Gartner is reporting the biggest slump in PC sales for almost two years. The second quarter report saw 68.4 million units shifted in the three-month period, a year-on-year reduction of 9.4 percent, and the steepest drop in seven quarters.
What’s more, the prediction is that the next quarter will see a further reduction of 4.4 percent.
It seems that the dislike of Windows 8, coupled with the impending arrival of Windows 10, has battered the sales of new PCs.
The fact that most PC users will be entitled to a free upgrade, coupled with the fact that chip and RAM technology haven’t moved on at a spectacular pace this year, has created a perfect storm among consumers who are waiting it out for their machines to be born again on 29 July (or 30, or 31, or possibly 1 August).
If you’re reading this and thinking ‘It’s just a dying market’ you’re not wrong, but you have only to look at today’s IDC figures to see that this really is made of Microsoft.
IDC is even more pessimistic than Gartner, quoting 66.1 million units, down 11.8 percent year on year.
But more importantly, when drilled down to the OEMs, you can see where the real problem lies. Apple is the only company in the top five not rooted in the Windows ecosystem.
It is also the only manufacturer to see a rise in its market share, and is now the fourth biggest vendor in the world, up 16.1 percent. Acer at number five has seen its share plummet by 25.9 percent.
Things were a bit rosier this time last year, because businesses were migrating away from Windows XP (not all of them, mind). This year, there’s no ballast and a lot of hesitation to see exactly how Windows 10 does before big orders start being deployed in enterprises.
“The price hike of PCs became more apparent in some regions due to a sharp appreciation of the US dollar against local currencies,” said Mikako Kitagawa, principal analyst at Gartner.
“The worldwide PC market experienced unusually positive desk-based growth last year due to the end of Windows XP support. After the XP impact was phased out, there have not been any major growth drivers to stimulate a PC refresh.”
IDC’s Loren Loverde, VP of worldwide PC trackers and forecasting, said: “We’re expecting the Windows 10 launch to go relatively well, though many users will opt for a free OS upgrade rather than buying a new PC.
“Competition from 2-in-1 devices and phones remains an issue, but the economic environment has had a larger impact lately, and that should stabilize or improve going forward.”
Meanwhile, Apple, despite having a tiny market share for its OS X operating system at just 7.5 percent, according to this month’s Netmarketshare figures, has managed to avoid being the winner or loser OEM by being the referee, which is a nice trick if you can do it.
Both analyst firms see the top three remaining as Lenovo, HP and Dell. Nothing to see there.
Seasonally adjusted, that would be down 1-2 per cent on a monthly basis and mean that actual chip sales will likely fall 15-16 per cent on a yearly basis. The reason for the fall, the analysts say, is due to disk drive shortages in Thailand which have forced costs to rise. The PC market is likely to be more back-loaded this year, the report notes.
Handset chip sales were likely also soft in January. Chips for cars were softer after a strong December. Other quirks, such as an early Chinese New Year also contributed the low figures in January. Although several chip makers indicated the inventory problems in fourth quarter had ended, Carnegie thinks that the indicator shows that the trend will continue into this year.
PC’s are the biggest chip users, followed by cell phones. Cars, appliances, base stations, and instruments are other significant users, the analyst said.
HP has appointed former Boeing Company executive John Hinshaw as CIO.
In the newly created role of EVP of Global Technology and Business Processes, Hinshaw will oversee IT and shared and administrative services, including indirect and services procurement. Hinshaw also will be in charge of optimising business processes across the company.
Hinshaw was previously VP and general manager of Boeing Information Solutions at The Boeing Company, where he was responsible for running a new business.
Prior to Boeing, Hinshaw was SVP and CIO at Verizon Wireless. Earlier in his career he also served as a consultant with Accenture.
Hinshaw will join HP as a member of its executive council on 15 November, reporting to HP president and CEO Meg Whitman.
Meanwhile, HP also announced that Craig Flower has been promoted to SVP and CIO. Flower will be responsible for data management, application architecture, global business intelligence, sales, and product development and engineering applications. Flower has held a wide range of IT management positions within HP since 1984.
The new appointments come at a time when HP is losing executives right and left. Earlier this week, HP lost its CTO of the HP personal systems group, Phil McKinney, when he announced this retirement.
Less than two weeks ago HP’s chief strategy and technology officer Shane Robison announced his retirement.
In September, HP abruptly removed controversial CEO Leo Apotheker from his corner office and replaced him with Meg Whitman.
In its announcement, HP said it conducted a “data-driven evaluation” of the impact of cutting off its Personal Systems Group (PSG) and concluded that it was just too important to its supply chain, procurement and overall brand.
“HP objectively evaluated the strategic, financial and operational impact of spinning off PSG. It’s clear after our analysis that keeping PSG within HP is right for customers and partners, right for shareholders, and right for employees,” Meg Whitman, HP president and CEO, said in a statement. “HP is committed to PSG, and together we are stronger.”
HP is the world’s largest maker of personal computers.
As Whitman considered a spin-off, rival CEO Michael Dell worked to capitalize on HP’s self-imposed uncertainty while also offering advice. Dell believed a spin-off or sale was a bad idea, and argued that despite sluggish PCs sales, “it’s a growth market.”
Dell has predicted that the number of PCs in the world would grow from 1.5 billion now to about 2 billion in a few years.
Other critics of the idea argued that the separating the PC division from HP’s other product lines would hurt the company’s ability to sell into enterprises and would cost it some leverage in buying parts, such as disk drives.
This is Whitman’s first big strategic decision for HP. In keeping the PC division, she is holding on to a division that generated $40.7 billion in revenues in 2010.
But in an earnings call with Wall Street analysts on Thursday afternoon, Microsoft said that revenues from the Windows group actually climbed by 3%. It called that “in line” with the quarter’s global PC sales growth.
The difference in the two numbers was due to the inflated revenue in the comparative quarter – 2009′s fourth – which had been boosted by a Windows 7 pre-launch “spike,” and by the $1.71 billion in revenue that had been deferred to account for the free upgrades Microsoft handed out to customers who bought Vista in the months just before Windows 7 launched.
When the spike and deferred income revenues in 2009′s fourth quarter are removed, Microsoft said, Windows’ revenues of $5.05 billion inched up that 3% from last year’s $4.92 billion.
Four quarter revenues were 5% higher than the $4.79 billion in 2010′s third quarter. Rob Helm, an analyst with Directions on Microsoft, tried to explain Microsoft’s accounting.
“When the launch ‘spike’ and the deferral are both ignored, Windows revenues climbed 3%,” said Helm. “When just the spike is ignored, Microsoft took a 5% hit.” Only when both the spike and the deferral are included does the balance sheet show a 30% decline, he stated.
Helm said that the Windows 7 launch spike boosted 2009′s fourth quarter by $560 million. “My guess is that it’s a matter of computer manufacturers buying a bunch of extra licenses then, anticipating the launch of Windows 7, and increased PC sales,” he said.
But the number to focus on is “3%,” the year-over-year increase in Windows revenues when all the deferred and spike-driven income is tossed aside. “It just shows how tightly Windows 7 sales are yoked to PC sales,” Helm said. “When the PC market slows, so does Windows.”
Earlier this month, both Gartner and IDC estimated global PC sales had climbed about 3% — Gartner said 3.1%, IDC said 2.7% — in the last three months of 2010 compared with the same timeframe last year.
Microsoft noted several times that consumer PC sales slowed dramatically last quarter, adding that netbook sales had been particularly soft. Business PC purchases, however, were up. And Windows’ sales reflected those trends.
Overall, Microsoft listed its revenues at $19.85 billion, a record for the October-December quarter. Sales from the company’s Entertainment and Devices division, helped immensely by the success of Kinect and its halo effect on the Xbox 360 game console, grew by a whopping 55%, the best showing of any Microsoft group.