It's safe to say Microsoft (NASDAQ: MSFT ) and Apple (NASDAQ: AAPL ) aren't the best of friends. The animosity between the two IT giants goes back decades, and with Microsoft's transition to a mobile device provider in full swing, that's not going to change. But as strange as it sounds, the success of Apple's new tablet, the lighter-than-helium iPad Air, and an interesting trend in PC sales could turn out to be saving graces for Microsoft's tablet ambitions.
After taking a US$900 million hit in its fiscal Q4 because of abysmal Surface RT tablet sales, Microsoft could certainly use all the help it can get. But from PCs and Apple?
The scoop on PCs
To no one's surprise, the overall PC market will continue to decline this year, dropping 10.1%, according to IDC. The biggest drop in PC sales is among consumers — nearly 15% in 2013 — as individuals opt for mobile devices rather than those old-fashioned desktops. But digging a bit deeper, IDC's data opens up a few intriguing doors that Microsoft, with the assistance of Apple, can take advantage of.
IDC's data makes a distinction between PC types in its sales projections through 2017: desktop PCs and portable PCs. As IDC puts it, "The emergence of 2-in-1 devices designed to function in both clamshell and slate configurations — many of which will run Windows — along with Windows-based tablets themselves, is expected to provide some new volume for the Windows platform as well as the PC vendors and other parts of the traditional PC ecosystem in coming years."
Just as the line between smartphones and feature phones gets fuzzier every day, the distinction between portable PCs and tablets with detachable keyboards, loads of memory, and all the software you'd expect from a PC is also becoming hazy. Case in point: By 2017 portable PC sales are expected to grow worldwide by 2.1%, including a nearly 5% jump in emerging markets. That, combined with the likely change in consumers' appetite for screen size, fits right into Microsoft's wheelhouse.
Thanks, Apple
As the recently completed Black Friday madness confirmed, Apple's iPad Air is a rousing success. Why should Microsoft care about Apple's Air? Because the ultra-thin, ultra-light iPad Air, with its nearly 10-inch screen, combined with the advent of phablets, may change consumers' buying habits for tablets — and Microsoft's Windows OS will be the beneficiary of that change.
The trend in tablets the past couple of years has been toward smaller screens, like Apple's iPad Mini with its 7.9-inch display. But, according to IDC (and common sense), that's likely to change as more phablets — including the soon-to-be-Microsoft Lumia 1520 and Lumia 1320 — become available. Why buy a phablet with a 6-inch screen and a mini-tablet with a 7- or 8-inch screen? There is no reason, and that will drive consumers to look toward larger-display tablets, as they are with the iPad Air. A trend toward larger screen sizes is ideal for Microsoft's Windows OS, which is best suited for displays that have some real estate.
Final Foolish thoughts
The success of Apple's iPad Air, with its nearly 10-inch screen, coupled with larger smartphones, will help push Microsoft's tablet OS market share from this year's paltry 3.4% to more than 10% by 2017. Apple? During that same time period, IDC suggests Apple's tablet OS share will drop from 2013's 35% to 30.6%.
This won't be easy, Microsoft fans, but a heartfelt "thanks" to Apple will be in order before long.
