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Weak PC sales, Apple to ding Microsoft's Windows sales, say analysts

By | October 13, 2011, 5:50am PDT

Summary: Microsoft’s Windows revenue may come in lighter than expected because of sluggish PC unit growth, Apple’s popularity and delayed purchases due to Windows 8 publicity.

Microsoft’s Windows franchise is about to face some rough sledding due to three factors: Sluggish PC sales, Apple’s popularity and widespread coverage of Windows 8 that may keep consumers on the sidelines.

Gartner and IDC reported their third quarter PC unit shipment figures on Wednesday. The unit growth can be summed up in one word: Anemic. Specifically, Gartner pegged PC growth at 3.2 percent, which was below its previous 5.1 percent forecast.

The figures have analysts scurrying to handicap the blow to Microsoft’s Windows franchise.

Also see: HP retains top PC spot, Lenovo surges

Stifel Nicolaus analyst Tim Klassel said about PC sales:

We largely expected these results given the broad media coverage of the Windows 8 launch in September causing some consumers to begin delaying purchases as they wait for the new version, an effect we have modeled to accelerate through the end of the fiscal year. This combined with Apple’s ongoing strength in tablets and Macs we think will continue to underperformance in the Windows division. For the quarter, we are reducing our underlying PC unit growth rate from 6.2% to 3.1%, which lowers our revenue estimates for the Windows division from $4.96bn to $4.84bn (up 1.2% y/y).

Morgan Stanley analyst Adam Holt said that PC growth was better than his estimates and added:

Developed consumer continues to be weak as expected, while commentary downticked on US and EMEA corporate PC growth as IT budgets feel the strain from macro uncertainty, suggesting better than expected units will be largely offset by a mix shift away from corporate/dev. markets. While Microsoft should hit our Windows estimate of $4.75 billion, consensus again appears to not have adjusted for PC food chain data points and is likely high at $4.9 billion.

Fortunately for Microsoft, analysts expect the software giant’s other units to more than pick up any slack in the Windows division. Servers and tools, Xbox and Office are expected to shine in the September quarter.

Microsoft reports its fiscal first quarter earnings next week. Wall Street is expecting earnings of 68 cents a share on revenue of $17.26 billion.

See also:

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Topics

Unit Growth, PC, Analyst, Apple Inc., Microsoft Corp., Microsoft Windows, Desktops, Sales Strategy, Operating Systems, Software, Hardware, Sales, Larry Dignan

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic.

Disclosure

Larry Dignan

Larry Dignan has nothing to disclose. He doesn’t hold investments in the technology companies he covers.

Biography

Larry Dignan

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CNET News.com. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism and the University of Delaware.

For daily updates, follow Larry on Twitter.

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Exactly!
spdragoo@... 14th Oct
@adornoe@...

When we keep hearing so much news about the economy being weak -- & not just in the US (as witnessed by all of the European woes) -- it's no wonder that corporate IT departments are using a "make-do" strategy, & only buying when they absolutely need to (i.e. hardware is broken & needs replaced, vs. hardware is getting old & we'd like, but don't need, more performance).
View in thread
0 Votes
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Lot's of things are weak
jscott418 13th Oct
PC sales have been weak for some time. But as we see Lenovo moving up the ladder in PC sales. Not everything is bad. I do not see Apple moving up that fast? I just listened to Michael Dell and he makes a good point about Dell. Their profits have never been better and they have a solid Enterprise customer base to work from. Apple maybe having decent times with consumer sales. But everyone knows consumers are fickle and Enterprise is much more consistent. If I had my choice between Enterprise or consumers. I would pick serving Enterprise all the time.
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iPad sales aren't weak.
HollywoodDog 13th Oct
@jscott418 ... or iPhone presales.

"Decent" times? Have you looked at Apples stock price? Chart it against Microsoft.
0 Votes
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Stock prices don't equate sales
William Farrell 13th Oct
@HollywoodDog
Apple sold the same amount, if not less iPhones per quarter, yet earn more profit for per phone through supply chain reduction costs.

So yes, you can actually make money even though you are selling less, which is what stock prices are based on, not how many of a product was sold.

You could sell 3 million phones each week, yet if you lost money doing it, investors and cash reserves would not be there to raise the stock price.
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Yes & No for Apple
spdragoo@... 13th Oct
@jscott418

They remained in 3rd place for US sales, & even increased their share from 10.8% to 12.9% over last year.

_However_, there are 2 problems I see with the data:

1. They exclude all tablet sales from the charts. Yes, this would help Apple quite a bit if they were to include them... but they'd also help all of the _other_ tablet manufacturers. And if we're going to add tablets into the mix, then we'd better add smartphones as well...which favors the other makers as much, if not more, than Apple.

2. Apple didn't even crack the Top 5 when looking at *worldwide* sales. Acer Group was 5th in the US (1,376,768 units), but 3rd worldwide (9,686,853 units). Asus was 5th worldwide (5,693,146 units)...which means that Apple isn't selling well outside of the US (at most, they could have sold 3,393,145 units, since any more would have let them surpass Asus).

In fact, what that seems to point towards is that Apple's ability to sell non-iPad PCs outside of the US is _worse_ than that of other manufacturers, since other companies average at least 3 times as many non-US sales but Apple at best would 1.5 times as many...
0 Votes
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Disapearing posts again. These boards suck
William Farrell 13th Oct
post a reply and it doesn't make it, yet the actual Spam messages stay up for days.

Seems thge spammers are better programmers then the company that ZDnet hired to revamp these talkbacks
0 Votes
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Is it mysteriously disappearing posts? Or is it deliberate
adornoe@... Updated - 13th Oct
deletion of posts by the powers that be?

BTW, I've had a lot of "disappearing" posts myself in this site.
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I don't think its the powers that be.
William Farrell Updated - 13th Oct
@adornoe@...
as it's immediately after you hit submit.
Yet this post and the one you responded to posted just fine.
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William Farrell: You might be right, but...
adornoe@... 13th Oct
I've had posts submitted, and then I've been able to read them immediately after submission, and come back later in the day, and, Poof!, the post is gone.
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I don't get it. Is Windows 8 launching in September?
adornoe@... Updated - 13th Oct
If it's this year's September, I didn't notice it's launch. If it's September of next year, then the figures don't necessarily reflect that the reaction of lesser PC sales is related to the expected launch almost a whole year away.

People need to make stuff up in order to justify their existence.

Microsoft could very well have a very huge next year with the expected launch of Windows 8. All that's necessary is to promise a free, or almost free, upgrade to Windows 8 with the purchase of a new PC that is sold prior to Windows 8 launching.

Also, why is it that, all predictions being made lately, attribute slow PC sales to iPad and other tablets taking away sales? Why don't people figure the slow economy into the equation for sales? More than likely, and more than any sales that might be lost due to tablets, the economy is a bigger reason for people not making any new PC purchases, especially when what they a already have will serve most of their purposes, and can actually be upgraded to Windows 8 when it launches.
0 Votes
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Exactly!
spdragoo@... 14th Oct
@adornoe@...

When we keep hearing so much news about the economy being weak -- & not just in the US (as witnessed by all of the European woes) -- it's no wonder that corporate IT departments are using a "make-do" strategy, & only buying when they absolutely need to (i.e. hardware is broken & needs replaced, vs. hardware is getting old & we'd like, but don't need, more performance).
0 Votes
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Hmmmm
Gisabun 13th Oct
Companies holding off on win 7 PC purchases because of Win 8? I doubt it. who knows how Win 8 will take off if any. Even when Vista came out and 3 years laterwith Win 7, companies were not in a rush to deploy them or buy systems with them.

It isn't because of Apple or anything but uncertainty in the economy. Nothing else.

Apple is selling gadgets mostly now anyways.

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