Don't blame Windows 8 for PC slowdown; Apple hit, too

Retail expert points finger at touch PCs' too-high prices for industry's woes

Don't blame Windows 8 for plummeting PC sales, a retail analyst said today.

"It wasn't about Windows 8, it was much more about the price challenges facing OEMs," said Stephen Baker of the NPD Group, citing U.S. retail sales data the firm collected in the first quarter. "People want cheap touch devices, and that's where Windows 8 devices can't compete right now."

While IDC and Gartner last week said U.S. PC shipments dropped 13% and 10% in the first quarter compared to the same three-month span in 2012, Baker said retail sales were essentially flat.

And rather than blame Windows 8, as IDC did last week, for the poor numbers, Baker said the slow sales stemmed from a lack of touch hardware at prices consumers would swallow.

Windows 8, launched last October, is Microsoft's radical attempt to revitalize its OS by stressing touch over mouse and keyboard.

Touch-ready PC notebooks have been selling at relatively high price points: Baker said such systems averaged $750 during the quarter, with 75% of those above $500. Most buyers balked at those prices, passing on Windows 8 not because they dislike the operating system but because they wouldn't pay the going rate for hardware that exploited it.

Only about 10% of the Windows 8-equipped notebooks sold in the three-month period were touch-enabled.

Until prices come down, Baker said Windows 8 machines will continue to struggle. Those prices don't have to be cut-rate, but they do have to be lower than they are now.

"The operative thing is that they don't all have to be in the $400 to $500 range," Baker said of touch PCs. Consumers see the value in touch, and are willing to pay more for it. Just not as much as the current price tags.

"They have to come down $100, $150," said Baker. "At [an average of] $600, there's room for some decent entry-level kind of products in the $450 to $500 range." Baker also pointed out that when retailers offered $100 discounts on touch-enabled PCs in late February and early March, sales picked up.

Bolstering his view that Windows 8 was not the primary reason for the PC industry's problems was the fact that Apple also experienced flat sales in the U.S. Apple was as affected by competition from cheap touch tablets -- including its own iPad and iPad Mini -- as were Windows-powered PCs.

"The market is flat, and no one is outperforming the others," said Baker, including Apple.

NPD's data on Macs, collected at point-of-sale for both brick-and-mortar stores like Best Buy and online outlets such as Amazon.com, was out of sync with the estimates from IDC and Gartner. The former pegged Mac shipments as down 7.5% for the first quarter, while the latter tagged them as up 7.4%, an irreconcilable 15-point difference.

Apple will reveal its first-quarter sales figures Tuesday, April 23, in a conference call with Wall Street analysts. Meanwhile, Microsoft will release its quarterly revenue data, including that for Windows, on Thursday, April 18.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at  @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is gkeizer@computerworld.com.

See more by Gregg Keizer on Computerworld.com.

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