The Android operating system from Alphabet's (GOOGL) Google is inching extremely close to passing Microsoft (MSFT) as the most popular operating system (OS) for Internet usage, according to February 2017 data collected by StatCounter from usage across desktop, laptop, tablet and mobile.
"This is hugely significant for Microsoft," StatCounter CEO Aodhan Cullen told TheStreet. "It's coming close to the end of an era with Microsoft no longer having the dominant operating system. It took the lead from Apple (AAPL) in the 80s and has held that title ever since." This new development is coming after Google's Chrome browser has already beat out Microsoft's Internet Explorer and Edge, he added.
According to last month's data, Windows took 38.6% of the OS market share worldwide, vs. a close 37.4% grabbed by Android. This numbers are significant considering Windows held 82% of the global Internet usage share in 2012, vs. a measly 2.2% held by Android.
"The idea of Android almost matching Windows would have been unthinkable five years ago," Cullen wrote in the post. The development is a result of more smartphones that can access the Internet and a slowdown in the sales of traditional PCs, Cullen said.
StatCounter noted that Windows still has a comfortable lead in the PC Internet usage with a staggering 84.1% market share. "Windows has won the desktop war but the battlefield has moved on," Cullen claimed.
The new battle is in mobile and tablet Internet usage, which surpassed desktop and laptop Internet usage globally for the first time in October 2016, according to StatCounter. Mobile and tablet devices captured 51.3% of Internet usage across the world, topping the 48.7% grabbed by desktops. For this reason, businesses should make sure that their websites are mobile friendly, not only so they can capture some of the growing mobile Internet usage market share, but also because Google favors mobile friendly websites, Cullen said.
T. Rowe Price Global Technology Fund portfolio manager Josh Spencer agreed with Cullen, saying these figures show that mobile Internet usage is rising at the expense of PCs. "In many regions of the world, particularly emerging markets, the PC infrastructure is non existent and applications are increasingly mobile-first," he noted. "That is likely to continue and potentially even accelerate. Google has done extremely well with Android and taken advantage of this shift."
In addition, Spencer said this shift shows why Microsoft's next battle to conquer the cloud is so important. "As they realize Windows will no longer be dominant, they've moved aggressively to build out their cloud computing platform Microsoft Azure," he said. "This has the potential to help them retain their strong position with enterprise customers, even if they have lost the battle for the consumer market to Android."
Microsoft first introduced Azure in October 2008 and its competitors include Amazon (AMZN) Web Services (AWS) and Google Cloud Platform. Microsoft Azure's revenue grew by 93% year-over-year for the quarter ending in December, and the platform's compute usage more than doubled year-over-year. While the company did not break out Azure financials, it did note that Microsoft's commercial cloud business, including Office 365 commercial, Azure, Dynamics 365 and other cloud products, is now on a $14 billion annual run rate.
Meanwhile, Amazon Web Services posted revenue of $3.53 billion for the 2016 fourth quarter and $12.22 billion for the full year. Like Microsoft, Google doesn't show individual revenue for its cloud computing platform, but noted that its "other" revenue category, including Cloud and Play and hardware, rose 62% year over year to $3.4 billion for the 2016 fourth quarter for a total of $10.07 billion for the full year.
While Azure is an important growth avenue for Microsoft, the company would need another "paradigm shift" in order to keep its position as top OS system for Internet usage, Cullen told TheStreet. "That's how Google and Apple got their lead in mobile. It was virgin territory and open to anybody to win, but now it's pretty locked down as developers are unlikely to develop their apps outside of Android and iOS now," he explained.
Microsoft has potential with its Continuum feature that aims to let you use your Windows 10 phone just like you would a Windows laptop, Cullen claimed. In other words, users would be able to use Office apps from their computer on their phones, allowing them to create PowerPoint presentations on their phone or to publish a YouTube video without a bulky laptop. Continuum hasn't been perfected yet, but it does allow users to connect their phone to a big-screen projector without Internet to use certain apps or see content on a bigger screen so they can continue their work on different devices.
"In a few more years time, we could look back at the notion of having a 'desktop' and a 'mobile' device as quaint. In the future we might just have one device that we can plug into a bigger monitor and more comfortable keyboard wherever we go," Cullen explained. "Microsoft is positioning themselves to be the provider of that single device."