Microsoft execs downplay talk of possible PC demand slowdown

Microsoft execs downplay talk of possible PC demand slowdown

Summary: Some Wall Streeters are sounding early warning bells regarding a possible consumer PC slowdown. Yesterday, those rumors affected Intel and AMD share prices. On August 11, Microsoft also got dinged. Microsoft execs are downplaying the reports.

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Some Wall Streeters are sounding early warning bells regarding a possible consumer PC slowdown. Yesterday, those rumors affected Intel and AMD share prices. On August 11, Microsoft also got dinged.

What's Microsoft's response? During a question-and-answer session at Oppenheimer's Annual Technology, Media & Telecommunications Conference in Boston on August 10, General Manager of Investor Relations Bill Koefoed downplayed slowdown reports. From the transcript of his remarks:

"You know, whether or not the market's up or down one month or another, I don't know, there tends to be, since I've had this job, there tends to be a lot of chatter.  There's a lot of chatter back in kind of April, May about PC markets for the second quarter. I don't know that I would take two guys that go visit some ODM (original design manufacturer) in Taiwan as a reference on what the market looks like. I would gather a lot of information and then decide what you think that it looks like."

Koefoed reminded Oppenheimer conference attendees that Microsoft has sold 175 million Windows 7 licenses and  repeated that business upgrades to Windows 7 are starting to happen now. He said demand in emerging markets is strong. Koefoed reiterated Microsoft's earlier guidance that "our Windows division would roughly move in line with the PC market."

Koefoed also seemed to infer there could be news about Microsoft's dividend coming in the next month or so. There's been growing speculation that Microsoft will raise its dividend to offset its stagnant stock price. In response to a conference attendee's question on Microsoft's dividend intentions, Koefoed said:

"Our board makes both capital as well as dividend policy decisions at their September board meeting.  The dividend is something -- you can look at since we established it back earlier in the -- I don't know, decade -- we've grown it basically in line with operating income. In absence of saying anything more, I think you could expect that as a reasonable policy going forward."

Robert Youngjohns, Microsoft Senior Vice President and President, North America Sales and Marketing, also was asked about the possibile effects of a PC slowdown on the company. Youngjohns was speaking at the Pacific Crest Leadership Forum in Vail, Colo., on August 10. Youngjohns also downplayed the worries and noted that Microsoft has enterprise cash cows it can lean on. From a transcript of his remarks:

"I can't really comment on what we're seeing from these numbers. I mean, they're relatively new out there and we have our own assessment that we do and we talk about on a quarterly basis, in terms of our views of the market. I mean clearly our business is connected to the number of PCs that get sold. But, I think at the same time we have significant ability to sell other stuff related to the PC infrastructure. A substantial part of our business in North America is selling infrastructure software like Windows Server 2008, like SQL Server, like System Center, the stuff that runs the enterprise not just the PC, and that's a business that I think continues to be attractive to us."

Topics: Banking, Hardware, Microsoft

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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26 comments
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  • RE: Microsoft execs downplay talk of possible PC demand slowdown

    So the softies are now in denial.

    First, the newly uncovered signs that the recovery actually never happened sure indicate that this Holiday season we are going to see fewer PC being bought not only on the U.S. but also in Europe (currently sucked the debt crisis in Greece, Spain and Portugal).

    Then, there's the iPad effect which basically sucked life from netbooks and lower cost laptops.

    Microsoft should stop confusing bundled Windows sales (where the customer has no say in which OS he gets) and "actual" Windows 7 loyal customers. Else they could label Windows 7 an "unbeatable success" when in real terms it could end up being an OS with marginal market-share (akin to Mac OS X) against an XP/iOS/Android dominated market.
    cosuna
    • The entire eCONomy is slowing down

      As what I've been saying and someone here already noticed, all that 'recovery' was an naked emperor fooling around with printed depreciated Dollars and trying to con everyone on a phony recovery. No one can recover from an overly-in-debt situation by, GASP, taking on more debt.

      Fasten your seatbelt, folks. You ain't see no real crash yet until Dollar flops under so much debt and eventually sends US to Weimar Republic. Thank you, Obama and Bernanke.
      LBiege
      • as it doesn't affect Obama european vacation!

        ;-)
        Richard Flude
      • RE: Microsoft execs downplay talk of possible PC demand slowdown

        @LBiege And thank you Bush and Cheney for the expensive invasions they got us into and the continued pouring of billions into the middle east and into the pockets of the various weapons manufacturers and defense contractors. Bravo!!
        nothingness
    • Hows the spin

      Past sales figures as if they're a forward projection.

      "stagnant" used to describe msft.

      Priceless!
      Richard Flude
    • RE: Microsoft execs downplay talk of possible PC demand slowdown

      @cosuna Not sure there's anything to "deny". It's still too early in the game to know where we're definitively going. But I've often said that as HDTVs became TRULY pervasive (90+% penetration) and as the next generation turns into working adults and have grown up with gaming consoles, consoles may become the next platform for engaging in Net activities. Microsoft is well positioned in this respect with the XBox platform. Then again Google is making its own move with Google TV. Given that the top 3 activities in the home are web surfing (social network activity included), email and gaming, once Google's Chrome browser debuts on TVs, there will be even less reason to have a PC in the home as compared to times past. <br><br>Sure there's some of us that will always have a PC or Mac because we want to run some media server and have gobs of files but there are plenty of people who just don't fit into that bucket. A big reason people need a personal computer is store their music files. Using myself as an example, my music library, which I've paid for, far surpasses anything anything I've created in terms of disk space usage. The iPad has shown that most people are content consumers not content producers.<br><br>I see a day when you'll create playlists in the cloud and pull down music to your mobile device accordingly. A music service just needs to keep a single master copy of each song and a simple list of what "you own". When things like 100 megabits down and USB 3.0 transfers became pervasive, this isn't outside the realm of possibility. Bandwidth changes everything. People would have been hard pressed to have seen video on demand being wildly successful ten years ago, e.g., Netflix. Imagine what things will look like in another ten years.<br><br>-M
      betelgeuse68
  • RE: Microsoft execs downplay talk of possible PC demand slowdown

    I try not to think about microsoft...I DONT DO WINDOWS.. That 175 million will not be returning anytime soon. When we don't hear of the only 75 mil or so that upgrade, Msft will be in deep trouble, hemorrhaging market share! Boy, is it gonna hurt loosing dominance. But what do I know? I'm only a financially stable fanboy elitist; who gets laid well. And often.
    Dr. Figgnuttan
    • RE: Microsoft execs downplay talk of possible PC demand slowdown

      @Dr. Figgnuttan - I left for OS X but came back.

      For more than one reason, but one of them was "Apple Politics(tm)"... :( In ways I adore Macs, but in others - Apple has become a parody of itself; their own 1984 ads being ironically pertinent - except Apple is the one being targeted this time and not IBM/Microsoft/whoeverwasin1984.
      HypnoToad72
      • RE: Microsoft execs downplay talk of possible PC demand slowdown

        @HypnoToad72 .....In parody of myself, I agree with you. Within the next few years I plan to return to paper and pencil, live on the street and be tech free...free from the prying eyes of Apple. Now if I can just keep them pencil people from frustrating me...
        Dr. Figgnuttan
    • What, exactly will business use in place of Windows?

      @Dr. Figgnuttan
      I've been listening to the "Impending Demise of Windows" stories since Windows 3.1...and it never seems to happen.

      Exactly who is MS going to "hemmorage market share" to?

      Apple? Hardly It's simply not an affordable business platform. You don't double the cost of your clients in tough economic times.

      Linux? What's the point? Windows 7 is a very stable, very affordable OS that connects very nicely to...you guessed it...all kinds of Windows Servers.

      I'm not sure that the fact that you are a"financially stable fanboy who gets laid well and often" really supports your argument. In fact, guys who write things like that are, invariably, not well-heeled, well-endowed, or well-recieved by women.
      trickytom2
      • RE: Microsoft execs downplay talk of possible PC demand slowdown

        @trickytom2 .....Hmmm! A nasty frustrated person me thinks.
        Microthudd will hemorrhage share. A new generation of clients is emerging and they are shunning winthudd!
        Perhaps you should do more reading, less insulting.
        Gee, can't even parody myself without a winboy getting upset.
        By the way, I do have an enormous amount of fun with these comments. That is what they are. Enjoy!
        Dr. Figgnuttan
  • So it's not due to the spiraling middle class economy?

    Phew.

    Granted, once in a while I do see an iPad. The last time I saw one was when I was at an Adobe Flash CS5 symposium, ironically... but I digress. With worker wages being driven down, thank goodness for credit cards to keep up on the latest technologies - though the iPad really isn't career-driving worthy...
    HypnoToad72
  • Here's the thing...

    What are you really going to replace all of these PC's with? Laptops won't work; they're too costly and too delicate. Tablets, you say? Hardly. You would have to ad an external keyboard, mouse and pad-stand...which leaves you with an underpowered PC with a 9.7" screen.

    Never gonna happen.
    trickytom2
    • An iPad, DUUUH!

      @trickytom2

      At least according to the Apple zealots at least.

      To me, I agree, what exactly are you going to replace a desktop computer with?
      The one and only, Cylon Centurion
      • RE: Microsoft execs downplay talk of possible PC demand slowdown

        @NStalnecker

        Well, in 2007 I got a MacBook Pro. Quite old today as computers go. I have knocked it off the dinner table onto the floor twice. Once naked, and the second time in the bag. Had to bend the case back straight the first time so the lid would close. Never missed a lick.

        What do I do with this animal? I do Gimp, CAD (400MB files), hairy spreadsheets (4000 entries per page), iPhoto with thousands of photos.

        I run Windows (gag) to write software for a datalogger and do the graphical interface for web reporting data presentations.

        The only thing I don't do is video/movies.

        This is with a 3 1/2 yr old machine. Works perfectly.

        But I have started a new company and as soon as it gets on its feet I am going to hand the 07 MBP to someone in the company who is not a power user and get me a new MBP hot rod with 8GB of ram - about $2100.

        I considered getting a desktop, but find I need to have the full horsepower with me at various locations - home office, factory office, and travelling. While a desktop is more powerful than any laptop, the MBP line has long since crossed over the line of power users, and they are almost indestructable.
        zdnetbtg
      • RE: Microsoft execs downplay talk of possible PC demand slowdown

        @NStalnecker

        Sorry, forgot to add that the same MBP laptop runs two 24" external monitors as well as its own screen when in my home office.
        zdnetbtg
      • Not bad.

        @NStalnecker

        Nice set-up actually. I run my laptops the same way when I am at home.
        The one and only, Cylon Centurion
  • RE: Microsoft execs downplay talk of possible PC demand slowdown

    Why does every Microsoft story here have a GINORMOUS (including sidebars) Google Apps add?? I mean I can guess why, but I think that's it's creepy at best and treacherous to the subject at worst. Makes me not want to come back!
    ALISON SMOCK
  • Don't worry about Google Apps

    Really they are RUBBISH
    hubivedder
  • Two points... right off the top of my head...

    First, with a downturn in the economy and with no hope for a recovery any time soon, people will hold back on their spending, especially on computers when what they already have will do the job, and that includes most older Pentiums and AMDs, whether they use XP or Vista or some other OS that works on those older PCs.

    Secondly, with the big companies such as Microsoft and Google and others trying to get people to move to the "cloud", why would people need to upgrade their PCs or OSes if all they need is a "thin client" to get to their files or to get on the internet?

    The thing is that, Microsoft and Intel and Apple and other big players on the PC/Mac front are hurting themselves by trying to get people to move from the desktop/laptop to the cloud and thin clients, including the tablets.

    Why is it that articles such as the one above can't present the causes along with the problems?
    adornoe