Last week, the Head of Windows, Panos Panay, penned a blog reflecting on the state of the PC industry and celebrating the success Windows 11 has enjoyed thus far. In 2021, the PC market saw the biggest growth in a decade, with Windows powering 1.4 billion monthly active devices with overall time spent on Windows up 10% over pre-pandemic levels. According to Microsoft customer insights data, there was nearly a 50% growth in people wanting to use their PC. Since its launch in October, Windows 11 has seen the highest satisfaction scores of any version of Windows yet, and the number of people accepting to upgrade to it was twice as high as that recorded by Windows 10. What is critical is that Windows 11 is driving increased engagement with people spending 40% more time on Windows 11 PC compared to Windows 10.

So, the big question that Microsoft now must answer is: will this engagement remain, or as we all start to return to a more mobile daily routine, will PCs be left behind once again?

There are some new behaviors many of us picked up during the pandemic, which are likely here to stay. From shopping to telehealth to gaming and video consumption, we have gotten used to spending more time in front of a computer screen besides our smartphones. As a result, for many of the activities we wanted or needed to perform, our preference shifted to a larger screen. In addition, in many households in mature markets, we saw the number of PCs grow with a ratio of one to one, PC to human. This means that PCs have returned to be more personal allowing for an individual set up, which delivers higher value which in turn will drive more time spent. But even with all these positive trends, Microsoft must continue to evolve its business strategy when it comes to Windows in order to maintain high engagement.

Three factors will be vital in keeping PC engagement as high as it has been during the pandemic, and they all require intentionality and a different approach from Microsoft and the Windows ecosystem.

Going Beyond Productivity

The need to be productive is never going away. While we will have new devices come into the foray of the tools knowledge workers use every day, it is hard to believe the PC will not maintain a key role in driving productivity in the near and medium-term. While this means engagement, it is not enough to foster a more visceral connection with the PC. During the pandemic, engagement grew because we worked, learned, killed time, connected with people, shopped, and so much more. Microsoft and Windows must stay focused on delivering delightful experiences across a comprehensive set of activities so they can appeal to a broad audience and retain time spent on a given device. Delivering on these experiences might come through different aspects of Windows like Microsoft Edge and some of the shopping features that have rolled out, such as lists and coupons. Or new first-party apps such as Journal driving new use cases with inking. Gaming will remain a strong point of engagement on PC as Microsoft continues to build on Xbox Game Pass, but with gaming, the risk is that the engagement built is with the titles and the platform, which in this case is Xbox and not necessarily Windows.

Focusing on the PC as Part of an Ecosystem of Products

The second important point is as tempting as it is to talk about the PC renaissance and think that users have found a renewed love for the PC that will never be challenged, it would serve the Microsoft ecosystem to look at PCs, not in isolation but rather as one of the options users have to get stuff done. So the strategy should be looking at the PC as part of the ecosystem of devices users have both in their private and their work-life. How can Windows facilitate those connections so that transitioning from a phone or a dedicated video device or XR glasses and the PC will be a seamless experience? Adopting this strategy will ensure that the PC is seen as adding to that one experience that matters to me and to the other devices I am using. This was the critical point of failure when both smartphones and tablets hit the market. Devices were seen as an “either” “or” rather than an “and,” The past two years have proven that we all have time and space for more devices in our life. So as much as we want to keep people on a PC, we cannot just think about the PC in isolation. This approach will also offer a broader opportunity to Microsoft from a service and apps perspective as well as first-party devices to broaden the reach and have points of contact with users no matter what device and platform they are on.

Shifting from Market Share to Market Value

Lastly, while growing market share is always nice, I firmly believe that the opportunity for revenue growth for Windows and Microsoft will come not necessarily from new users and licensing but from how they can monetize from the user base that is now engaged. Whether it is Xbox Game Pass, or Microsoft 365 or new services linked to intelligent productivity, educational classes, video or design creation…. there is a massive opportunity for Microsoft to deepen the return-on-investment Windows users see from the different brands that link back to Microsoft.

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