Only Windows 8 can save the PC market now
Three days ago, near the end of his last Consumer Electronics Show keynote, Microsoft CEO Steve Ballmer boomed: "There's nothing more important at Microsoft than Windows". He better mean it, because the Windows PC is in big trouble. Fourth-quarter US personal computer sales were outright disastrous, while overall 2011 global growth was the worst since 2001. Recession that year devastated PC shipments, despite Windows XP's late-year launch.
There is no single reason for weak shipments during fourth quarter, when holiday sales typically give PCs a boost: Economic crisis in Europe, hard drive shortages following flooding in Thailand and weak demand among consumers, among others. There is a convergence of factors -- a cascading effect that disproportionately affects Windows PCs compared to Macs. On the Windows side, only Lenovo has proved immune. Apple meanwhile continues to sell Macs hand over fist, as they say, while Windows is at risk.
Worst Year Since 2001
On Tuesday, Tami Reller, chief financial officer for Windows and Windows Live, warned that the division's fourth-quarter results could fall below analysts' estimates (That's her above from the Microsoft CES keynote). She largely blamed the natural disaster in Thailand and estimated that PC shipments fell about 1 percent year over year.
Late yesterday afternoon, Gartner and IDC both released preliminary fourth quarter and full 2011 PC shipment data. Reller's statement indicated something unexpected, because of the stated reason. However, Gartner and IDC say the declines they observed -- 1.4 percent and 0.2 percent globally, respectively -- were in line with their forecasts. US declines were substantially greater, 5.9 percent by Gartner's reckoning and 6.71 percent by IDC's. The full year wasn't much better, with IDC calling 2011 the "second worst year in history" for US PC shipments.
The hard drive shortage is a mitigating factor that obviously cannot be ignored, but Microsoft is wrong to principally lay blame there. It's not like retailers sold out of PCs during the holidays because they couldn't get enough stock on the shelves. Shipments into the channel were down, but sales to businesses or consumers weren't necessarily up -- that is for most vendors. Gartner calls the hard drive shortage's fourth-quarter impact "limited". The full force is still ahead, and it comes during a quarter of lower sales anyway. IDC says that first quarter is when "the full impact of the HDD shortage is felt". Gartner is a bit more dismal, warning "first half" of 2012. [betanews]