Microsoft's wasted decades?

A little perspective on the ‘Microsoft’s wasted decade’ meme: revenue went up 6x in the 15 years after 1995, the year Windows 95 came out, which was arguably the company’s high point. 

Of course, Apple’s revenue grew far more, and Apple has changed a great deal in the last decade, but equally important have been changes that have brought the market much closer to Apple. Apple has always sold a product in which specifications were less important than design, quality and experience. In the past, the computer industry was a commodity bulk business in which design was irrelevant and technical specifications were everything, and purchase decisions were taken by IT managers who never even saw the devices. Microsoft sold the perfect product for that market, and Apple naturally remained a niche player.

Today, Moore’s Law has advanced to the point that increases in performance are much less noticeable: a 50% increase in CPU speed may be imperceptible to a typical user, and specifications are irrelevant to large parts of the market. This makes the other parts of the purchase decision much more important, and this is where Apple has always focused its efforts: design, experience and build quality.

The first manifestation of this was growth in laptops, which were 66% of Apple Mac unit sales in 2010 (and 72% in the 12m to June 2012), versus 30% in 2001. 

Yet mobile and tablets are markets even better suited to Apple’s model than PCs. There is no locked-in Windows install base, while the purchase decision is entirely personal and highly dependent on the physical object and the software experience – the areas that Apple has spent 30 years focusing on and Microsoft deliberately sacrificed to achieve broader reach. Apple even has the advantage in marketing – it is possible to demonstrate the iPhone UI in a 30 second TV spot in a way that it is not possible to demonstrate the Mac OS.

In other words, you could argue that you should ignore the personalities. Both Microsoft and Apple carried on doing what they had always done at their best; what has changed is the market. That’s not entirely fair, but it’s worth considering. 

Note: I made the chart for a report in 2011. I could update it, I suppose, but I can’t be bothered ;)