience is to develop their own devices ?
There were two new laptop/tablet devices in the Surface Book and Surface Pro 4 as well as 3 new phones the Lumia 950, 950XL and 550. Finally there was the new Microsoft Band and Hololens VR headset.
There have been many reviews and specs released so I'm not going to drill into them all here. The focus of this post is on the question will the combination of new Microsoft branded gear and Windows 10 change the market and as well the perception of Windows.
Microsoft recently announced that since it's release in July - that over 110M devices have been activated with Windows 10 and they expect 1B devices activated by 2018.
Overall the new devices have really nice specifications and are more powerful and more effective than any of their predecessors.
But will be combination change the market ?
So let's first look at Surface. Microsoft first got into the hybrid tablet space with the Surface brand back in June of 2012. During the first two years of the line's existence it lost money. It was not until the Surface Pro 3 release in June of 2014 and the Surface 3 in 2015 that MS started to make money with the product line.
According to most recent figures MS attributes $888M in revenue to Surface. Do some simple math at the $799 / Surface - you can estimate that MS sold about 1M Surface devices last quarter. The actual number is probably less since most folks end up buying keyboards, etc as well raises the Average Selling Price (ASP) to probably somewhere closer to $1,000.
In comparison - last quarter Apple's revenue from Mac was $6.4B. Now this includes a whole range of Macs and Apple did not publish specifics on the Surface's biggest competitor the Macbook Air - but overall Apple sold about 4.8M Macs.
The overall PC industry sold 68.4M units in Q2 2015. So Surface Market share is 1/68 or 1.04%. Apple's is 7.05%. The leader in the space Lenovo sold 13.4M units and carries a 19.7% market share. Followed closely by HP, then Dell.
So MS would need to increase sales by nearly 500% to catch-up with Apple and be in the top ten.. What was interesting last month was the MS announcement that both HP and Dell could sell the Surface. Obviously an attempt to boost sales.
But let's face it - Surface was never intended to be a market leader in terms of overall sales. It's original intent was to help showcase first Windows 8 and now Windows 10 with the hope it would inspire the PC industry to create more competitive devices to the iPad which by the way sold 10.1M units in Q2.
In fact some of the new devices coming from Dell, Lenovo and others have been influenced by Surface and I suspect that the major PC vendors will leapfrog Surface Pro 4 specs before too long.
Now to phones. As of today IDC states that in Q2-2015 341.5M Smartphones where sold. Windows OS based phones have a 2.6% market share worldwide. Samsung is the market leader with 21.4% Market Share followed by Apple with 13.9%. Apple sold 47M iPhones in Q2. Microsoft by comparison sold 8.2M units at a much lower average sales price than either Apple or Samsung.
In fact MS as a smartphone device builder has yet to make money. As was well documented this summer - MS had to take an over $8B write-down to cover the Nokia purchase in 2014.
The new 950/950XL and 550 seem to be really nice devices from a hardware standpoint. But the market as a whole and even Windows Phone enthusiasts are skeptical about moving forward with these devices. And at their price point will probably only sell to small fraction of the current Windows Phone base. MS made market growth even more limited by only providing these new devices on 1 wireless provider AT&T.
Bottom line - will these new Microsoft branded devices change the market. My answer is no. They are just too small of overall market share to move the needle for either the industry or Microsoft themselves. And as nice as these devices seem - neither will grow so dramatically as to put MS in the leaders column for overall device sales.
So to me it raises the question - why is one of the long time leaders in software in the PC and Phone business ? Do MS feel that the best way to provide a premium experience is to develop their own devices ?
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