Apple Inc. (NASDAQ:AAPL)’s dominance in the high-end PC market is decreasing, and Microsoft Corporation (NASDAQ:MSFT) CFO Amy Hood believes that Windows PCs are the reason, according to Business Insider. On the earnings call on Thursday, Hood said Microsoft’s business of licensing Windows out to PC manufacturers increased 5% in the last quarter, including both consumer and business PCs.
Windows PCs take high-end market share
Breaking it down further, Hood said the business of licensing Windows for the consumer market went up 5% last quarter, superseding the overall shrinkage in the PC industry. The hardware maker defines “premium devices” as computers that are in the $900-plus price range. This segment has long been dominated by Apple with its popular MacBook and iMac.
In the meantime, many of Microsoft’s PC partners have spent the last several years focusing on low-to medium-priced PCs, sacrificing high margins to make it up in volume. Apple, in the meantime, “entrenched its position as the computer manufacturer of choice for the discerning power user,” says Business Insider.
In the fall of 2015 when the Surface Book laptop was released, Microsoft explicitly announced that those days were over, pitching it as a more versatile and powerful alternative to Apple’s flagship MacBook Pro. The software making giant said the intention was to prove to computer manufacturers that there was space for high-end Windows machines in the market.
Why has Apple lost its dominance?
In 2009, NPD declared that Apple held more than 90% of the high-end PC market. Since then, a lot has happened, including Microsoft’s Surface line and the ascendancy of the iPhone as Apple’s profit center, says MSpoweruser.
Apple then launched the new MacBook Pro at the end of October 2016, with the largest innovation being the removal of a large number of essential ports (to be replaced by USB-C slots) and the addition of the Touch Bar. This, it seems, made the device unpopular, helping Windows OEMs enter Apple’s high margin terrain.
Perhaps the growing share of the high-end market will lead to higher profits for Windows OEMs. This, in turn, should result in OEMs better aligning with Microsoft’s goals regarding laptops, IoT devices, PCs, VR headsets and even smartphones in the future.
On Thursday, Apple shares closed up 0.05% at $121.94, while Microsoft shares closed up 0.93% at $64.27. Year to date, Apple’s stock is up more than 5%, while in the last year, it is up more than 20%.