Why Is the Operating System Market Shifting? A Deep Dive into Global OS Trends and China’s Rise

1. A Century‑Long View of OS Evolution

Operating systems (OS) are the software layer that connects hardware and applications, forming the core of any computer system. Since the first computer in 1945, OS development has passed through three major phases: enterprise/commercial, personal desktop, and mobile, giving rise to Unix, Linux, Windows, macOS, Android, and others.

In 2018, foreign OS vendors dominated the Chinese market, holding over 94.75% of the desktop share and 98.86% of the mobile share. Gartner reported a market size of more than 189 billion RMB in China that year.

By August 2019, Windows held 87.66% of the Chinese desktop market and macOS 7.09% (total 94.75%). On mobile, Android accounted for 75.98% and iOS 22.88% (total 98.86%).

Key Characteristics of the Chinese Desktop OS Landscape

Windows + Intel architecture still dominates the civilian market.

The closed‑source Wintel stack faces increasing competition from the maturing open‑source Linux ecosystem.

Domestic OS Players

Chinese manufacturers have launched several Linux‑based OSes, such as Kylin (Zhongbiao, Galaxy), Deepin, and Huawei HarmonyOS, showing strong growth potential.

Notable strengths:

Zhongbiao Kylin leads in government markets.

Galaxy Kylin has deep ties to the military sector.

Deepin ranks among the top‑12 global Linux distributions and recently partnered with Huawei to ship a Deepin‑based notebook.

Huawei HarmonyOS leverages its 5G and IoT advantages.

2. The OS Market Over the Past Three Decades

OS evolution can be divided into four stages based on hardware and network changes: (1) Government, enterprise, and defense; (2) PC desktop; (3) Mobile internet; (4) Emerging “A‑IoT” (All‑Internet‑of‑Things).

Windows + Intel has long monopolized the desktop, while Android and iOS dominate mobile. The fourth stage will be driven by 5G, cloud, and IoT.

2.1 Windows + Intel Dominance

The platform effect of Windows created a near‑monopoly, but Linux’s openness and cost advantages are hampered by a fragmented ecosystem and lack of a single dominant vendor.

Statcounter data (Aug 2019) shows Windows at 78.32% of the global desktop market, macOS at 13.22%, Linux 1.72%, ChromeOS 0.86%.

2.2 Mobile Internet Era (Android / iOS)

Android, based on Linux, powers smartphones, tablets, TVs, wearables, and more. iOS, a Unix‑derived commercial OS, runs on iPhone, iPad, and Apple TV.

Globally, Android holds 75.44% of the mobile OS market, iOS 22.49%; in China the split is 75.98% Android vs. 22.88% iOS.

2.3 The Struggle of Domestic OS

National security concerns (e.g., Stuxnet, Prism, Intel Minix leak) have spurred policy support for home‑grown OSes. Since 2011, Chinese policies have encouraged development of domestic OS, databases, middleware, and office software.

Key domestic projects over the past 20 years include:

Xteam Linux (1999) – first Linux‑based Chinese OS, discontinued in 2003.

Blue Point (1999‑2000) – briefly listed in the US, ceased after the dot‑com bubble.

Red Flag (2000‑present) – survived multiple restructurings, now owned by a state‑backed consortium.

Kylin family (Zhongbiao, Galaxy, Ubuntu‑Kylin, Hunan Kylin) – originated from the National University of Defense Technology, serving government, military, and enterprise.

Deepin (2004‑present) – a Debian‑based desktop OS, consistently in the top‑12 DistroWatch rankings, with over 80 million downloads and multi‑language support.

3. Outlook: Ecosystem Shifts

3.1 Government‑Led Demand

Security‑critical government and public‑sector workloads are the primary entry point for domestic OS adoption. Assuming 2 million civil servants and a 1.5 × PC‑to‑person ratio, the government sector could represent over 2 000 million PCs and 200 000 servers, translating to roughly 100 billion CNY in desktop OS spend and 160 billion CNY in server OS spend over the next five years.

3.2 Enterprise (State‑Owned Enterprises)

With ~4 000 million employees in central and local SOEs, a 1.5 × PC ratio yields 6 000 million desktops and 600 000 servers. Replacing 50 % within five years adds another 150 billion CNY (desktop) and 240 billion CNY (server) market potential.

3.3 Consumer Market

China’s PC penetration is only 21.8 % (vs. >70 % in developed nations). Assuming a 5 % increase in penetration over five years and an OEM price of 300 CNY per domestic OS, the consumer desktop market could add 45 billion CNY, with an additional 42 billion CNY from new PC sales adopting domestic OS.

3.4 Up‑stream Chip Maturity & Down‑stream Software Richness

Domestic chip vendors (Loongson, Phytium, Kunpeng, Zhaoxin) now cover MIPS, ARM, x86, and Alpha architectures, providing a hardware base for local OSes.

Down‑stream, Deepin offers 28 native applications (store, media, utilities) and supports popular third‑party apps via Deepin‑Wine (WeChat, QQ, etc.). Government‑focused OSes such as Zhongbiao Kylin are integrating with major Chinese databases (Kingbase, Dameng) and middleware (e.g., KingbaseES, middleware from Chinese vendors).

4. Summary and Investment Highlights

Key publicly‑listed companies tied to OS development include:

China Software (holds 50 % of Zhongbiao Kylin and 40 % of Tianjin Kylin, plus 33 % of Dameng Database).

Deepin (majority owned by founder Liu Wenhuan, with 26.4 % held by 360 Security and 8.8 % by NSFOCUS).

Given the projected government, SOE, and consumer replacement volumes, these firms stand to benefit from a multi‑billion‑yuan market expansion for domestic operating systems.