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Microsoft's bet on touch PCs fails to pay off

Buyers reject touchscreen notebooks, spooked by higher prices and concerns about value of Windows 8's touch UI

August 12, 2013 06:08 AM ET

Computerworld - Microsoft's bet that touch would propel Windows 8 has run into a major snag, an industry analyst said Friday: Consumers see little reason to pay premium prices for touch-enabled laptops.

According to IDC, touch-ready laptop shipments are significantly lower than optimistic forecasts by computer makers such as Acer, whose president, Jim Wong, said in May that by the end of the year 30% to 35% of his company's notebooks would sport touchscreens.

"We forecast that 17% to 18% of all notebooks would have touch this year," Bob O'Donnell, an analyst with IDC, said in an interview Friday, referring to the research firm's own estimates earlier this year. "But that now looks to be too high, to be honest." He said IDC would probably drop its touch estimates to between 10% and 15% of all laptops.

Others have already pegged touch to that range for the year. In April, NPD DisplaySearch said that about 12% of notebooks sold in 2013 would be equipped with touch.

Those numbers bode ill for Microsoft, which has tied Windows 8 to touch on all platforms, not just tablets. It bet that buyers would find Windows 8 attractive because it was designed as a touch OS, repeatedly describing the radical overhaul as "touch-first." The Redmond, Wash. developer assumed that once customers tried Windows 8 on touch-equipped traditional form factors, like clamshell-style notebooks, they would love the operating system.

That thinking led Microsoft months ago to blame Windows 8's sluggish start on too-few touch PCs at launch.

"Frankly, the supply was too short," said Tami Reller, at the time the CFO of the Windows division, in January. "I mean, there was more demand than there was supply in the types of devices that our customers had the most demand for."

Microsoft's message was clear: If touch PCs had been more prevalent, Windows 8 would have gotten out of the gate faster. And once touch was more widely available, the new operating system would power a rebound in PC sales.

But half a year after Reller's finger-pointing and nine months after Windows 8's debut, most customers are taking a pass on touch, said O'Donnell.

One reason is that touchscreen laptops remain more expensive than non-touch models. Many industry watchers expected that prices would quickly fall as demand climbed and computer makers scaled up to crank out more touch-enabled PCs.

"Touch was too expensive last year," said O'Donnell. And although he acknowledged that prices have fallen, they have not dropped far enough. "They're generally in the $699 to $799 range," he said. That's hundreds more, sometimes as much as double the price, of non-touch notebooks.



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