Windows XP upgrades over, UK businesses are buying fewer PCs

UK businesses have suddenly stopped buying PCs, with first quarter commercial sales plunging 17 percent year-on-year according to IDC’s Q1 2015 figures. Consumer sales were much brighter, but most of the action was thanks to low-spec laptops running Windows with Bing.

As is often the case, the picture is complicated and depends on sector and country to some extent but the bottom line from IDC is that that businesses in the UK and many parts of Europe are simply buying fewer PCs.

It sounds like bad news but a drop of some kind in the UK and EMEA business sector was expected. A year ago businesses were finally dropping older XP machines for new replacements, boosting numbers a bit. That bulge has now passed.

Actual shipments in Western Europe (IDC measures channel shipments not sales) were down only 2 percent for Western Europe specifically, caused partly by currency fluctuations that raised prices. Total sales for EMEA were 20.2 million.

Hiding within that are large drops in specific markets, including the double digit falls in the UK and German commercial sectors with France flat.  IDC hasn’t released its full UK breakdown yet beyond the headline business decline but it looks as if the commercial plummet was more offset by a rise in demand from consumers where Windows with Bing and other cheap PCs have been a big hit.

According to IDC’s EMEA research manager for PCs, Maciek Gornicki, it looks as if the British public can’t get enough of these machines. They are cheap – under £200 ($300) in many cases – and not much dearer than the tablets that have been eroding the popularity of the PC for several years.

According to Gornicki, the effect of cheap Windows PCs has been to corrode the appeal of mid-priced systems. The consumer PC market now has two sectors – expensive business machines and cheap home equivalents.

As for Chromebooks, “[They] are not picking up as quickly as Google would want,” he said. In European terms, “the UK is the biggest market for Chromebooks.”

A lot of the problems have to do with availability. Chromebooks had been launched in the Nordics but the machines didn’t seem to have been available in the shops to meet demand.

It’s almost as if vendors are frightened to sell too many Chromebooks in case they simply cannibalise PC sales that might one day cause them problems with Microsoft.

And the rest of the year?

"Unfavourable exchange rates as well as changes to the Bing promotion will most likely lead to drop in shipments in the coming quarters, particularly in the consumer space, as vendors are expected to focus on depleting the 4Q and 1Q inventory and limit new shipments,” predicted Gornicki.

“The commercial market is also likely to remain negative, with many renewals completed in the past five quarters."

The big question is whether Windows 10, due at the end of July if leaks are correct, will make difference. According to Gornicki, probably not much. By offering a no-cost upgrade, Microsoft has changed the whole cycle - users no longer had to buy a new PC or stump up substantial sums of money for a license to get the latest version of Windows.

Cheap systems will help sales a lot going forward but the days when PCs were an easy and profitable market appear to be over.


Copyright © 2015 IDG Communications, Inc.

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