Microsoft challenges Apple’s business model with new Windows 11 operating system

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Microsoft challenges Apple's business model with new Windows 11 operating system

A Microsoft logo is displayed on a store in Manhattan, New York City, New York. January 25, 2021. REUTERS/Carlo Allegri

June 24, 2015 (Reuters) – Microsoft Corp. (MSFT.O.) Thursday presented Windows 11, its first major operating systems overhaul since 2015. The new changes are directed at Apple Inc.’s (AAPL.O.) lucrative App Store business model.

Windows 11 will be available for purchase by the end of this year. It will also include a Windows Store, which will allow software developers to use their payment systems in the app and not pay any commissions to Microsoft. In addition, with the help of both Intel Corp (INTC.O) and Amazon.com (AMZN.O), users will be able to find and install Android mobile apps on their PCs.

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These moves are in direct contrast to Apple’s “walled gardens” approach in which Apple only allows users to download software from the App store and imposes restrictions on software developers. This includes a requirement to use Apple’s in-app payment systems and pay commissions up to 30%.

These changes are a clash between Microsoft, whose recent market capitalization topped $2 trillion, and Apple, which is the only U.S.-listed company with a valuation of $2 trillion. It also challenges Alphabet Inc (GOOGL.O), which charges developers commissions.

“Windows has always stood up for sovereignty for creators, and agency for consumers,” Satya Nadella (Microsoft’s chief executive officer) said at an event to announce the new operating system.

Although Microsoft’s software has become a household name and was the dominant personal computer brand for many years, Apple and Google software devices have taken over. However, it remains a core part of Microsoft’s strength in corporate markets.

Windows 11 will offer many new features targeted at this user group, including the ability to unlock your computer from an external monitor and take a call in quieter rooms before returning to the docking station.

Slack Technologies Inc. (WORK.N), Microsoft’s main competitor in the workplace chat market, also stated that it would integrate its Teams chat software directly into Microsoft’s operating system. Salesforce.com Inc (CRM.N), which has purchased Slack for $27.7billion, has filed an EU antitrust complaint against Microsoft.

Microsoft’s new operating system, which includes improved gaming performance and an Xbox app, may be appealing to some individuals.

The most significant shift seems to be in Microsoft’s pitch for developers, content creators, and other people seeking to make money off the world’s 1.3billion Windows users. This is almost as many as Apple’s total installed device database of 1.65billion users but less than half Alphabet’s 3billion Android users.

Microsoft announced Thursday to add new tools to tip content creators, including local news outlets, directly into the Windows 11 operating platform. In addition, Microsoft recently reduced its commissions on games purchased through the store from 15% to 12%. This is a significant reduction from the 15% it takes for regular apps. It has also been vocal in its criticism of Apple’s AppStore.

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Windows was the driving force behind Microsoft’s rise during the 1990s when PCs were a standard fixture in businesses and homes. The operating system was replaced by Alphabet’s Google and Apple’s iOS. Mobile phones became the primary computing device of billions of people.

Windows is still the largest platform in the technology industry. Microsoft’s personal computing division, which includes Windows revenue generated from businesses, accounted for $48.2 Billion of its $143 Billion in revenue in its most recent fiscal year.

According to IDC, Windows suffered a loss of market share among laptops and PCs in 2020 due to Google’s Chromebooks. As a result, schools opted for cheaper devices to learn online, but they still held more than 80% market share.