Windows 8 takes blame for 'brutal' PC sales slide

Microsoft's new OS hurts industry as PC shipments contract 14%

Microsoft's Windows 8 took another knock Wednesday as research firm IDC laid much of the blame for the first quarter's historically-horrible PC numbers at the feet of the beleaguered operating system.

Yesterday, IDC and rival Gartner released their estimates for 2013's first-quarter PC shipments. The former painted a gloomy picture of the industry, saying that the 14% decline, year over year, was the largest ever in its nearly two decades of tracking.

Gartner pegged the global downturn at 11%.

While the drop was expected -- IDC, for example, had forecast an 8% contraction year over year -- yesterday's figures had one analyst searching for words. "It's brutal," said Bob O'Donnell of IDC. "These are disastrous numbers. Huge."

O'Donnell was one of the IDC analysts who blamed Windows 8 for the unprecedented fall-off in consumer PC purchases during the quarter. "Not only has Windows 8 not helped, but it's actually hurt PC shipments," he said in an interview.

In a statement that accompanied the firm's estimates, O'Donnell ticked off a now-familiar litany of Windows 8's confusing traits that caused consumers to shy from new PCs, including the bold-but-radical move to the tile-based "Modern" user interface (UI), the removal of the Start button and menu from the "Classic" desktop UI; and the touch-first strategy Microsoft's taken.

"The costs associated with touch PCs have made PCs a less attractive alternative to dedicated tablets and other competitive devices," O'Donnell said in the statement. "Microsoft is going to have to make some very tough decisions moving forward if they want to help reinvigorate the PC market."

Jay Chou, another IDC analyst, also tapped Windows 8 for contributing to the decline in PC shipments. "Users are finding Windows 8 to offer a compromised experience that doesn't excel either as a new mobile interface or in a classic desktop interface," he said in the same statement. "The result is that many consumers are worried about upgrading to Windows 8."

David Daoud, however, said that Windows 8 is only one of several factors that suppressed PC shipments. "This was a perfect storm, and Windows 8 was just one issue among many," IDC analyst Daoud contended in an interview.

He ticked off several other contributors, including a general saturation of PCs, especially in developed countries like the U.S.; the fact that PCs bought since 2008 or 2009 remain "good enough" for what consumers want out of a desktop or laptop; and in some parts of the world, stagnant economic conditions.

But like his colleagues, Daoud agreed that Windows 8's lackluster acceptance played a part. "There's a disconnect between what the OS wants to do and what the end user sees," said Daoud, referring to the touch features of Windows 8 and the higher price of touch-ready PCs.

Daoud expected that the bad news for the PC business -- and Microsoft, which largely relies on sales of new systems to fuel Windows revenue -- won't be over soon, although he was optimistic that things would improve in the second half of the year.

"There is a correction the industry has to go through," said Daoud. "The addressable market going forward will certainly be smaller than this industry has been used to from 2002 until 2012. And that correction is likely to continue."

In some places, the downward turn is the new normal: The U.S. has posted smaller shipments year-over-year in nine of the last 10 quarters. Globally, the first quarter is the fourth consecutive to record fewer shipments than the year before.

Daoud rejected the idea that the industry is seeing the death rattle of the PC. "Do we need the PC? Definitely. They're going to be around for a while."

Gartner's numbers were a bit brighter in that it estimated worldwide PC shipments at 79.2 million for the quarter, compared to IDC's 76.3 million. And although Gartner did not call out Windows 8, it implicitly said that the new OS hasn't helped boost PC shipments.

"Similar to other mature markets, the U.S. will see the installed base of consumer PCs decrease going forward," said Gartner analyst Mikako Kitagawa in a statement. "This is because many of these systems will not be replaced with PCs; they will be displaced by other devices, or simply retired."

Last week, Gartner's Carolina Milanesi said declining PC sales and booming business for tablets and smartphones were putting the heat on Microsoft. The Redmond, Wash. developer, she said, must manage to grab consumers' attention with its tablets and phones in the next 20 months, or see its influence and relevancy wane.

The quarter's PC shipment estimates add fuel to Milanesi's argument, as Gartner's previous bet was that the PC market would contract by 3.5% in 2013, less than a third as much as the first-quarter drop.

Microsoft will hold its quarterly earnings call with Wall Street analysts next week, on April 18, starting at 2:30 p.m. PT, when it will reveal revenue figures from its Windows division.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, or subscribe to Gregg's RSS feed . His e-mail address is gkeizer@ix.netcom.com.

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