Windows 8 blamed as PC sales slide

April 11, 2013

Has the shift from PC to tablet finally reached the point of no return? There’s been chatter about the “post-PC” era for years, particularly after the introduction of the iPad. But recent data suggest that we may finally have reached the tipping point.

Since the start of the year, the PC market has seen its steepest quarterly decline ever — 13.9 percent, according to a report from International Data Corp. That news comes on the heels of a Gartner report predicting the PC market will shrink as much as 3.5 percent over 2013 in favor of ultra-light notebooks and tablets.

It’s not necessarily that users are dropping PC use altogether, but rather that they aren’t interested in replacing their PCs because tablets are becoming the center of their tech lives. As Gartner analyst Carolina Milanesi said in the firm’s press release, “As consumers shift their time away from their PC to tablets and smartphones, they will no longer see their PC as a device that they need to replace on a regular basis.”

None of this is particularly surprising. But it is bad news for Microsoft, whose new Windows 8 system is being partly blamed for the market’s poor performance. When the company introduced Windows 8 in October, the operating system was supposed to help a flagging PC market gain — or at least lose less — ground against tablets, with a new touch-based interface. Instead, sales of PCs have dropped faster, and analysts are saying that sales aren’t coming back.

“At this point, unfortunately, it seems clear that the Windows 8 launch not only failed to provide a positive boost to the PC market, but appears to have slowed the market,” said Bob O’Donnell of IDC in a press release. “Microsoft will have to make some very tough decisions moving forward if it wants to help reinvigorate the PC market.”

Microsoft has been heavily promoting Windows tablets and hybrid PCs over desktops — particularly its own keyboard-toting Microsoft Surface devices, which straddle the line between tablet and PC. It has also emphasized cloud services, such as its Office suite, which can be used across a variety of gadgets, including smartphones and tablets. All this is party of Microsoft’s larger push for its smartphones and tablets, as the company has to fight to take a third-place spot behind Google’s Android mobile operating system and Apple’s iOS.

And that competition is expected to grow even fiercer, BGC analyst Colin Gillis said in a note to investors this week, as Google eyes the ultra-portable market with its Chromebook models.

Gillis downgraded Microsoft from a “buy” rating to “hold,” citing the PC market slowdown and saying that Microsoft has “no fast fixes” for adapting to these shifting trends.

Microsoft stocks were down about 4.7 percent to $28.86 a share in late morning trading Thursday.

Related stories:

Microsoft Xbox event planned for May, reports say

Microsoft to Facebook: We had the idea for ‘Home’ two years ago

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Hayley Tsukayama covers consumer technology for The Washington Post.
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