Is the Microsoft ecosystem shrinking?

Is the Microsoft ecosystem shrinking? By 'ecosystem', I mean the set of companies developing applications for Microsoft Windows, and specifically those developing applications exclusive to Microsoft Windows: apps that say "requires MS Windows" and won't run on a Mac or under Linux. (I'm ignoring emulators like WINE here.)

It seems that the number of companies developing desktop software (including Windows software) is rather small. I ran a quick, informal, and quite unscientific survey of app vendors. There were a bunch, but not many. (My survey included sites such as NewEgg and Programmer's Paradise.)

Perhaps I am comparing the current ecosystem to the early PC market. Shortly after IBM introduced the PC, lots of companies jumped into the market. There was a "Cambrian Explosion" of software, from accounting packages to compilers to word processors. Today, the software genres seem limited. Excluding software from Microsoft, I found tax software (Intuit), accouting software (Intuit, Peachtree/Sage), CAD (Autodesk), PDF utilities (Adobe, Nuance), reports (Crystal Reports, ActiveReports), security/malware software (AVG, Symantec, bitdefender), and others, but nothing like a "Cambrian Explosion".

Perhaps the industry (ecosystem) has fragmented. In the early PC days, PCs did everything, from development to business applications to games.

If the market has fragmented, where has it gone? Here are a few ideas:

Games: Instead of using plain desktop PCs for games, there are capable gaming systems, such as the X-Box and the Wii. Games exclusive to the X-Box are part of the Microsoft ecosystem, but only exclusive games. Games for multiple platforms count less, and games exclusively for other (non-Microsoft) consoles are not.

The iPhone: A lot of fun applications (games and toys) have moved to the iPhone, or live only on the iPhone. The "glass of beer" application has no purpose on a PC, but it is a lot of fun on an iPhone.

Dual-mode apps: Instead of a PC-only application, developers are creating applications for both PC and Mac. (And sometimes for PC, Mac, and Linux.)

The web: Instead of selling shiny discs in a box, applications can run on the web. In this situation, the question becomes "how many apps run only on Internet Explorer?". In the early web days, lots of web sites worked only on Internet Explorer. Today, limiting your web site to a single browser is passe. Web sites work with IE, Firefox, Safari, Chrome, and Opera. (And other browsers.) A multi-browser web app is a "lose" for Microsoft.

Changes in marketing: Perhaps my study is flawed. Perhaps marketing methods have changed. Instead of going though central distributors, software manufacturers may be distributing their software directly, using the web to reach customers.

I'm sure that all of the above have happened. But I think that they do not account for all of the shrinkage.

Here's my claim, based on nothing more than my "gut feel": The Microsoft ecosystem was most vibrant immediately after the introduction of the IBM PC XT, and has been undergoing consolidation and shrinkage since then. (We may have considered it an "IBM ecosystem", but it was really Microsoft's.) It has been shrinking since then, and it continues to shrink. The number of companies producing applications for Windows is decreasing, either through attrition or acquisition. The reduction is not caused by the current economic recession, but has been occurring for the past twenty-five years.

In some ways, this has been good for Microsoft: They have acquired customers. In other ways, this is bad for Microsoft: their market/ecosystem is dying. If my theory (or gut feel, as "theory" may be too sophisticated a word) is correct, then Microsoft has been achieving short-term gains at the expense of the larger market. Microsoft will continue to gain customers, and business, and market share, as other companies leave the market. It's similar to being queen and the high school prom while every one else leaves: yes, you are the fairest of them all -- for them as what remains in the gymnasium. But most of your class-mates have gone outside to party, and aren't willing to put up with your snobbery.