 Computing platforms  Profound shifts in market segmentation and orientation  Mid- to long term  The overall market for operating systems is growing. The expanded range of computing environments will include desktop computers, handheld devices, smart phones and the latest generation game consoles. It is now possible for niche players not only to survive, but to gain critical weight and market visibility. Consumers are becoming increasingly comfortable with switching platforms according to the needs of a given situation. Several indicators show that the market is ready to support a segmented computing world driven by robust data-exchange standards.  Hardware and software manufacturers should consider this trend in their development strategies (Read the full report for more details.) |
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 Trend Overview Fundamental changes in the computing market have been building up for many years. The number of computing platforms is increasing, not diminishing. Despite predictions that PDAs (Palm, et. al.) would be big sellers and that mobile phones would become a major force in the market, it has taken some time for the full scope of this trend to become visible. The trend has only recently become apparent to the average computer user with the explosive growth of the cell-phone market and the prospect of a connected world relying on smart phones for many of its online tasks. The market is ready for fragmentation. Major players in each sector will experience noticeable growth in market share. Two major things have happened here: the Web with its comprehensive set of cross-platform standards, and the expansion of the market itself, which makes it finally viable for niche players to maintain visibility on the market. This in turn has enormous implications for the hardware and software industry. While it was so far simply a question of supporting one or two leading operating system brands, these companies will increasingly have to consider specific market segments in their product strategies. (Read the full report for detailed analysis) Microsoft, despite its desperate attempts to grab a major slice of just about any technology trend on the horizon, has been the least nimble in understanding and following new trends. A good example is the Pocket PC: it took the company years to figure out that Windows on a handheld device is overkill. Even now, the latest Microsoft devices are still not competitive when it comes to two major selling points of their main rival, the ubiquitous Palm handheld: style and convenience. The idea of ‘less is more’ is still not something which fits well into Microsoft’s corporate culture. Apple is another case in point. Many years ago, when the operating systems war was in full bloom, the argument was made that despite its shrinking market share, Apple still held a larger slice of the computer market than that held in the car market by Volvo, BMW and Mercedes combined. Despite the fact that its market share of the overall PC market has hardly increased, Apple is doing very well. The company is back in the role it was always best in: that of the stylish innovator. The difference nowadays is that there is a sizeable market for this role and Apple has some considerable assets, such as a strong, positive brand. Where will the operating systems market be a year from now ? One thing is certain: the “balkanization” of the market will increase. Microsoft will contribute two big slices, Windows ME and Windows 2000. Apple, on the other hand will have its two main players as well, MacOS “Classic” and MacOS X. And while Steve Jobs's company is in a better state for actually merging its two versions of operating system into a single one over time, it is also clear that it will take many years before the majority of Macs out there will run MacOS X. A similar situation is likely to occur with handheld devices: Palm PCs have finally come to a level of functionality which should allow the platform to grow beyond the current Windows CE level of things. However, if they are to thrive, it will not be because they are stealing sales from the Palm, but because they are actually expanding a new niche, alongside the sub-notebook market. As far as sleek, lightweight pocket organizers go, Palm is still the only game in town. For the time being, it seems unlikely that the Pocket PC will be able to compete in this arena. As for Linux, its impact will continue to grow in the higher end of the corporate market, specifically for servers, and in the scientific market as well. While some companies have come up with end-user applications, it is still too early to tell whether the Linux-based applications market will become a major player alongside the different versions of Windows and MacOS. This is only the beginning: as it becomes increasingly simple to integrate computing functionality into a variety of devices, the market will only continue to diversify. What does all this mean? For many years now it has been assumed that eventually Windows would take over the entire computing market. The latest trends show that this was a false supposition. Though Windows is likely to continue having a lion's share of the market for a while, its competitors are likely to grow and thrive nonetheless. As the market grows, niches will become more and more important. In the mid-term, the computing landscape could be completely reversed, as inter-operability and flawless data exchange driven by robust standards provide the vital glue between a variety of desktop computers, handheld devices, smart phones,and game consoles. After decades of operating systems dominance, we are heading for a data and application driven world. 18May2000 ©2000 Pfeiffer Consulting |
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