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Windows 8 blamed for Christmas PC sales slump

Windows 8

By Reuters

Posted on 11 Jan 2013 at 09:45

Windows 8 is being blamed for Christmas PC sales falling for the first time in five years, according to tech industry tracker IDC.

The slump caps a miserable year for PC makers such as HP, Lenovo and Dell, which saw the first annual decline for more than a decade with no immediate signs of relief.

It underscores an unspectacular launch for the latest version of the Windows franchise, which Microsoft is banking on to fight off incursions into the PC arena from Apple and Android tablets.

"The sense is that until Windows 8 is fully installed and prices start to come down, we will be in this state of negative dynamics in the PC market," said Aaron Rakers, an analyst at Stifel, Nicolaus & Co.

Still, analysts warn against counting out Windows 8 - the most radical change in the operating system in 20 years - as consumers grow more comfortable with its tile-based interface and touch features.

In the past, a new operating system from Microsoft tended to stimulate a spurt of PC sales, but PC makers simply didn't get enough attractive machines into the market, said IDC.

"Lost in the shuffle to promote a touch-centric PC, vendors have not forcefully stressed other features that promote a more secure, reliable and efficient user experience," said Jay Chou, senior research analyst at IDC.

This year could be better, he suggested, even in the face of talk about the death of the PC as tablets are on track to outsell full-featured machines for the first time in the US.

"As Windows 8 matures, and other corresponding variables such as Ultrabook pricing continue to drop, hopefully the PC market can see a reset in both messaging and demand in 2013," said Chou.

PC makers sold 89.8 million units worldwide in the fourth quarter of last year, down 6.4% from the same quarter of 2011. That was slightly worse than expected by most, and the worst performance for more than five years, when the global economy shuddered to a halt and ushered in the worst recession since World War II.

For all of 2012, 352 million PCs were sold, down 3.2% from 2011. That was the first annual decline since 2001, according to IDC, in the wake of the tech stock crash and the September 11 attacks.

IDC is forecasting a meagre 2.8% growth in PC sales for 2013. "There's a lack of compelling reasons to upgrade," said Ashok Kumar, an analyst At Maxim Group, who said people are now waiting up to ten years to replace computers rather than five in the past.

"Increases in performance have been smaller and there are fewer new applications that require more computing horsepower," he said. "In developing markets, the first purchase is not a PC, it's a smartphone, especially in markets where literacy levels are low."

Disappointing CES

The numbers are bad news for Microsoft, which still provides the underlying software for nine out of ten PCs but is suffering as Apple's iPad and other tablets eat away at the cheap end of the PC market.

Touch-friendly Windows 8 and Microsoft's own Surface tablet were designed to counter that shift, but the radical new-look software has not gripped consumers' imaginations.

"Windows 8 wasn't going to be as big a catalyst," said Shaw Wu, analyst at Sterne Agee. "It's so different, it's almost uncomfortably different from past Windows, and there's a risk that Windows 8 ends up like Vista."

Windows Vista, released worldwide in 2007, was Microsoft's least popular operating system with users in recent years.

Microsoft pulled out of CES 2013 in Las Vegas, vacating its usual sprawling display area, but PC makers such as Asus, LG and Samsung filled the gap with a dizzying array of big screen computers, lightweight laptops, tablets and combinations of those, all running Windows 8.

Many of the new models attracted jostling crowds on the show floor, such as Panasonic's 20in ultra-high-definition tablet and Razer's dedicated Edge tablet for PC gamers.

But none was hailed a show-stopper that might single-handedly turn around the fortunes of Windows. "No single device will spur sales, it will take time for consumers to learn that Windows 8 even exists. CES will do little to change that," said Sarah Rotman Epps, an analyst for tech research firm Forrester. "Windows 8 is going to be a slow ramp, regardless of hardware quality."

Microsoft says it feels good about the progress of Windows 8, as sales hit 60 million this week after 10 weeks on the market. That is in line with Windows 7 three years ago, and well ahead of Vista, which took 100 days to reach 40 million sales.

Tami Reller, chief financial officer of Microsoft's Windows unit, said sales of Windows 8 PCs may have been held back by shortages of the most popular touchscreen machines.

"The level of demand I think surprised a lot of people. And frankly, the supply was too short," said Reller at an analyst presentation at CES this week.

Microsoft is looking to juice that demand further this month with its new Surface with Windows 8 Pro, a tablet running an Intel processor that is fully compatible with Office and traditional PC programs, unlike the Surface RT it launched last year based on an ARM chip.

Despite that bullishness, analysts have been edging down their earnings expectations for Microsoft lately.

"Windows 8 is disappointing, the PC market will remain weak for awhile and margins are likely capped," said Morgan Stanley analyst Adam Holt on Thursday, as he downgraded the stock to 'equal-weight' from 'overweight'.

Investors are also nonplussed, driving Microsoft's shares down almost 20% since last March, even as the Standard & Poor's 500 has marched upward to a five-year high this week. The shares are down 6% since the launch of Windows 8 on 26 October.

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User comments

Patch Metro to be an Option and Win8 is fixed!

All the Win8 haters say "Win8 is rubbish" when what they actually mean is "I don't like Metro" - most of which (by their own admission) only used the preview version, under a virtual PC (not going to see the speed gains there).

Don't like Metro? So don't use it! I don't. Windows 8 is great! You didn't abandon XP because of IE6, you replaced it. Why change now?

PC sales were down? In a recession? WOW! People must have bought gold-plated Ferarri's instead, those traitors! Or maybe, being short of cash people just didn't buy anything expensive?? (I should be an "analyst")

Windows 8 + (Start8/Classic Shell) is a winner.

Microsoft should acknowledge their error and issue a "non-touch device" patch for Windows 8 that re-instates the START menu.

By cheysuli on 11 Jan 2013

Manufactures blamed for poor sales ..

would be a more accurate headline. As is stated clearly in the article, manufactures have failed to get decent models into the market or market them properly. Win8 sales are apparently OK if you read all the data in the story. Another PC Pro news headline fail.

By dwlhot on 11 Jan 2013

As above

I sit in an open plan office and not ONE person purchased a laptop/desktop this xmas. Now that schools require the kids to have laptops every home, pretty much, already has one. Sure, of course, this office is not the entire country but you can see where I'm heading.

Also as above... recession. Also, again, as above, there were next to ZERO tablets in PC World and I even had to specially ask for a 500t (Available from PC World/Dixons at airports??).

I've also seen the cover for your new issue and if I were Microsoft I'd REALLY want to tell PC Pro where to get off! Casual passers by will read the cover and get the wrong impression.

By rhythm on 11 Jan 2013

Crappy PCs blamed etc....

Oh Dear.
As Rhythm notes, you (at PCPro) have developed as penchant for the sensational.
As he also notes this month's cover must be verging on libellous.....

To the matter in hand, though. PC sales have been disappointing, but to place the blame for that on W8 is a bit harsh.

As you (PCPro) are constantly reminding us only Apple makes any halfway decent hardware, and that's so good that despite costing up to several times more than alternatives it is still "Recommended" and scores 4/5 stars for VFM....

The harsh truth is that (like the MP3 Player market) most people who want\need a PC have got one, or access to one. Anything featuring Intel "Core" generation technologies will happily run everything most people want, or need. Put simply there is little or no demand for PCs, or Notebooks. What demand their is often falls into the "treat" niche, and so people are happy to be seduced by Apple's reassuringly expensive toys..... It was ever thus during hard times. For similar reasons BMW are breaking sales records, while FIAT, Renault et al languish.

By wittgenfrog on 11 Jan 2013

It's not the consumer's fault

As noted by others above, the problem is a shortage of hardware, not potential customers.

Very few touchscreen laptops are available, even though W8 has been talked about for over 12 months.

Even when hardware is launched, the retailers sell out. The Saturday before Christmas, my local PC World had sold out of Nexus 7 tablets, Sony Tap 20s and Sony Duos. Didn't ask what else they didn't have. The nice sales rep from Google just complained that the store was lacking customers.

Sure, there were lots of old W7 machines, but that is not the way to encourage sales.

If computer hardware suppliers resemble Communist Block stores, only selling what the manufacurers and retailers choose, is it any wonder that sales are down.

By nigel_nicholson on 11 Jan 2013

Lack of decent hardware

It's funny, the IT press seems intent on spreading FUD about Windows 8. Yet in the real world I see none of that.

I have lots of (non techy) friends who are really interested in Windows 8. Even before I told them about it.

One friend has just bought a Sony T Series with a touch screen and she loves it. My sister has bought an ASUS VivoBook and adores it.

Others are looking at alternatives.

But the problem for a long time after the launch was that most of the computers were Win 7 laptops which the manufacturers had thrown Win 8 onto.

Once they have proper hardware (my sister had to wait for a couple of months after the supposed launch date of the VivoBook to actually get one) consumers seem to love it.

I know a Apple fangirl who is now after a Lenovo all in one and a Windows Phone.

As wittgenfrog says, PC Pro are increasingly sensationalist.

I realise you want readers but please be accurate rather than contribute to all the FUD out there.

By Grunthos on 11 Jan 2013

cheysuli, reinstating the Start Button to Win8 using Start8 or similar won't solve its ills. There are many built-in apps that are metro, and hence a dog to use on a keyboard and mouse. Examples include the PDF and photo viewers.

Microsoft needs to remove Metro completely, not just give us back the start menu.

By brendan on 11 Jan 2013

@Brendan

I Use "Windows Live Photo" and "Office Picture Viewer" when not using Explorer itself to look at photos. I also have Adobe Photoshop Elements to make albums for iTunes (got that one cheap last year).

PDF's are viewed in FireFox using the Adobe plugin. I haven't needed to download Adobe Reader (although I could). The PDF App is not great, but it's free and no earlier version of Windows supported the format natively.

I haven't bothered with Start8 or Classic Shell. I just hit Windows Key + D at start-up and then stay there.

I did briefly try to force myself to use Metro, even making tiles for games and commonly used programs, but there isn't a single App I use, so Metro is superfluous. I personally consider Metro to be Microsoft's attempt at combining RocketDock with the iTunes App store. And failing on both counts. Clicking on any program (not App) returns you to the desktop anyway, so why did they bother?

Clearly wherever they analysed this in Microsoft, they either ALWAYS used touch-screens or didn't actually ask the question "Is this any good with a mouse and keyboard?" or they might have known the obvious answer is "no".

But as I stated previously, you can use Windows 8, enjoyably, without ever using Metro. So don't cut off your OS to spite your launch bar!

In summary; Windows 8 good, Metro bad.

By cheysuli on 11 Jan 2013

IDC: Windows 8 launch did not prevent lower PC shipments

http://www.neowin.net/news/idc-windows-8-launch-di
d-not-prevent-lower-pc-shipments

By henry20012 on 11 Jan 2013

Prob = Windows 8 AND Hardware

Let me look at it from a slightly different angle. There are 2 problems with the current state of the PC Market.

1 = Windows 8. Very few consumers want to upgrade to this. So unless there is a compelling reason no-one wants to move from a a competent dedicated operating system to a childish looking system made for marketed for touch devices. I spent much of my time donwgrading people from Vista to XP. They don't want that experience again and Windows 8 looks to them and to me like another Vista. With Vista they prbably fixed it after the 2nd service patch but by that stage no-one wanted to touch it.

2 = there is no compelling hardware reason to upgrade. There are very tired laptop screen resolutions which are at least equalled and in some cases bettered by tablets and smartphones. This is more than embarassing in what used to be New Technology.

I have had my quad core 2.4 ghz processor for around 8 years and still seems adequate for all my needs. Only the graphics card and hard drive have been replaced.

I will replace my laptop but only when I can find a decent matt finished laptop screen with the equivalent of 1280 x 1024 screen. Very few companies offer these.

If it wasn't for the fact that the laptop keys are worn out and failing and the screen has developed a fault my 6 year old 2ghz dual core laptop would still be more than adequate for my needs.

By Manuel on 11 Jan 2013

User don’t get a choice

The one thing that everyone seems to miss when talking about Windows 8 numbers is that normal end users have little or no choice in these matters. They get what they are given and so Windows 8 sells at a similar level to Windows 7 and we all try to read a lot into the exact numbers.

Here’s how it actually works in real life:

When an end user’s old PC breaks and they go shopping for a new one it is hard for them to find one with Windows 7, not impossible, but certainly hard (I guess Microsoft have given vendors financial incentives to push Windows 8 instead of 7, as vendors know 8 is controversial).

What’s more, Mrs and Mrs Normal have no idea how different Windows 8 is. They see Windows 8 and think that must be like Windows 7 only better (the numbers higher, it must be so). It’s only when they get it home that they struggle. At first they think it just them being dim (trust me I know this stuff, I run a company providing support to the home computer market, I see it all the time). Eventually they realize that it is not them and Windows 8 is a dog’s breakfast of a mishmash of UI elements and they don’t like it (their must be some end users out there who like Windows 8 after living with it for a while, but I have yet to meet a single one). The trouble is, by that point they have brought it, invested time in getting all their stuff and settings on it, there is no downgrade path. They would have to buy a copy of Windows 7 and pay an engineer to do the install and transfer, that’s not cheap. I see most of them gravitating towards using their smart phones and iPads instead.

There is a trend I have noticed where when people say negative things about Microsoft they are accused of being Apple Fan Boys. So I had better address that: I have built a business on Windows. We completely ignore Macs because it has too small a market share to matter, it does not matter if it is good or bad to us, its simply irrelevant because so few of our target customers use it. iPads and iPhones are a different matter all together, we work on those all the time, but Macs, off the radar.

The number of copies of Windows 8 sold tells us very little. The user experience of Windows 8 means that normal people are becoming very more open to considering alternatives. I suspect if users were given a week on each with their own data and asked to choose almost none of them would choose Windows 8.

Kicking them around this much means they might not even consider a Windows option next time their PC is up for renewal. You think they hated Vista, wait to you see what they do with this baby. Tablets (iOS and Android) are not ready to be people’s sole computers yet, but when they are, Windows is it deep trouble and I will have to find different employment.

By Ratbat on 12 Jan 2013

Ratbat is correct

Well almost...
I now think for the average user that a tablet can be their sole computer. Most people want to read emails, surf the web, look at their photos, check their finances, watch videos and listen to music. You can do all that without any need to go near a PC. I know of three people that have iPads that have said they haven't even started their computers in a while. One of those hadn't used their laptop in 8 months.
So why would these people automatically look at Windows again? Microsoft is nothing special in this arena and the time when Microsoft was the only platform to look at has passed. If you look at consumers day to day computing tasks I think you'll find a greater percentage now use Android and iOS above Windows. They might spend half an hour twice a week on their computers compared to daily use on their phones and tablets.
I would also like to point out that I'm a Windows developer and luckily, I don't write consumer software. Microsoft is not threatened at work just yet but we have started to developer ipad apps because that's what people want to use.

By TimoGunt on 13 Jan 2013

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