PC industry woes worsen as 'phenomenal transition' shrinks shipment numbers

Windows 8.1 can't turn around the trend, says IDC

By , Computerworld |  Hardware

If 2013 ends up as IDC expects, the year would represent a 13% contraction from 2011, the industry's high-water mark.

Other than computer component suppliers and PC makers, Microsoft will be the company hit the hardest: Sales of its Windows operating system are almost entirely reliant on new PC sales.

Microsoft knows that as well as anyone and has already told Wall Street to expect lower revenue from its Windows group this quarter. At the last earnings call, in July, company Chief Financial Officer Amy Hood told investors to expect a 2% decline in Windows revenue for the quarter ending Sept. 30 when compared to the year before. Hood did not explain why her estimate of Windows revenue was at odds with her expectation that PC sales would decline "in the mid-teens" during the quarter.

The Redmond, Wash., company is in the midst of a reorganization that will make it more difficult for analysts to gauge Windows' performance, as it's been shifted to a new group responsible for all Microsoft operating systems, including Windows Phone.

But Chou doubted that Windows 8.1, the major update Microsoft plans to ship in October, would move the PC needle this year, or anytime soon.

"The transition of the PC world has some ways to go. Windows apps are still not at the stage to turn the tide," Chou said, referring to the touch-first, tile-based apps at the heart of the "Modern," originally known as "Metro" user interface that is one half of Windows 8 and all of Windows RT. "Devices with much longer battery life are coming to some of the laptop segments, so that's a positive, but the software experience on PCs has not changed to address what tablets and smartphones bring to the table.

"Microsoft has made some concessions that users have wanted in Windows 8.1, not all the way, half the way, but they are important things at the very least to help enterprise users look at 8.1 down the line," Chou said.

PCs -- as most visualize them after three decades -- will not disappear, Chou acknowledged. "People are still more comfortable with a PC for productivity-related tasks, and in certain markets, with the larger screen, it does offer a total Web experience rather than looking at a mobile Web site. But those are not strong enough reasons to sustain those earlier sales cycles."

That said, businesses will be using more PCs far longer than consumers, Chou said. "Commercial users are much more captive to the Wintel platform," he said, using the term for the Windows-Intel collaboration that put billions of PCs on desktops and laps.

In the short term, the dreary outlook will drive sellers to aggressively promote PCs in the fourth quarter. Chou expected to see heavy discounting during the traditionally strong holiday sales season.


Originally published on Computerworld |  Click here to read the original story.
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