PC sales boomed throughout 2020, sending semiconductor earnings soaring. One company without much to cheer about, at least as far as its conventional Windows business is concerned, is Microsoft. For decades, we’ve talked about the “PC industry” and the “Windows PC” industry as if they were synonymous. New data on 2020 PC shipments suggests we shouldn’t be.
As Emil Protalinski writes for GeekWire, “This is a big win for Google and a warning for both Apple and Microsoft. It also signals to app and game developers that Chrome OS can no longer be ignored.” Data points quoted in the paragraph below are by IDC.
In Q1 2020, Apple held 5.8 percent market share, Google held 5.3 percent, and Windows had 87.5 percent market share. In Q4 2020, Microsoft’s market share slipped to just 76.7 percent. Apple had 7.7 percent share in Q4, and Chromebooks claimed no less than 14.4 percent of the market. Full-year figures show Microsoft declining to 80.5 percent of the market, down from 85.4 percent, with Chrome OS claiming 10.8 percent and Apple up to 7.5 percent.
The full-year numbers aren’t as dramatic as the quarterly figures, but they still show Chrome OS claiming 4.4 percentage points of market share (it held 6.4 percent of the market in 2019). Other analysts agree; Omdia’s own data shows Chromebook sales rising by 1.67x in 2020 as well.
Analysts don’t think the Chromebook trend is going to slow down. This is part of why ARM may be emerging as a genuine threat to Intel and AMD in what has traditionally been thought of as the heart of the x86 market. The M1 has demonstrated that custom ARM silicon can beat x86 at its own game, but the x86 legacy software market is still the proverbial 800-pound gorilla in the room. Trying to best x86 on Windows means building a high-performance ARM chip and a top-notch emulator. It’s an additional barrier that helps keep the PC market and the mobile phone markets technologically separate. This specific barrier, however, is only as strong as Windows’ market share.
Chromebooks don’t carry the same expectations around legacy software support that a Windows laptop does. That allows ARM and x86 to fight on more even terms. To be clear, all of this presumes that a company such as Qualcomm, Samsung, or Nvidia will build an ARM CPU core that can compete with x86. Any such CPU is still a few years away, best-case. x86 CPUs are currently the preferred Chromebook solution for anyone who wants a higher-performing system, and that’s not likely to change in just the next year or two. But if ARM CPUs show a sustained ability to beat past x86 chips, we’re going to see more chip designers interested in entering that market. When they do, they won’t necessarily focus on Windows, where the entrenched software market makes beating x86 as hard as it could possibly be. They’ll focus on Chromebooks, where x86 enjoys a performance advantage but lacks a four-decade software library to anchor it.
Windows, of course, will remain its own titanic force — nobody expects the OS to just collapse — but it’s clear that Intel and AMD would be fighting over a shrinking pie if the two companies can’t maintain Chromebook market share. Today, of course, all of this is theoretical, but that’s how the semiconductor market works. It’s the CPUs on drawing boards today that’ll be defining the performance market 3-4 years from now. Today, AMD and Intel have no problem. Four years from now, it could be a very different story. Microsoft’s own decision to transition away from defining itself in terms of Windows and towards a cloud-centric future makes a lot of sense in the face of numbers like these. Microsoft wants to have other business segments to talk about by the time Chromebooks are truly carving into its market share.
It’s clear now that the long period of tranquility in the PC market through the 2010s, where nothing much interesting happened, was less a terminal decline and more of a pause. There’s a (relatively) new OS eating market share and a new CPU architecture. AMD has emerged as a competitor for Intel across the entire x86 space at the same time that AI and ML accelerators are redefining the CPU’s role in the larger system architecture.
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