Don’t Blame Windows 8 For Falling PC Sales

Microsoft is being unfairly scapegoated for the industry's struggles

   

Most of us suspected PC sales were going to decline this year; it was pretty much a given after global sales were first pegged to slow to 4.4% growth in 2012, then revised to veer into negative territory — a 1.2% decline — for the first time in 11 years.

In fact, one key indicator that things weren’t going to get better was Microsoft’s (NASDAQ:MSFT) new Windows 8 operating system, which launched in the fall of 2012 and faltered from the get-go. Now, though, many are calling it not just an indicator of the slowing market, but a cause.

Analysts at IDC announced earlier this week that worldwide PC shipments dropped an unprecedented 13.9% in the first quarter of 2013 — twice as much as estimated and the worst result since sales tracking of PCs began. On top of that, IDC minced no words in largely blaming Microsoft, saying:

“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.”

Indeed, calls have been growing for Microsoft to do something about the Windows 8 user interface amid reports that sales of the new OS were “horribly stalled.” It appears that Microsoft’s decision to radically overhaul the UI and adopt a tablet and touch-centric approach has scared off users accustomed to their Windows desktop.

But, really, blaming Windows 8 for the decline overlooks countless other factors contributing to the shift away from PCs.

To start, the bulk of the decline in PC sales is accounted for by two companies: Hewlett-Packard (NYSE:HPQ), with shipments down nearly 23%, and Dell (NASDAQ:DELL), with shipments down 15%. While a tepid response to Microsoft’s new OS may not have resulted in the boost these PC manufacturers were hoping for, both companies are in trouble … and have been for some time.

With that in mind, the sales decline has been long and steady — not tied to Windows 8.

On top of that, consider Apple (NASDAQ:AAPL). The Cupertino company’s Macs and MacBooks have been bucking the PC sales decline trend for the most part. Plus, Apple was anticipating a stellar holiday quarter with a refreshed lineup of ultra-thin iMacs, an updated Mac Mini and a Retina display 13-inch MacBook Pro.

But Apple’s PC sales dropped 21% year-over-year and 16% from the previous quarter. There were factors at play that hindered sales, such as manufacturing challenges with the new PCs that put a crimp on supply, but that can’t account for the whole slide. And Apple’s computers run OSX, not Windows, so there’s no way to lay blame at Microsoft’s feet for this one.

Instead, PC alternatives are the bigger reason for the shift across the board — not one new OS.

First off, PC upgrade options have become easier and cheaper than ever in the past few years, while also offering a bigger boost than in the past. The big game-changer is solid state drives, which dramatically increase computer boot time and make many tasks much speedier. A 256GB SSD that went for $550 in 2010 can now be had for $150. By goosing the RAM and replacing the hard disk with an SSD, many consumers are breathing new life into their older PCs for much less than buying a new one.

Next, there’s the growing phenomena of a “PC on a stick” — devices that don’t count as a PC sale, but replace a desktop PC. These powerful, thumb-sized gadgets plug into a TV and run Google’s (NASDAQ:GOOG) Android operating system. They are becoming increasingly popular in emerging markets, but are also appealing to a segment of U.S. buyers. A $50 Mini PC may not run Windows, but gives full access to Google Play apps for gaming, social media and productivity, supports a wireless keyboard and has sufficient onboard storage to hold docs, music, photos and even a movie or two.

And of course, the biggest factor in the PC shift is tablets. Tablet sales are expected to overtake PC sales in 2013 and keep going from there. While many in the PC industry had hoped that tablets would complement computers instead of replacing them (the “PC Plus” viewpoint), it’s clear that tablets are increasingly replacing PCs (the “Post-PC” viewpoint).

That’s not to say that PCs are dead in the water or will ever disappear, but that PC sales have entered a period of slow decline as tablets grow more popular. If you need a computer in your home for surfing the web, updating Facebook (NASDAQ:FB), doing some casual gaming or maybe watching some YouTube videos, you used to buy a cheap PC from Dell. Today, you’re more likely to buy an iPad. It’s less expensive, portable and takes up way less space.

And it has nothing whatsoever to do with Windows 8.

Granted, you certainly can point a finger at Microsoft for perhaps going too far with the radical interface and scaring some potential buyers away. But realistically, most PC manufacturers are still offering Windows 7 as an option.

Heck, Microsoft may well tweak the operating system and make it easy for users to boot straight into the familiar desktop — problem solved — and that still won’t result in a PC sales recovery.

Because in the end, the writing’s on the wall. The PC industry is in a decline and the most spectacular Windows 8 launch in the world would have done nothing to change that.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/2013/04/dont-blame-windows-8-for-falling-pc-sales/.

©2014 InvestorPlace Media, LLC

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