The software giant is quickly becoming irrelevant, an analyst claims

Jul 23, 2013 06:48 GMT  ·  By

Microsoft is once again under fire after revealing its quarterly earnings, as two of its key products, Windows 8 and the Surface tablet, have both failed to stir up interest in more than six months on the market.

Analyst Benedict Evans claims that Microsoft is quickly becoming irrelevant, mostly because the company’s number one product, the Windows operating system, continues to focus especially on desktop computers.

Users, on the other hand, are slowly migrating towards mobile platforms, so Microsoft’s share of connected devices sales is dramatically collapsing.

“This is really a classic illustration of the demand curve; falling prices and rapid growth in unit volumes, mainly driven by the growth of the PC internet. And, of course, the dip downwards in the last few quarters. The contrast with the exploding sales of the new wave of mobile UNIX devices is pretty obvious,” the analyst wrote.

“The practical effect of this is that Microsoft's share of connected devices sales (in effect, PCs plus iOS and Android) has collapsed from over 90% in 2009 to under a quarter today.”

Benedict Evans then goes on to call Windows 95 Microsoft’s moment of victory, as PC was the only way to browse the Internet 18 years ago.

“It came just at the moment that the Internet started taking off, and Microsoft was never a relevant force on the internet despite investing tens of billions of dollars,” he said. But you needed a PC to use the internet, and for almost everyone that PC ran Windows, so Microsoft's failure to create successful online services didn't seem to matter.”

Microsoft blamed the collapse of the PC industry for its declining sales, with analysts around the world predicting an even more dramatic collapse. As a result, the Redmond-based software giant could lose ground in the coming months, despite the refresh of Windows 8 and the updates prepared for both Surface RT and Surface Pro tablets.

“Microsoft survived and thrived in the PC internet era, despite appearing to be irrelevant, by milking its victory in the previous phase of the technology industry. PC sales were 59m units in 1995 and rose to over 350m in 2012. Of course, that's now coming to an end,” the analyst concluded.