Goldman Sachs has just released a report recently that measures Microsoft's share of the "consumer computing market". From this we get that Android has 42% market share in new sales, iOS 24%, and Microsoft only 20%. The actually installed base is still a bit larger for Microsoft right now, because people even use PC's that they've had for 10 years even. But the new sales market shares point to a clear trend - Windows will get a shrinking market share as fast as "consumer computing devices" go.
"Microsoft faces an uphill battle (though not insurmountable) given it lacks meaningful share in either tablets or smartphones and as such will need to rely on its appeal to knowledge workers to help drive adoption as its complement ecosystem will remain behind the iOS and Android platforms at least over the next 6-12 months." observed Goldman Sachs.
"It took a compute revolution to unseat Microsoft from its dominant market position." It was not that Linux-based Android or Apple ever managed to knock Windows off its desktop throne. They haven't. It was that the smartphone and tablet rebellion has unseated the desktop. "Fundamentally, Microsoft's business was disrupted by other vendors who successfully introduced compelling new device categories" But, "thus far, Microsoft has failed to establish a meaningful foothold in [these new] key growth categories."
This is the key part here, and this is how disruptors usually end up uprooting the incumbents from older technology markets. They completely change the game - they don't beat them head-on, just like Google and Apple are not beating Microsoft directly in the PC market. They are beating them by changing the rules of the computing market, and making other type of devices much more popular than PC's.
This is exactly how Apple (and other top Android makers) managed to beat Nokia, too. They did it not by making "better" feature phones that existed at the time, which would've been a failing strategy, but by completely changing the game for what a phone should be and how it should work. In fact, in these new "phones" the phone part is barely relevant anymore, as people use them for browsing the web, using apps, watching videos and chatting with each other.
Goldman Sachs believes that to merely compensate for every PC license lost, Microsoft needs to sell 5 Windows Phone licenses or 2 Windows RT licenses. That's because they make a lot more money from the PC licenses. So if Microsoft is to continue making the kind of money it makes now from PC's, even as the PC market shrinks, that's what they need to at least maintain their revenues. But that seems pretty unlikely, as Windows Phone sales and Surface sales haven't made much of an impact yet, and there's a long way to go until Windows Phone sales can even be as many as PC sales, let alone 5x more than that.
Android is now quickly growing and becoming very popular in countries and continents with huge number of people, such as India, China and Africa, and it's becoming the standard OS for all of them, and for many people there it's their very first "computer", which they can get for a lot less money than a PC, too. Android's open source and free nature is a big part of this growth, and it's why Android will dominate computing over the next decade or longer, with iOS being in a more distant second place, but with still a lot of influence in the tech world.