Bekker's Blog

Blog archive

Analyst Slams Surface's Chances, Urges OEMs To Boycott Windows RT

Canalys, the market research firm that counts iPads and other tablets among PC shipments, released numbers on Tuesday putting Windows' overall market share at a "new low of 73 percent."

In spite of some bright spots for Windows, the firm doesn't see the Microsoft Surface pulling Windows out of a market share dive any time soon and its analysts are encouraging OEMs to demand better pricing from Microsoft on Windows RT. The slide represents a 9-point share loss in the year since Canalys put Wintel's Q2 2011 share at 82 percent.

Microsoft is slated to release an ARM-based Surface running Windows RT with Windows 8's general availability on Oct. 26 and a Surface Pro running Windows 8 Professional three months later.

"The information available to date suggests the prices of both will be too high to capture significant market share, and a direct sales approach will prove inadequate. We expect the Surface pads to have a similar impact on the PC industry as the Zune did in portable music players," Canalys analyst Tim Coulling said in a statement.

Canalys does not expect the launch of Windows 8 to arrest Microsoft's market share decline until Q3 2013 at the earliest.

The firm also says it has advised PC OEMs to postpone launching Windows RT devices until Microsoft reduces the price for the underlying operating system.

Meanwhile, another Canalys analyst suggests those PC OEMs will be licking their chops for what, in his view, will be Microsoft's inevitable failure with the Surface.

"Microsoft has upset some partners by bringing its own hardware to market," says Chris Jones, Canalys vice president and principal analyst. "Marketing, distributing and servicing such hardware profitably is hard. Once the Surface makes a material dent in Microsoft's P&L, it will need to repair relationships with PC vendors, who are already preparing lists of demands."

In addition to reducing OEM prices for Windows RT, Canalys warns that Microsoft will need to subsidize touch-panel production costs by $50 to $100 per unit to "kick-start the market" by helping the OEMs hit mainstream price points.

The bad news in the second quarter for Microsoft is Apple's 60 percent shipment growth to 21 million units (iPads and Apple desktops and laptops), HP's 11 percent drop to 13.5 million units, and Dell's 11 percent drop to 9.6 million units, according to Canalys' figures.

The bright spots Canalys referred to are Lenovo's 27 percent shipment improvement to 13.1 million units and Acer's 4 percent growth to 10.7 million units.

Posted by Scott Bekker on July 31, 2012