Microsoft: Obsolete By 2017?

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Microsoft was once king of technology, owning 90 percent of the operating systems market and making Bill Gates the world's wealthiest human.

Times have changed. As demand shifted from desktops to laptops and then to tablets and smartphones, Microsoft lost its reign to Google and Apple.

Microsoft Logo

So drastic is the trend that a new report from technology research and advisory firm Gartner forecasts that by 2017, Microsoft could be all but obsolete.

How is this possible? By then, shipments of devices using Google’s Android operating system will likely dwarf shipments of Windows PCs and phones.

Shipments of Apple iPhones and iPads, meanwhile, will be almost at parity with devices powered by Microsoft. Says The Daily Ticker's Henry Blodget:

“Microsoft could be completely irrelevant in 3-4 years if they can’t make headway in the smartphone or tablet market, where they’ve been struggling.”

The numbers are staggering. Gartner forecasts that by 2017 the number of tablets, mobile phones and ultramobile devices will total 2.7 billion units.

That's almost 10 times the number of desktop and notebook PCs. Ten.

Even new devices like the Facebook phone are entering the market and hurting MS. The stock market already reflects this shift in the device market, too.

According to traders, the market is basically saying Microsoft is not a growth story, but a declining asset, if you look at the current books and current cash flow.

Microsoft shares are down nearly 9 percent year-over-year while competitor Google shares have rallied over 25 percent since this point a year ago.

Apple is way down as well, but this reflects other factors such as leadership and competition; it's profits have been and will continue to be staggering.

The challenge Microsoft faces now is how to stay relevant.

Can it catch up in the tablet and smartphone market, where it’s been operating for years without much success, or must it try something completely different?

“Wall Street would probably welcome that news,” says one expert, but it’s not clear it would make an impact, or how exactly the company even would reinvent itself.

That may be the most troubling sign of all.