Market Share != Profit. Profit = High Margins = User Experience First

08 April, 2011 09:38PM · 2 minute read

During the 90’s Microsoft successfully pushed their Windows operating system preinstalled on almost all PCs by the major PC manufacturers with only a handful of exceptions. Apple was in chaos and didn’t put up a fight at the time. Apple however are making a comeback with OSX and their range of Macbook, Macbook Airs, Macbook Pros, iMacs and Power Macs.

Apple passed Microsoft in May last year and went on in September to become the second largest company in the world by market value. Whilst Apple still trails Microsoft in terms of revenue the gap is closing very quickly. Microsofts Windows is steadily losing market share to Apple’s OSX but is still way, way in front by a massive margin. Whilst it’s a simplification to focus on total product revenue based on operating system it’s still interesting that Apple seems to be making a fair bit of money and investing it better than Microsoft. For such a small market share, Apple is doing really well.

Microsoft poured a lot of money into Windows Vista and Windows 7 and it shows (Windows 7 is a great OS) but all the while Apple has been making many many more incremental updates to its OS, switching to Intel CPUs in their Macs and gradually building market share. They kept their higher margins on their hardware and put user experience first and that strategy is beginning to pay off.

The interesting part is looking at the new frontier - Apples iOS and Googles Android - built as low power mobile operating systems. It’s interesting again that despite Android having a bigger market share, most developers report making much more money from iOS with only a handful of exceptions. Apple is helped out by linking into iTunes - a payment ecosystem that is well established and trusted meaning a higher percentage of apps on iOS are paid for vs Android. Google is making money off Android (from ad revenue) it’s true, however nowhere near as much as Apple is making off iOS devices.

Once again though it seems Market Share does not equal Profit.