“Bleak” times for Microsoft and its PC partners, analyst says

Apple’s ascent to the PC throne appears to be coming at the expense of Microsoft and its allies.

While Apple has capitalized on the shift from traditional PCs to tablets, the Windows gang is seeing its traditional dominance slip away and has gained almost no traction in the tablet segment, according to a new report from market research firm Canalys. Dell is rapidly losing market share, Windows-based tablets have negligible market share and sales of devices running Windows RT, a new version of the operating system largely designed for touchscreen tablets, have been abysmal, Canalys’ report indicates.

“The outlook for Windows RT appears bleak,” Tim Coulling, a senior analyst at Canalys, said in a statement. “Hardware (manufacturers) are ignoring it.”

Worldwide, computer manufacturers shipped just 720,000 Windows RT-based computers and tablets in the fourth quarter, according to Canalys. That means that they accounted for about half of one percent of global PC market.

But even if you include other versions of Windows, Microsoft accounted for a miniscule share of the global tablet market. Of the 46.2 million tablets shipped in the fourth quarter, only 3 percent were running a Windows-flavored operating system.

That’s a huge blow to Microsoft, at least in the near-term. The company designed its new Windows 8 software specifically to make it more suitable for touchscreen devices, particularly tablets. And it created Windows RT to run on chips designed by ARM or using the ARM instruction set.

ARM chips are known for their power efficiency; they can run without a fan and allow manufacturers to create thinner, lighter-weight devices with longer battery life than they generally can with Intel-based chips. The chips are at the heart of the iPad, Amazon’s Kindle Fire and most Android tablets on the market. Making Windows compatible with ARM was supposed to allow Windows tablet makers to come out with devices that could more easily compete with the iPad and Android tablets.

But that’s not been the case. Part of the problem, according to Canalsys has simply been the price that Microsoft is charging for Windows RT. Android is available for free to manufacturers and Apple uses its own operating system in the iPad. Microsoft, by contrast, has built an empire around selling and licensing its operating systems.

But the company needs to radically change its strategy if it wants Windows RT to take off, Coulling said. Microsoft needs to do a better job of marketing the software and supporting manufacturers who use it, he said.

And it needs to slash the licensing cost — by some 60 percent, he said. That “should get (manufacturers) back onside,” he said.

But it’s not just in tablets where Microsoft and its partners are struggling. Laptop sales were flat in the fourth quarter. And Dell, long one of Microsoft’s closest allies, is really struggling.

Dell’s PC sales fell 19 percent in the fourth quarter from the same period a year earlier to 9.7 million PCs.  That gave it just 7 percent of the global market for tablets, laptops and desktops. Arch-rival Hewlett-Packard, by contrast, shipped 15 million PCs in the quarter. giving it 11% of the market . But that was only good enough for second place, trailing far behind Apple, which shipped 27 million tablets and Macs in the period.

(Photo courtesy of Dell.)

 

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  • DonS

    Microsoft should not have sacrifice its elite OS users (Admin, Engineers, programmers, by forcing a tablet OS (Metro) down their throats.) Removing customization fome the OS (Disabled the Metro interface) and isolating their loyal users base is a bigger mistake. Shame on them. It’s time for the CEO to step down.

  • Paul

    Hi Troy – I recently bought a Dell running Windows 8 and to be honest the simple truth is that Microsoft haven’t got their product right – AGAIN. The Dell itself is excellent – Inspiron Touch screen all in one -but W8 and its apps are so clunky, Bing is awful and the whole thing is full of seams! I find myself getting out of the apps page pronto and navigating the traditional way through File Explorer rather than using the Start Window interface. After all these years and all this time surely the guys at Microsoft would have realized that PC users just want something that is clean, simple, easy to navigate and that allows them to use their key Office software a Bill Gates would have wanted it himself!?!?…I recently reinstalled XP Pro on my laptop and loved its simplicity and speed…now there was an operating system :)…if they strip out the crap and give us back the core then a hell of a lot of users will be really happy. PMC

    • OrionH

      Odd, I had the opposite impression. Most Dell boxes are spec’d low, and feel and look like plastic junk. I’ve been using MacBook Pros because Windows runs faster and looks better on a Mac than on Dells and HPs. I think W8 is on target as far the interface is concerned. Windows 7 was/is great, but I like 8 and l like it more because the interface works well on the tablets where 7 would less so.

      • Paul

        …I had the same impression before I checked out their touch screen range…speed is good, quality is good and to be honest for Photoshop,Archicad and other Adobe platforms the Hardware so far keeps up…I actually owned a G4 Powerbook 17″ but dropped it because it was too slow compared to my PC…but in terms of design yeah Mac’s got it maxxed…

    • Carlos

      Hi Paul.

      I dropped Windows XP a year or two ago for Windows 7, and I’m really really happy. Clean, fast, usable.

      I haven’t tried Windows 8, but I do have a Windows Phone 7.5, and I absolutely love the UI :)

      A shame it’s not going so well for Microsoft. I still love their OS.

      • Paul

        Hey Carlos – was running 7 last year for a while and was a big move forward from Vista which quite simply chewed the big one – so far for me 8 looks pretty good but the apps and seamlessness are not there yet…maybe in the future..touch screen computer is amazing though -use the screen probably 30% of the time ( need to keep it clean now which is the issue) …funny thing about XP was that even though it doesn’t look contemporary I really did and do enjoy the simplicity of the architecture…* looks great on the phone..havenet used it there yet..perhaps a better experience awaits/!..

  • OrionH

    These reports seem at odds with Microsoft’s diversified business structure and it’s numbers.

    Looking at Surface shipment and comparing them on a sales basis to mature, well established product lines seems senseless.

    Another take is that Microsoft and it partners (Levono, Asus, and even dull Dell) will be producing Pros and maybe RTs in a variety of form factors in 2013. Apps seem to be coming out of the wood works. AND, there is still a pretty large captive audience and the prospect of selling Office on Android and iOS (MSFT is a software company).

  • http://www.woolseystudio.com Jeff Ericson

    I’m one of those new converts. After 3 top-of-the-line Dell laptops in the last 10 years, I just bought the cheapest one of the bunch – a maxed out MacBook Pro. I have to say it is hands down a better piece of hardware than the Dell, and does more, faster, with less hassle. Parallels does everything I can’t find on a Mac. Microsoft doesn’t get it – the marketing guys are running the show, and are putting out buggy, slow, bloated and not-intuitive software in an environment where the IT dept. no longer gets to specify the hardware…

    The new SAAS Microsoft is good, but may be too little too late…

  • Jun Ho Huh

    that is why i still run my win 7….i think it still the most stable OS after XP. It was Microsoft stupid decision to make win 8 for both PC and tablet…..It is very dumb idea……..

  • Ranjeet Bassi

    Ever since the developer version was out for windows 8, I have testing their releases. I love the fact that they have come up with a great operating system. This is only the start right now and it will take some time to mature. I am very excited about whats to come in the next few months of updates.

  • http://www.dynamicedge.co.uk Robert Petrie

    I don’t think it’s fair to compare iPad sales with computer sales.

    I used to work for Apple and even they don’t consider an iPad to be a competitor to a PC.

    Mac sales still only account for about 5-6% of the PC market trailing behind Windows dominant share of around 95%.

    The iPad is still the biggest player in the tablet market by a long way but in the PC market Apple machines are still a minority.

  • Pingback: Apple tops PC market again by selling 27M iPads – CNET | The News Crew

  • Pingback: Chart of the day: Apple as the world's No. 1 PC maker – Fortune

  • http://vimeo.com/52861634 Don Burnett

    Personally I feel that Dell’s design patterns and quality has been lacking for sometime.

    It’s easy to blame Microsoft and trash Windows for bad design when Dell barely has given a nod to touch products or even stayed in the game with mobile devices.

    Simply put with the hardware quality of Dell and VERY clunky thick designs I think Dell is actually the problem not the solution.

    As far as Windows on ARM goes has Dell whole heartedly embraced ARM for Windows consumer devices ?

    I see Windows RT as a marketing that is newly inventing for home users and a market segmenting thing. One that doesn’t compete with PC prices or even in that ecosphere. But also one that could be price competitive in the future with tablet devices without having someone like you complain about the PC price point.

    Microsoft made TONS of money last quarter in FACT record profits. Stop trying to SMEAR Microsoft for Dell and stodgy old PC “Box” makers not willing to keep up and innovate.

    I am sharing a video with you that goes to the heart of the revolution that folks like you are too blind to see. Maybe you can learn something from it and Microsoft’s direction.

    http://vimeo.com/52861634

    • http://gizmodo.com/5978232/intel-to-stop-making-desktop-motherboards Don Burnett

      From Gizmodo.com:

      “It’s the end of an era: Intel has announced that, over the next three years, it will wind down production of desktop motherboards to zero.

      The company will continue to supply chipsets for use by third party motherboard manufacturers—the likes of ASUS, ASRock and Gigabyte—but after 2013 it won’t make more motherboards itself, reports Anandtech. In fact, the last output from Intel will be ‘boards that accommodate its soon-to-launch Haswell architecture chips (the successor to Ivy Bridge). It’ll then wind down and not bother for its subsequent set of silicon.

      Instead, it will focus its efforts on creating form factor reference designs: mock-ups that are used internally for testing, but which often also end up as the base for third-party products. There won’t be any trimming here—so you can probably expect to hear of plenty of new ultrabook, tablet and desktop prototypes in the future. Comfortingly, none of this will see job cuts at Intel. Instead, engineers will be absorbed into other divisions. [Anandtech via Engadget]”

      Dell and “consumer” box makers need to clue in to what Microsoft is telling them their time is at an end unless they figure it out. They have made the PC a “commodity” and put themselves out of business in the process instead of continuing to innovate ? Do I feel sorry for them ? No, they looked at it as a cash cow forever. Idols die quickly..

      http://gizmodo.com/5978232/intel-to-stop-making-desktop-motherboards

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  • http://news.cnet.com/8301-10805_3-57529238-75/microsoft-is-now-your-devices-and-services-company/#! Don Burnett

    Even Microsoft admits Prior to the Windows 8 launch that it’s refocusing and now is a devices and services company..

    http://news.cnet.com/8301-10805_3-57529238-75/microsoft-is-now-your-devices-and-services-company/#!

  • Pingback: If an iPad's a computer, then Apple is the world's PC shipment leader – tuaw.com | The News Crew

  • http://www.phonearena.com/news/Microsoft-reports-higher-profit-margin-than-Apple-Google-or-Samsung-phone-division-hauls-in-546-million_id39091 Don Burnett

    Microsoft reports higher profit margin than Apple, Google or Samsung, phone division hauls in $546 million

    Posted: 25 Jan 2013, 02:45, by Daniel P.

    Categories: Samsung Windows Apple Android Bookmark
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    Microsoft reports higher profit margin than Apple, Google or Samsung, phone division hauls in $546 million

    Rumors about Microsoft’s demise and “the end of the PC era,” as Steve Jobs used to put it, seem to be greatly exaggerated, judging by the company’s Q4 results.

    The folks over at Redmond managed to pull in $6.38 billion profit on just $21.5 billion revenue. In comparison, Apple made $13.1 billion, but on $54.5 in revenue, and Samsung hauled in record $6.6 billion of net profit from $52.45 billion of revenue. If we round up the margin percentages, we get 30% for Microsoft, 24% for Apple, and 13% for Samsung. Google scored about 20% margin.

    Moral of the story is that Microsoft still keeps the most money from its revenue when all is said and done, and the revenue it received from its mobile operating system division grew to $546 million.

    http://www.phonearena.com/news/Microsoft-reports-higher-profit-margin-than-Apple-Google-or-Samsung-phone-division-hauls-in-546-million_id39091

    “Microsoft fails to notice the death of the PC, posts record revenue figures instead

    The Windows Division once more becomes the company’s biggest money-maker.”

    http://arstechnica.com/business/2013/01/microsoft-fails-to-notice-the-death-of-the-pc-posts-record-revenue-figures-instead/

  • http://www.princigration.com John

    I know the first thing to get thrown away when I buy a new PC is the OS; some version of windows I was forced into taking with my new hardware. I would be delighted to find the option to pay less for no OS, since ubuntu, CentOS, or Suse are free and have first dibs on my hardware. It is time to stop force feeding Microsoft down everyone’s throats and giving consumers the choice of which OS comes with their new computer.

  • Vicente Fraser

    Baiting headline if there was one.

    Tablets and PCs are dissimilar, as are there marketshares, shipped units and trends.

    Until business apps and sensible multitasking rather than app switching can be done on a tablet, it’s hardly a productive tool for that audience.

  • Thierry

    I personally love Windows 8, It took about 2 hours of fooling around with it to change my paradigm concerning where or how to find things, but after that I wouldn’t go back…I remember the same kind of hating when Win95 came out. You’d install it in an office and people would ask: ok how to I get to command prompt, (I know how to get to WordPerfect from there) that’s all I’ll ever use anyways

  • Henry Tirebiter

    “Frankly my dear, I don’t give a damn.”

    Rhett Butler was right. If hardware manufacturers want to survive, it’s time to grow up and be unique. They have great hardware, but they got lazy and let Redmond call the tune. They let themselves get blindsided by reality. Opening up the hardware is the only chance left. Closing it down spells the end of the era.

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  • Anonymous

    I think 2013 is going to be the absolute worst year for Intel. Even 5 year old desktops and laptops are already too powerful for the average user, and the upcoming “uber idle power usage” Haswell will barely make a dent, as most people use laptops as portable desktops than actual mobility devices and nobody at the ARM mobile side is going to consider x86 chips that are owned, designed and manufactured by a single sole entity that cost the usual high Intel prices even if they beat ARM chips in the performance/battery life metric.

    Meanwhile, this year ARM SoCs are going to be at least ~50% faster than the already blazing fast quadcore Kraits with even better power management to further seal Intel’s fate in a segment where they have virtually no presence.

 
 
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