The Windows Brigade’s Last Stand
The Windows gang is back at it, or so we are led to believe. Over the past few weeks, Microsoft and partners have tried to put together a coherent plan to win back mind and market share from the Mac. I am left unimpressed with both their attempt and odds of success. The reality is, we are likely seeing the Window brigade’s last stand in trying to go up against the Mac.
It's been a busy past few weeks in PC land. Last month, Microsoft held its Build developer conference. One day prior, the company hosted an event where it unveiled Copilot+ PCs. The refreshed branding refers to PCs containing Copilot + Windows + NPUs (neural processing units). At the event, Microsoft rolled out one partner after another to reiterate how an intelligence revolution has kicked off a new era for the PC with Microsoft as the conductor. Jump ahead a few weeks, and we saw many of the same companies talk up AI and PCs again at Computex Taipei. This time around, other companies, like Qualcomm, positioned themselves as kicking off a new PC era. Tooting one’s horn is prevalent in awkward partnership relationships.
Dive a bit deeper, and the message being pushed by the Windows brigade (Microsoft, Qualcomm, AMD, Intel, Dell, Samsung, Asus, Acer, HP, Lenovo) is that generative AI has given them a new path to compete against long-time foe, Apple. The message isn’t convincing. Microsoft kept its (suspicious) comparisons between Copilot+ PCs and Macs to the entry-level M3 chip and MacBook Air. Moving beyond the performance comparisons, Microsoft’s attempts to sell the mass market on generative AI have not been impressive. There has been a notable post-pandemic sales lull across the PC industry that has impacted the Mac as well. AI is being put out there as the carrot to entice hardware upgrading. Many of the AI-infused features that were supposedly going to anchor interest in Copilot+ PCs are highly suspect. Microsoft was forced to backtrack on Recall, one of the marquee features for Copilot+ PCs, turning the feature to opt-in instead of the original opt-out. The change severely reduces the feature’s potency. Meanwhile, Microsoft’s bet on generative media to help one’s imaginative and creative processes is demoralizing.
It's difficult to see where or how the Windows brigade finds traction against the Mac. The consumer market is a lost cause. In the mid-2010s, Surface events were met with buzz and chatter as vocal Mac loyalists wanted to show their frustration with the state of Mac (MacBook Pro and Mac Pro to be exact). Whatever mind share Surface had been able to win from Apple in the 2010s has firmly reverted to the Mac and iPad. Today, it is more likely to see PC loyalists admit Apple is releasing the best all-around laptops. There is still a major advantage found with one company controlling HW/SW/Services. We now see the computing frontier shift to spatial computing which Microsoft, despite years of trying, has not been able to crack with consumers in mind. More worrying for the company, there is no evidence that Microsoft understands what consumers want or need. Gaming had been an outlier in this regard, but even there I would argue it has become complicated as Microsoft has been forced to use M&A to keep mind share.
The Windows brigade is fighting a battle that may very well be their last stand against the Mac. Unlike in the 2010s, there are very few pockets of discontent Mac users they could try to leverage into a market opening. Apple is in the much better position to solidify support among creative verticals, a segment Microsoft had tried to turn to once consumer momentum evaporated. Microsoft’s and Qualcomm’s fascination with competing against the Mac is misplaced. While they may want to go on the offense against the Mac, their resources are needed to establish better defensive lives to prevent the Mac from taking enterprise market share. The Windows brigade should instead aim their renewed sales pitch at PC loyalists who haven’t shown flirtatious tendencies with the Mac. The problem with such a strategy is that it amounts to cutting your losses and admitting the Mac is winning.
One factor that the Windows brigade underestimated was the degree to which a multi-product ecosystem would impact laptop and desktop preference and usage. It hasn’t helped that the line between enterprise and consumer continues to blur. Apple ecosystem momentum on the consumer side is translating into enterprise momentum. Someone invested in the Apple ecosystem with an iPhone, Apple Watch, and a few Apple services, is far more likely to want to remain in the Apple ecosystem for work. In addition, Apple has gotten better at learning enterprise – it helps that enterprise has been trending towards consumer more so than the other way around.
Since Apple doesn’t compete at the low-end of markets, the Windows brigade will still have room to sell product. We are not going to see PC shipments fall to zero. However, from a mind share perspective, there is no convincing argument to be made that things can be turned around. Instead, the ball is in Apple’s court for determining just how aggressive it wants to be in going after PC share in enterprise.