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The MacBook Air is Microsoft's Biggest Problem

by: Mark Reschke | Jul 01, 2013
Categories: MacBook

Ballmer_worriedIf you think the new MacBook Air is just a minor update with a slightly new Intel processor and stingy battery life, think again. The MacBook Air is more than the sum of it's parts, it has become Microsoft's biggest nightmare.

The new MacBook air is absolute perfection for the dollar, and nothing in the market of Ultrabook's can touch it. It's a marvel of engineering and takes the truck vs car metaphor to task, as the new MacBook Air seems more like some new breed of Transformer: All the utility of a truck in the body of a sports car.

Research firm NPD Group recently told CNET that the MacBook Air captured 56% of the entire Ultrabook market during the first five months of 2013. The rest of the market was comprised of a smattering of Ultrabooks from typical PC players. As Microsoft watches overall PC sales dwindle, the company finds itself sandwiched between Apple's iPad and the growing realm of Ultrabooks, a market Apple currently dominates.

How could Microsoft's desktop dominance find itself being squeezed by Apple, during a time of massive market transformation in the mobile and portable space? Microsoft should have been able to crash the party and dominate several segments, not least of which dominating the MacBook Air, which showed it stripes early on as a high-priced niche computer.

Microsoft's desktop woes began with the emergence of the netbook. The $199 or less computers took off in sales, but Redmond was caught off guard as most netbooks emerged as Linux systems, used primarily as appliance solutions. Microsoft counted the Linux derivatives with a netbook OS, but the revenue and margins were thin. Microsoft and its PC hardware partners found little incentive to promote netbooks over traditional laptops. Only Asian players (primarially Asus and Acer) were intent on using loss-leading netbooks as a way into the PC space.

The netbook market saw its peak at the end of 2010, as the iPad started to make its dominance felt in 2011 and Microsoft focused heavily on how to defeat the iPad. What Microsoft should have been doing in working closely with Intel to promote and widely distribute Ultrabooks for the masses. They didn't. 

Apple continually honed the MacBook Air, and rapidly reduced its price. Meanwhile, Microsoft was busy spending billions on creating, and now marketing, a highly unsuccessful Surface RT and Surface Pro product with an equally dismally selling Windows 8. 

Microsoft is hoping for a slew of new 2-and-1 products to hit the market this fall, offering a full Windows 8 platform experience, complete with touch, detachable keyboards and tablet abilities. Stated another way, Microsoft is desperately hoping someone else can sell a Surface-like idea better than they can.

If Microsoft fails, and their recent track record suggests they will, the relatively expensive 2-and-1 Surface solutions will be too costly for the majority of PC buyers, while iPad continues its ascendancy in the old netbook/low-end laptop space. On the high-end, Apple's new MacBook Air is likely to continue its dominate run and expansion, leaving Microsoft caught selling $499 - $699 Windows 8 laptops and desktops that do not fully utilize the 2-and-1 capabilities, while the market continues to bleed off to fully intended tablet designs... and the MacBook Air.

While Microsoft continues to paint a brave and optimistic picture in the media, the onslaught of new Apple hardware and new operating systems coming this fall, coupled with the new MacBook Air selling like wildfire, paint a much grimmer picture for the ever-diminishing software company.

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3 Comments

  1. AlfieJr ~ July 01, 2013 20:16

    yes, all true. but even worse, the MB Air is the real "two in one" product - it runs Windows too! W7 that is, the one most people actually want to use. and worst of all, its already state of the art battery life will take another jump with OSX Mavericks in a few months. to a true all day life that no PC ultra-whatever can hope to match, even with the latest Haswell chip. if the 'old' model got 56% of the market, by the end of the year it could be over 70%. #
  2. Don108 ~ July 01, 2013 21:31

    The MBA is hardly Microsoft's "biggest problem." That dubious "honor" goes to Microsoft's (i.e., Ballmer) stubborn clinging to Bill Gate's decade-old vision of "Windows Everywhere," the idea that the same interface should appear on everything: phones, tablets, computers, toaster, refrigerators, etc. It completely ignores that this fantasy has consistently been rejected by the marketplace which (wisely, IMO) has chosen to have UIs that are appropriate to the device. This means the UI for tablets/phones is different than for desktops/laptops, but they should easily communicate. Until Microsoft gets rid of this policy (and Ballmer), the once great company is going to end up being the makers of a box to run TVs and not much else. #
  3. Neil Anderson ~ July 01, 2013 23:55

    Starting to look like iPod market share numbers. #

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