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Gloomier PC forecast means more trouble for Windows

But Microsoft has plenty of 'cards to play' to maintain overall revenue, says analyst

May 28, 2013 03:33 PM ET

Computerworld - IDC today drastically lowered its forecast for PC shipments in 2013, a prediction that if accurate means more bad news for Microsoft's Windows 8 operating system.

"Lower PC sales are certainly not a positive for Microsoft," said Loren Loverde, an analyst at IDC who heads the research firm's PC tracking data group. "This will have a direct impact on Microsoft."

IDC, which earlier this year had assembled a rosier forecast, predicting that shipments would slightly increase in the second half of 2013 to end the year down only 1.3% compared to 2012, revised its estimates today.

According to the new forecast, PC shipments will decline 7.8% in 2013, drop another 1.2% in 2014, and along with the 4% decrease already posted for 2012, create an unprecedented three-year contraction. Not until 2015 will the industry show shipment gains, when the market expands by an estimated 1.4%.

Even in 2017, as far out as IDC looks into the crystal ball, the PC shipment total of 333 million will still remain below 2012's 349 million and 2011's peak of 363 million.

Because Windows revenue usually stays in sync with PC shipments, the sharp downturn in the latter will certainly be reflected in Microsoft's financials, agreed Loverde.

Microsoft has already taken a beating over Windows 8, not because of falling revenue in the division -- in the first quarter, income after adjustments was flat even as PC shipments plummeted 14% -- but because the upgrade did not boost hardware sales, as has been past habit.

Other IDC analysts, in fact, have blamed Windows 8's lukewarm reception for a big part of the PC industry's malaise.

Loverde backed off that today, saying that Windows 8 was only one of several contributing factors IDC had taken into account when it released its Q1 estimates.

The revised, and much gloomier, forecast, was prompted not only by those factors -- Windows 8's performance, economic uncertainties, lack of compelling hardware that took advantage of the touch-enabled OS -- but also by the realization that the shift toward mobile would be more substantial than expected.

"There's a fundamental shift under way in how people are computing," Loverde asserted. "Computing is much more mobile, people's priorities are shifting, and that trend doesn't seem to be turning anytime soon."

While PCs aren't going away -- something Loverde stressed even as IDC predicted a plunge in shipments this year -- tasks that now are considered core to computing, including social network interactions, photograph taking and sharing, and email can be accomplished on non-PC devices like smartphones and tablets.

In other words, IDC sees the PC's chief chores shrinking in number, resulting in fewer purchases by consumers and corporations as users and businesses stretch out replacement cycles or in some cases, simply swear off PCs.



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