Could Apple's Mac Finally Win the War with Microsoft’s Windows?

In terms of market share, Apple's (NASDAQ: AAPL  ) Mac appears to have lost the war with Microsoft's (NASDAQ: MSFT  ) Windows long ago. Today, Windows powers more than 90% of the world's PCs -- Macs account for less than one in ten.

With the PC market in outright decline, however, the "Mac vs Windows" debate that dominated the tech landscape nearly a decade ago seems to have fallen by the wayside -- the arrival of tablets and smartphones has made the traditional PC uninteresting.

But Apple clearly isn't giving up on the PC market, and with a variety of new initiatives, could see its Mac market share grow dramatically in the coming quarters, further eroding the market for Microsoft's Windows.

Apple plays to its strength
Apple is primarily, and overwhelmingly, a mobile company. Last quarter, Apple's mobile devices -- the iPhone and iPad -- collectively accounted for more than 70% of Apple's revenue (if you include iTunes, it jumps to more than 80%), and last year Apple sold more than 150 million iPhones.

There are a lot of consumers who own Apple's mobile devices, and they're generally extremely loyal. That mobile dominance is Apple's biggest advantage.

People who own iPhones and iPads tend to own more Macs than the general public, but they are still in the minority. According to a recent survey from Consumer Intelligence Research Partners, just one-quarter of people who recently purchased an iPad also own a Mac, and only 28% of iPhone buyers have one of Apple's PCs. While a few may be running Linux, or simply not have PCs altogether, most of them likely own computers running Microsoft's Windows.

Binding OS X and iOS
Could they be converted into Mac buyers? That appears to be the angle Apple is taking. Most of its Worldwide Developer Conference (WWDC) keynote was spent demonstrating features of its new Mac operating system, many of which serve to tie the Mac to Apple's mobile devices.

With OS X 10.10, iPhone users are able to place and receive phone calls with their nearby Macs, as well as send text messages. A feature known as Handoff allows iPad and iPhone owners to work in an app on one device, and then easily switch to another -- for example, an email draft started on an iPad can be seamlessly picked up and finished on a Mac. Instant Hotspot allows a Macbook to more easily utilize the mobile Internet connection of an iPhone.

iTunes and iCloud have bound Macs and iOS devices together for some time -- but these new features enhance the relationship between the devices to a level never before seen.

One major hurdle
To take advantage of these features, owners of Apple's devices may be tempted to get a Mac when it comes time to buy a new computer. Unfortunately, there's still one major hurdle standing in the way: price.

Apple's cheapest Mac, the Mac Mini, retails for $599 and doesn't include a monitor. Apple's cheapest laptop, the Macbook Air, starts at $899. Historically, the average PC running Microsoft's Windows has sold at around $500-700, and Microsoft has been working to aggressively reduce the price of Windows-powered devices, cutting the Windows license fee entirely on PCs with screens 8-inches or less.

But Apple has been steadily lowering the price of its Macs as well. Apple's Macbook Air used to start at $999, but Apple cut the price by $100 in April. It has also reduced Macbook prices in other ways, making OS X upgrades free last October, and giving away its iWork software suite.

An unlikely growth market
As Apple slowly reduces the costs associated with Mac ownership, and builds in features attractive to Apple mobile device owners, the Mac could emerge as an interesting growth market for the company, even as the larger market continues to contract.

It's Microsoft's market to lose. Although the company has a iron grip on the corporate market, consumers in developed economies, happy with their Apple-made mobile devices, could be lured to a Mac.

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  • Report this Comment On June 09, 2014, at 2:50 PM, foolforbluegill wrote:

    Microsoft's grip on the corporate market may not be quite as iron as you think, or at least the iron may have some rust on it.

    My employer's engineering division has a staff of about 30,000 worldwide, and if Macs have not already become the majority platform in engineering, they are certainly on a trajectory to do so and must be very close. They have been the number platform shipped by IT for at least 2 years, probably 3, company-wide, and most of the engineers I know are using Macs (so am I). A significant number of people outside of engineering also use them, so it's quite plausible that we could be a majority Mac shop in the near future (we could already be, for all I know; I'm not in IT, so don't have ready access to any numbers).

    I would be surprised if we are unique in this regard, so there are probably a lot more corporate Macs out there than you think. That could actually be something of a battering ram for Apple to crack more of the home market. My first-ever Mac was a company-issued one 7 years ago; after I learned it, I came to like it so much that I got one for my wife. Our kids now have them as well, and she recently retired her old one and got a MacBook Air. My experience with Mac as also the deciding factor when I got my first smartphone; I went with an iPhone 3G (current iPhone at the time) rather than an Android device because of how happy I was with my Mac.

    Because of that one corporate Mac, Apple has sold my family iPhones ever since, 3 MacBook Pros, 1 MacBook Air, and 1 iPad 3. I'm sure I'm not the only one who has bought Macs for home after using them at work.

  • Report this Comment On June 09, 2014, at 3:24 PM, techy46 wrote:

    Microsoft has an enterprise ecosystem that favors Windows clients and Apple has virtually no enterprise ecosystem. Apple's OS X can be a good client on Microsoft's enterprise ecosystem but iOS is not such a good client. Luckily for Apple most consumers do not use their Apple mobile iDevices for productivity work on enterprise ecosystems. Apple is trying to tie iOS and OSx together but Microsoft has no such challenge and has already tied Windows and WP 8 into all Window's enterprise ecosystems and the Microsoft cloud. Microsoft's competing against Android but there is no war with Apple's iOS or OS x.

  • Report this Comment On June 09, 2014, at 6:18 PM, metoo5 wrote:

    > Microsoft has an enterprise ecosystem that favors Windows clients and Apple has virtually no enterprise ecosystem.

    Ecosystem, as a term for internet services surrounding and supporting a product it makes sense. When used as a fuzzy term for unspecified advantages for 3rd parties however, as Steve Balmer used it to explain how he saw no threat from the iPhone, it means nothing. It seems to me you're using it the same way. As everything and nothing.

    For years Jobs was hounded by people who wanted to see a "corporate strategy" to ensure corporate success. But he knew what they didn't, that consumers were the key since employees didn't choose their own PCs until recently. They were purchased by their managers for them. And when they could choose their own they started choosing Mac in increasing numbers since MS never designed their software for the end user. As Jobs always knew they would if Apple made a good enough product, as they eventually did with the Unix-based OS X.

    There is no such thing as an Enterprise Ecosystem that matters. It is FUD pure and simple.

  • Report this Comment On June 10, 2014, at 11:17 AM, professorand wrote:

    There is a huge Enterprise Ecosystem and it is tightly run by large IT departments with budgets. Having served that market for the last 20 years, I see the elite few get the macs because of the superior hardware and the cutout logo. a significant portion run Windows on their macs too. The rest of the mignons get a nice tidy version of Windows and some even still have XP!! I was surprised after looking at current OS share a few days ago that Windows still has 90% of the market. With all the elite I'd been hanging with, I thought Apple had made some ground up but apparently not so much... There seems to be a groundswell of news user comment support for the Surface 3, but only time will tell on that too. Meanwhile market share graphs still show Microsoft dominance with Win8 already handily beating OSX and that's even with XP and Win7 taking up 75% of the entire pie. OSX share is roughly on par with Vista :)

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Sam Mattera

Sam has a love of all things finance. He writes about tech stocks and consumer goods.

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