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The mobile market is a clear duopoly. Despite Microsoft's (NASDAQ: MSFT ) best efforts, Windows tablets and smartphones have made little headway, with Apple's (NASDAQ: AAPL ) iOS and Google's (NASDAQ: GOOGL ) Android powering the vast majority of smartphones and tablets.
Could that dominance spill over into the market for traditional PCs? Despite having a virtual monopoly in the traditional PC space for years, Microsoft is starting to look vulnerable.
The Mac is taking market share
Last quarter, Apple's Mac sales grew 19% on a year-over-year basis. From October through the end of the year, Apple sold 4.8 million Macs -- more than the 4.1 million Macs it had sold in the prior year.
Admittedly, Mac sales still pale in comparison with the broader PC market, which sees annual shipments in excess of 300 million. Still, the growth in Mac sales cannot be ignored, given the decline in the PC market. Overall, the market for PCs contracted significantly in 2013, posting quarterly declines that set historic records.
Mac sales should continue to grow, as Apple remains focused on improving the Mac despite the growth of its mobile devices. As I pointed out last year, Apple is taking steps to make Mac ownership more affordable, offering free software updates and cutting the price of entry-level Macs.
Sony, a company known for its high-end Windows PCs, exited the market earlier this year, leaving Microsoft short another PC ally. Although Macs are unlikely to ever dominate the market, Apple's commitment to the traditional PC could give it a larger chunk of the high-end market going forward. Consumers and business users, turned off by the radical changes Microsoft has made to Windows, could opt for a Mac in place of a traditional, Windows-powered PC.
Google is pushing ChromeOS for enterprise, and Android-based PCs
On the other side of the spectrum lies Google, whose Chrome OS has emerged as a viable threat to Microsoft's Windows empire. While many observers initially dismissed Google's Chromebooks as too limited to be useful, the growth of cloud computing has made them attractive to a variety of users, particularly educational institutions, which appreciate their low cost.
Google's hardware partners have steadily offered better and cheaper Chromebooks and Chromeboxes, while the company has partnered with VMWare and Hewlett-Packard to make its operating system appealing to enterprise users.
As long as you don't need to run any local applications, a PC running Google's Chrome OS can do just as much as one running Microsoft's Windows. In many ways, Google's operating system is the superior choice, as it can run smoothly on low-end, inexpensive hardware and is nearly invulnerable to traditional computer viruses.
While Google's share of the operating-system market remains small, Microsoft clearly understands the threat. In addition to running two anti-Google advertising campaigns disparaging Chromebooks, Microsoft has cut the price of Windows licenses on low-cost PCs, according to Bloomberg -- a clear sign that Microsoft fears Google's potential to dominate the space.
The PC market remains Microsoft's to lose
For now, the PC market is still Microsoft's -- Windows powers the overwhelming majority of desktop and laptop PCs out in the market, and that may never change. The familiarity with Microsoft's operating system should keep many coming back.
Still, the growth of cloud computing and the controversial changes to Windows have given Microsoft's competitors an opportunity -- one that they seem to be eagerly taking advantage of. Google's Chromebooks and Apple's Macs may never obliterate Windows entirely, but I would expect them to take a progressively larger share of the market in future years.
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