Windows 8 fails to lift the PC market in Q4

IDG News Service - Microsoft's Windows 8 operating system failed to provide a spark to PC sales during last year's fourth quarter, with worldwide unit shipments falling by 6.4% compared to the same quarter in 2011, according to research by IDC released on Thursday.

Windows 8, the successor to the popular Windows 7, was released in late October, with PCs and tablets with the new OS shipping almost immediately after. But PC demand continued to be sluggish and the new OS failed to provide a spark, IDC said in a statement.

The problem was compounded by challenging economies and people holding back on spending to upgrade PCs, IDC said. The PC market also took a backseat to alternate computing devices like smartphones and tablets, which are being used increasingly for basic computing, Web browsing, video and email.

Global PC shipments in the fourth quarter totaled 89.8 million units, compared to 95.9 million units in the fourth quarter of 2011. Shipments fell by 6.4% year over year, while IDC originally projected a 4.4% decline.

Windows 8 has a new touch user interface that is significantly different from Windows 7. But PC makers failed to communicate the benefits of the new operating system, said Jay Chou, senior research analyst at IDC.

The demand for PCs with touchscreens has been lackluster, and demand could grow as more touch models become available this year, Chou said. Consumers expected a larger number of tablets and touch PCs with Windows 8 in the fourth quarter, but only saw traditional PCs not optimized for touch.

Another problem has been the high prices for ultrabooks, a new class of thin and light PCs backed by Intel. The category was introduced as a way to rejuvenate the PC market, but ultrabook prices have mostly exceeded $699, stretching beyond the $1,000 mark.

"As Windows 8 matures, and other corresponding variables such as ultrabook pricing continue to drop, hopefully the PC market can see a reset in both messaging and demand in 2013," Chou said.

Intel earlier this week at the International CES show said it would strive to bring the starting price of touch ultrabooks down to $599 by the end of this year. Advanced Micro Devices, which makes chips for laptops, said it wanted to bring touch laptop starting prices down to $499.

Windows 8 laptop shipments were also poor as companies tried to clear off the remaining inventory of Windows 7 laptops, IDC said. During the holiday shopping season, a large number of laptops with Windows 7 were available in U.S. retail stores.

Hewlett-Packard was the top PC vendor worldwide, and the company's shipments stabilized after a few quarters of precipitous drops as the company was dealing with instability in its PC division. HP shipped 15 million PC units, a drop of 0.6% from the same quarter last year, and a 16.7% market share. During the third quarter, HP's PC shipments dropped by 16.4% year over year.