Could it Just Be that in Mobile, Everybody Wins?

To hear it from the Microsoft pessimists, the ship is taking on water and its time to start throwing folks overboard to lighten the load (sorry, I couldn’t resist that metaphor..) I agree that Microsoft is playing a frantic game of catch-up in mobile against the iOS and Android juggernauts. And juggernauts they are.

Android accounted for 75% of all mobile units sold last year by leading in smartphones, while Apple led in tablets with the very popular iPad and iPad Mini.

Take a look at the table below, from data issued by International Data Corporation (IDC).  They see iOS dropping from roughly 54% of tablet market share in 2012 to 50% in 2016.  Android stays about the same – 43% to 40%.  The Microsoft forecast may make Redmond catch its breath – 2.9% in 2012 to 10.3% in 2016.

Tablet OS 2012 Market Share (%) 2016 Market Share (%) 2012-2016 CAGR (%)
iOS 53.8 49.7 20.9
Android 42.7 39.7 21.0
Windows 2.9 10.3 69.2
Other 0.6 0.3 7.7
Total 100.0 100.0 23.3

Tom Mainelli, research director, Tablets at IDC had this to say;

“Tablets continue to captivate consumers, and as the market shifts toward smaller, more mobile screen sizes and lower prices points, we expect demand to accelerate in the fourth quarter and beyond.

Android tablets are gaining traction in the market thanks to solid products from Google, Amazon, Samsung, and others. And Apple’s November iPad mini launch, along with its surprise refresh of the full-sized iPad, positions the company well for a strong holiday season.”

By the way, I think the Microsoft forecast is likely to be correct, given that Surface Pro arrives in January and other vendors are ramping up their Windows tablets.

However, Microsoft’s projected market share is not really the point here.  What I’d like you to take a look at is the Compound Annual Growth Rate or CAGR for the 3 platforms.  Even for Apple, losing market share will see 20.9% compounded annual growth in 4 years, similar to Android.

Do you know what that would mean for your 401K, if you had that interest rate?

Microsoft, IDC estimates, will see even higher growth rates – a compounded 69.2% per year.  That is just phenomenal if it comes to pass.

If IDC’s numbers are correct, why does everyone win?

Everyone wins because the forecast would see a worldwide market for tablets  at 122.3 million in 2012, growing to 172.4 million units in the 2013 forecast and to a staggering  282.7 million units in 2016.

I’ve learned to take forecasts from the IDC, Gartner Group and Forrester with a pinch of salt often because of how wrong they can be.  Who can forget the same IDC’s Kool-Aid forecast that Windows Phone 8 would overtake Android by 2016?   However, it is clear that something dramatic is happening with tablets and that cannibalization of the desktop market is also in process.

What seems clear though is that a rising tide lifts all boats and all major tablet players will be winners over the next four years.  As long as Microsoft can prevent the appearance of a duopoly in consumer’s minds, they should do just fine, even in third place.