Microsoft has acknowledged that it faces a continued desktop PC threat from both Apple and Google.
The software giant made the admission in its annual 10-K report filed with the SEC (.DOCX). Microsoft has previously named Linux as a competitor but removed references to the open source operating system in its 2011 report. On Windows, Microsoft posted the following as competition notes:
“The Windows operating system faces competition from various commercial software products offered by well-established companies, mainly Apple and Google. The Windows operating system also faces competition from alternative platforms and devices that may reduce demand for PCs. User and usage volumes on mobile devices are increasing worldwide relative to the PC. We believe Windows competes effectively by giving customers choice, flexibility, security, a familiar and easy-to-use interface, compatibility with a broad range of hardware and software applications, and the largest support network for any operating system.
Windows Live software and services compete with Apple, Google, Yahoo!, and a wide array of Web sites and portals that provide communication and sharing tools and services. Our PC hardware products face competition from computer and other hardware manufacturers, many of which are also current or potential partners.”
Microsoft’s competition notes for mobile included the following:
“Entertainment and devices businesses are highly competitive, characterized by rapid product life cycles, frequent introductions of new products and game titles, and the development of new technologies. The markets for our products are characterized by significant price competition, and we anticipate continued pricing pressure from our competitors. Our competitors vary in size from very small companies with limited resources to very large, diversified corporations with substantial financial and marketing resources. We compete primarily on the basis of product innovation, quality and variety, timing of product releases, and effectiveness of distribution and marketing.
Windows Phone faces competition primarily from Apple, Google, and Research In Motion. Mediaroom faces competition primarily from a variety of competitors that provide elements of an Internet protocol television delivery platform, but that do not provide end-to-end solutions for the network operator.”
Ed Bott at ZDNet summarizes the changes to Microsoft’s SEC filing very well. Microsoft has essentially admitted that Linux is no longer a desktop threat and that it’s a three-horse race between Apple, Google and Microsoft. Bott also points out that Microsoft appears to place a higher importance on its hardware business. Specifically, the company notes: “Our PC hardware products face competition from computer and other hardware manufacturers, many of which are also current or potential partners.” Microsoft currently manufacturers a number of keyboard, mice and webcams. It’s possible that the company could be considering to enter into additional hardware based markets, largely saturated by partners.