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Microsoft's Estimate of a 14% Decrease in Worldwide PC Shipments Is The Largest Decline

Tags: Microsoft

Microsoft Took another hard knock this month when top tech researchers laid much of the blame for dwindling first-quarter PC sales on the beleaguered Windows 8 operating system.

Estimates of first-quarter shipments, from both IDC and Gartner, paint a gloomy picture of the PC industry -- a sector that Microsoft still needs to be strong.

IDC said its estimate of a 14% decrease in worldwide PC shipments is the largest year-over-year decline it has ever seen in its nearly two decades of tracking those numbers. Gartner pegged the global PC downturn at 11%.

While a drop was expected, its size had one analyst searching for words. "It's brutal," said Bob O'Donnell of IDC. "These are disastrous numbers. Huge."

IDC cited a now-familiar litany of confusing Windows 8 traits that are causing users to shy away from new PCs: The bold-but-radical move to the tile-based "Modern" user interface; the removal of the Start button and menu from the "Classic" desktop UI; and a touch-first strategy.

IDC analyst David Daoud listed other factors, including the saturation of the PC market, especially in developed countries like the U.S., the fact that PCs bought since 2008 remain "good enough" for users, and stagnant economic conditions in some parts of the world.

The PC numbers are but the latest threat to Microsoft's influence and relevance in the technology industry.

The company in recent years has been hurt by a shift to tablets and smartphones and is threatened, even in its enterprise stronghold, by new demands from business users -- especially those who are spearheading the bring-your-own-device (BYOD) movement, said Gartner analyst Carolina Milanesi.

Unless Microsoft can turn around its faltering mobile strategy, it risks losing its prominent standing in an industry it has dominated for decades, she said.

"They need to win the consumer battle," Milanesi said. "To remain relevant, to remain an influencer, [Microsoft needs] consumers to seek out its products."

Even if it loses relevance, Microsoft will remain a major company for years to come because of its place in the enterprise, noted Frank Gillett, an analyst at Forrester. "Because of the huge installed base of Windows, and sales that will continue to grow gradually, Microsoft will remain relevant in the enterprise," he said.

But even there, Microsoft faces big challenges.

For instance, many corporate and government workers are flexing their muscles by bringing in their own devices, which in many cases aren't powered by Microsoft operating systems. "They'll still be the dominant operating system, but they'll have to deal with BYOD," Milanesi said.

Analysts did note that Microsoft is making some encouraging moves, most notably its work on "Blue," the code name for both a refresh of Windows this year and for a multiyear initiative designed to dramatically speed up the development and release tempo of the platform to put it on a more equal footing with the release pace of mobile operating systems.

Microsoft has time to correct its course, but the window is closing.

"2013 is still a transitional year, I think, even from a consumer perspective," Milanesi said. "But 2014, starting with this year's holidays, is where we need to see some momentum from Microsoft. Blue getting to market and different form factors may be the start."

Source: http://www.computerworld.com/s/article/9238520/Microsoft_faces_a_loss_of_relevance
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Microsoft Faces a Loss of Relevance