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Analysts Blame Windows 8 for Tanking PC Market

A new report from IDC indicates that first-quarter PC shipments dropped by nearly 14 percent over the year-ago period, the largest decline since IDC began tracking PC shipments in 1994.

Originally, the analyst and consulting firm projected a 7.7 percent decrease for Q1 2013, but data released on Thursday from IDC's Worldwide Quarterly PC Tracker shows that original forecast was too optimistic. Worldwide, 76.3 million PCs shipped during Q1 2013, with PC shipments down across all regions, according to IDC.

The PC shipment decline stemmed from a number of factors. Earlier shipments of low-cost netbook computers had lowered price expectation. Tablets and smartphones caused consumers to defer PC buying. And back in its Q4 2012 report, IDC had indicated that a lack of touchscreen hardware had slowed PC shipment volume. However, in this report, IDC was unsparing of Microsoft as a cause for the continuing slump.

Windows 8 'Slowed the Market'
The Windows 8 operating system for PCs and tablets was released in late October. However, the launch has met consumer resistance and just slowed the market, according to IDC.

"At this point, unfortunately, it seems clear that the Windows 8 launch not only failed to provide a positive boost to the PC market, but appears to have slowed the market," said Bob O'Donnell, IDC program vice president for clients and displays, in a prepared statement. "While some consumers appreciate the new form factors and touch capabilities of Windows 8, the radical changes to the UI, removal of the familiar Start button, and the costs associated with touch have made PCs a less attractive alternative to dedicated tablets and other competitive devices. Microsoft will have to make some very tough decisions moving forward if it wants to help reinvigorate the PC market."

Professional PC Growth
Analyst and consulting firm Gartner Inc. reported similar, but somewhat less pessimistic, results regarding Q1 2013 PC shipments. Gartner indicated that 79.2 million PCs were shipped in the quarter, representing a decrease of 11.2 percent compared with last-year's Q1 result. The one bright spot in Gartner's analysis concerned the so-called "professional PC market."

"Unlike the consumer PC segment, the professional PC market, which accounts for about half of overall PC shipments, has seen growth, driven by continuing PC refreshes," stated Mikako Kitagawa, principal analyst at Gartner, in a released statement. "Despite the fact that some regions already passed the peak of PC refresh, overall professional PC demand continued to grow."

Gartner pointed to touchscreen-based "ultramobile" computers as a way for PC vendors to increase sales. However, only a small percentage of consumers bought Windows 8 touchscreen devices in Q1 2013.

"The majority of consumers remain unwilling to pay the price premium for touchscreen capabilities on PCs at this stage," stated Isabelle Durand, principal research analyst at Gartner, in a released statement. "But, even so, touchscreens and Windows 8 will represent key opportunities for PC manufacturers in the second half of 2013."

Also to come at that time will be new machines running Intel's code-named "Haswell" x86 chips. Intel is promising that Haswell processors will offer full PC computing capabilities while also delivering power savings for mobile use.

Death of PCs?
Gartner, like IDC, suggested that consumers have been turning to smartphones and tablets, and that change has been affecting PC shipment results. The analyst firms weren't exactly declaring the death of PCs, since PC shipments still are trending on a relatively flat growth horizon over the next four years. However, some press accounts have been interpreting the numbers to mean that the era of the "death of PCs" has begun.

At least one analyst has rejected that view. In a blog post, Forrester Research analyst Ted Schadler suggested that the PC decline being measured just reflects shifted buying patterns in which consumers and office workers now have multiple devices. They reach for different tools for different tasks, and PCs are still the best tool for tasks such as typing and surfing the Web. What has changed is the Microsoft and Intel planned obsolescence scheme, in which new equipment was needed to power larger and more demanding apps.

"People will buy new computers when they want to or can't live with the old one any longer," Schadler wrote in the blog post. "Planned obsolescence still matters, but the replacement cycle may be 6 years instead of 4 years in the home and 4 years instead of 3 years at work."

Microsoft hasn't said a lot about the state of Windows 8 adoption, although it claimed to have sold more than 60 million Windows 8 licenses in January. Windows 8 use tracks at 3.17 percent in April, according to Net Applications' data. Microsoft will report its fiscal third-quarter 2013 results next Thursday, which may offer updated numbers.

Microsoft reportedly cut the licensing costs of Windows 8 for its original equipment manufacturers, which was confirmed by IDC. It's also thought that Microsoft will support new seven-inch tablets running Windows 8, including a new Microsoft Surface model expected sometime this year, according to a report by The Wall Street Journal that doesn't name sources. Microsoft may issue an update to Windows 8 and Windows RT this summer, code-named "Blue," that could affect this market as well. Still, on the tablet side, Windows 8- and Windows RT-based devices are expected to badly trail Android- and Apple iOS-based tablets over the next four years, according to an IDC tablet forecast.

The top PC vendors for Q1 2013 included HP, Lenovo, Dell, Acer and Asus, according to IDC. However, only Lenovo showed flat growth in terms of PC shipments, year over year. The rest of those OEMs saw red ink during that same period.

About the Author

Kurt Mackie is senior news producer for the 1105 Enterprise Computing Group.

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