Analysts at IDC said Friday that the launch of Windows 8 in October will be directly responsible for boosting the flat U.S. PC market into a period of moderate growth next year. And they were surprisingly specific about how big a bump Microsoft’s new operation system will deliver.
David Daoud, research director of personal computing at IDC, said the firm is attributing 5 percentage points of U.S. PC market unit growth to Windows 8.
From Flat To Up
“In other words, for 2013, the market otherwise would have been flat,” Daoud told ReadWriteWeb. “But for Windows 8, we boost it by about 5%, so that gives it 5% growth. That’s essentially the premium given to Windows 8.”
On Thursday, IDC reported that PC growth was slowing in advance of Windows 8’s launch in late October. Just 367 million PCs will ship into the market this year, up less than 1% from 2011 and marking the second consecutive year of growth below 2%, IDC said.
Despite the advent of Windows 8, IDC also reduced its worldwide PC forecast for the next few years. IDC now estimates that that worldwide PC shipment growth will average 7.1% from 2013-2016, down from the 8.4% compound annual growth rate (CAGR) previously forecast for 2012-2016. IDC did not formally break out numbers for individual regions.
Next year, however, worldwide PC sales in units should jump from 0.9% this year to 6.5%, with growth accelerating to 7.0% and 7.5% in 2014 and 2015, respectively. Much of that demand will come from emerging markets, whose residents are still buying their first PCs, as well as purchasing Windows 8 replacements for those they already own.
Part of IDC’s adjusted forecast can be explained by its definition of a PC: IDC still defines a PC as a box with an associated keyboard, whether it be a notebook or desktop computer. As more consumers choose tablets, which typically lack those discrete keyboards, the number of “PCs” sold decreases. Daoud also said that IDC factored in macroeconomic conditions; although U.S. GDP growth is expected to be about 2.0% next year, Europe is struggling and the Asia-Pacific region is “cooling off,” he said.
Windows 8 Driving PC Differentiation
One way that PC makers plan to cope is by using Windows 8 to drive new kinds of PCs. The Windows 8 PC designs Daoud has seen show that PC makers plan to differentiate their products. “So we do think there is the opportunity for growth,” he said.
Still, Daoud wasn’t prepared to cast Windows 8 as an unmitigated success, citing increased uncertainty “Windows 8 will have positive repercussions, without any doubt,” Daoud said. “That’s why we’re witnessing consumers waiting for that operating system to hit the market.
“But there’s a lot of unanswered questions: the price point, the design, how consumers will receive the product,” Daoud added. “So it’s also a wild card… We’re certainly moving to a crossroads in the industry: we’re moving to a new OS, new user interface, user behavior, new usage model, new software delivered through the app store, which is a new delivery mechanism. So we’re seeing a totally new type of environment, meaning that consumers will need to be educated about this.”
PC Makers Getting Hammered
Given the anticipation and uncertainty surrounding Windows 8, the slowdown in PC shipments before the launch of the new operating system should have come as no surprise. But PC makers were apparently caught unprepared.
In a conference call with analysts this week, Hewlett Packard chief executive Meg Whitman acknowledged that the number of PCs sold through the channel “softened” or slowed during the second half of July, driving the amount of stock in retailers’ hands “higher than our acceptable ranges,” Whitman said. All told, the company’s commercial revenue slipped 9% and consumer revenue declined 12% year-over-year, HP said.
Dell’s results were even worse: consumer revenue slipped 22%, and a combination of weak consumer environment and macroeconomic concerns prompted Dell to cut its revenue forecast by 2% to 5%.
“In the quarter, we saw the channel drawing down inventory in anticipation of the Windows 8 launch,” Brian Gladden, Dell’s chief financial officer, reported. Dell’s strategy of maximising profits at all levels of the business failed to pay off, as the only growth the company saw was in the low-value segments, Gladden reported; high-end customers, who undoubtedly knew Windows 8 was coming, held off purchasing PCs.
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