How Long Does Microsoft Have to Prevent Apple Dominance in Consumer Computing?

Microsoft Corp is investing $605 million over five years in Barnes & Noble new Nook e-reader and college book  business, in an effort to better compete with Amazon.com and Apple in the tablet computer market.

The move shows how important content stores have become in driving tablet sales, which clearly match the increasing role of computing devices as platforms for content. Beyond that important consideration, one might wonder whether Apple's growing strength in consumer electronics threatens to displace Microsoft's position in computing, at least in the consumer space.

The new touch-enabled Windows 8 operating system, and the inclusion of a Nook app on Windows tablets should allow them to compete with Apple's iPad and Amazon's Kindle Fire, some believe.

But the larger question is how much time Microsoft has before Apple's growing market share in a variety of consumer electronics categories threatens to relegate Microsoft to the sidelines in mobile phones, tablets, e-reading, music and other areas Apple hasn't attacked yet.

Though some will disagree, you can argue that Apple now leads the consumer electronics business, not only the computing business, while Microsoft has become more of an enterprise technology supplier.

Five years ago, in 2007, Microsoft reported quarterly revenue of $14.398 billion and  profit of $6.589 billion. In 2012, Microsoft’s revenue was $17.4 billion, while profit was $6.374 billion. The company is still growing, but not fast, and is less profitable.

The bigger story, though, is likely Apple.

Five years ago, in its first quarter of 2007, Apple revenue was $7.1 billion and profit was $1 billion,  the first quarter with a billion dollar profit in company history. In 2012, for the same quarter, Apple had $47 billion in revenue and $13 billion in profit.

The shift into different customer segments is not, in some ways, a surprise. Apple never has chased the enterprise market, preferring to sell directly to end users, and then watch enterprise sales grow as those users demanded the right to use their devices at work. You can say Apple has been the biggest beneficiary of "bring your own device" or "consumerization of IT" trends.

Workers now report using an average of four consumer devices and multiple third-party applications, such as social networking sites, in the course of their day, according to a study sponsored by Unisys.

Also, workers in the survey reported that they are using their own smartphones, laptops and mobile phones in the workplace at nearly twice the rate reported by employers.

In fact, 95 percent of respondents reported that they use at least one self-purchased device for work. Another big change is that where enterprise IT staffs used to assume they were responsible for training and supporting users on enterprise technology, these days many users simply will go ahead and train themselves to use tools they prefer. That also is a big change.

That "consumerization" of technology is quite a big shift. Decades ago, the pattern of technology diffusion was fairly straightforward. The latest new technology was purchased by large enterprises and large government entities.

Over time medium-sized businesses and organizations started to buy the same technology. Later, small businesses and organizations adopted the tools. Finally, some consumers 'brought the technology home' and used it as well.

All of that has changed over the last two decades. These days, many enterprise tools actually were brought into the enterprise by consumers who already had adopted the technology for home use.

The problem for Microsoft, and others, is that Apple increasingly is becoming a whole ecosystem in consumer electronics related to computing. And there is reason for all the others to worry. Apple's share in MP3 players, tablets and to some extent smart phones shows how hard it is to compete effectively with Apple, once a market is defined.

Some of us would argue that there is an iPod market, and then a smaller MP3 player market, an iPad market and then a separate tablet market, for example.