Win 8 fillip not enough for PC industry

Win 8 fillip not enough for PC industry

Summary: The sluggish global PC industry will receive a boost from the launch of Windows 8 devices and clearance of Windows 7 devices, but it will still face long-term challenges from other form factors and lack of innovation.


The PC industry has been sluggish with the upcoming launch of Windows 8 impeding PC sales as consumers, especially in mature markets, hold out on spending. However, the introduction of Windows 8 PCs, and the clearance of Windows 7 devices, later this year might not propel the overall industry forward as much as players hope for.

According to Beau Skonieczny, analyst for computing practice at Technology Business Research (TBR), PC shipments were flat and global revenue down 0.7 percent year-on-year in the second quarter of 2012. World No. 2 PC maker Lenovo was one of those affected, with its PC revenue growth slowing to 23.8 percent during the three months to June in response to weak demand from mature markets, he said.

The sentiment was further highlighted in September when chip giant Intel cut its revenue outlook for the third quarter due to "weaker than expected demand in a challenging macroeconomic environment", noting that PC manufacturers were cutting inventory.

Craig Stice, senior principal analyst for compute platforms at IHS, said a positive rebound could happen in the fourth quarter of 2012 though, due to the holiday sales and introduction of Windows 8 devices.

The PC market could be further boosted as PC vendors clear their Windows 7-based devices at a lower price, particularly in emerging markets, Skonieczny added.

Not enough to boost market
Both analysts, however, noted these factors will not compensate for the overall slow year. The TBR analyst said the touchscreen Windows 8 PCs would likely be US$100 more expensive on average than normal computers, and this might be a barrier to certain consumers.

"Emerging markets would also represent a limited opportunity for Windows 8 products in the near term, particularly as vendors saturate these markets with Windows 7 PCs," he added.

Stice pointed out the PC industry is coming under increasing pressure from other device segments such as tablets, including the next-generation Amazon Kindle Fire, the new Nook from Barnes & Noble, Microsoft's Surface, and Apple's much-rumored iPad Mini

"All these new computing gadgets do end up competing for consumers' dollar, and with many of them priced  lower than ultrabooks or ultrathins currently, it creates a challenge for the PC Industry," the HIS analyst said.

As for 2013's outlook, he said it would be brighter with Windows 8 in full launch, as well as the next generation of ultrathin and ultrabook devices hitting the market.

However, Tang Pin-chen, research analyst at Canalys, was more pessimistic over the long-term outlook of the PC industry. "It's tough times for the sector; it needs new innovation as it hasn't changed that much," he said, adding that more people were buying tablets than PCs.

Tang pointed out vendors can no longer compete on hardware specifications, but may have to focus on other aspects such as design elements and product quality to win over customers. Asus is one brand which has been able to differentiate itself by working on aesthetics, he noted.

Vendor still upbeat
Despite the emergence of new form factors, PC vendors such as Lenovo remain optimistic over the long term.

"In the short term, we observe new form factors taking hold and further blurring the lines between PC and tablet. However, we are confident the traditional PC will continue to play an important role for both personal and professional computing," said Koh Kong Meng, general manager for Asean at Lenovo.

Koh added the company believed in a "PC Plus" environment, which he described as the PC remaining central to people and businesses in an ecosystem of various devices.

He said a significant source of competitive advantage for Lenovo comes from its vertical integration, with which it could leverage manufacturing capabilities over both product development and supply chain operations. For instance, the Chinese PC maker opened its first plant in the United States this month, which it believed will speed production innovation and support rapid business growth.

Topics: PCs, Hardware, Tablets, Tech Industry, Windows


Loves caption contests, leisurely strolls along supermarket aisles and watching How It's Made. Ryan has covered finance, politics, tech and sports for TV, radio and print. He is also co-author of best seller "Profit from the Panic". Ryan is an editor at ZDNet's Asia/Singapore office.

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  • Lack of innovation from whom?

    Microsoft or its OEMs? You have to be very clear. It is not clear at all. If it is Microsoft, I will hold my judgement until i see first wave of surface PCs. If it is OEMs, they are stagnated into pricing, but I hope we see good products from Lenovo, ASUS, Samsung and HP (probably) and this would put pressure on DELL and ACER to bring good devices.
    Ram U
    • ...Lack of innovation??

      I agree with Rama.NET, you need to be clear on this point. MS has shown with windows 8, that it can innovate. The same can be said for what it showed with it's surface products.

      As for OEMs, some will innovate and try new things (like Lenovo and ASUS), and others will try to get by with the same old crap (Acer).
      • without being clear...

        this article looked like FUD at first soo lets give him a chance I guess. :)
    • Re: Lack of innovation from whom?

      It's quite clear where the blame lies: with Microsoft. And its hamfisted attempts to regain dominance with Windows 8/RT and its "Surface" devices are just demoralizing the OEMs even more.
      • RT Apps

        So.... Got a lot of Windows Store app updates today; all the MS ones basically.

        Guess what: The apps STILL SUCK!. Let's take 'Mail'. On my Exchange inbox, every single time I need to move a message to a folder (which is pretty much *every* message), I need to right-click (or swipe, if i had a touch string), click 'Move' and then select the folder I want to move it to.

        Drag and Drop, which has worked fine since Windows 3.0, DOES NOT work!!

        This is.. for lack of a more colorful word: unbelievable.
        Han CNX
  • Prices

    I think the main issue is that prices for devices that consumers typically use ARE coming down fast. Think Android Tablets, Chromebooks and the like. Then I hear Steve Ballmer dream up a price range of $300 to $700 and I see several vendors cheerfully announcing products at the higher end of that range and I can't help but think that all of them will be eating humble pie very soon.

    Repeat after me: *ANY* tablet should not cost more than a netbook. And when the cheaper brands get in on Win 8, which will work just as well on some generic Chinese brand as it will on a HP or Dell, then prices are a coming downnnnn.
    Han CNX
    • I agree...

      Now, of course, there were some fairly pricey netbooks -- they weren't all $200 models. But it's absolutely true. For the most part, you start with a Netbook, throw stuff out, and wind up with a tablet.

      Think about it. I toss out half the battery (ok, the new iPad has a larger battery, most others are 20-25Whr, about half the typical netbook's worth), keep the screen, toss out half the RAM and most of the storage, trade an Intel Atom or similar x86 chipset for a much cheaper ARM SOC, toss the keyboard and most of the peripherals. Maybe add a $15 touchscreen, but then again, some netbooks come with touchscreens.

      Now in truth, a few tablets have better-than-netbook displays... the new iPad, the ASUS Transformer Infinity, etc. But on the other hand, there's no Windows fee yet either in tablets. You're paying a little for iOS or Android, in either case largely licensing fees for patents used, maybe another $10 on Android if the tablet comes with all the Google stuff. Certainly nothing like the $40 for Windows on a netbook or the $75-$100 for Windows RT on a tablet.

      You might let it slide a little for x86 tablets, but then again, maybe not. Some are going to be built using laptop parts, some are going with Netbook components for the most part. Intel's new Atom for tablets is very comparable with a dual core ARM Cortex A9 on performance and power.. but not substantially better on either. This is going up against $15-$20 SOCs from Samsung, nVidia, Qualcomm, TI, and others. So for these lower powered x86 tablets, they're not likely adding cost over that of an ARM tablet, or my dismantled Netbook example.
  • You state the PC industry will face long term challenges, Really?

    What industry does not face long term challenges?

    Come on give me just one.
  • Maybe it's that we all have enough computers?

    I know why I haven't bought a tablet. I don't like them. I don't like using my fingers. I really prefer a mouse. I have a huge touchscreen on my desk and I've turned of the touchscreen function. People who don't mind letting their fingers do the walking (and talking and everything else) are buying tablets ... but ALL of them aleady have othe computers too, laptops and desktops and minis. I have three of my own. My husband has two. My granddaughter has two. Or is it three? So yes, people are buying things they don't already own. I'm a writer and a photographer. I will never want a touchscreen or anything that does not have a real keyboard. I write books: I'm not going to do it onsome stupid virtual touchscreen keyboard. Everyone I know who writes and owns a tablet goes back to their other computer when they want to write more than a few words. No one seems to be bothering to ask people what they own and what they want. A lot of assumptions are being made by a lot of people who are clueless.

    There was a time when everyone needed a computer. Then everyone got a computer. Many of us then got another and another and another. I look at computer ads, but I can't justify buying one ... I just don't NEED another computer. I might check out a chromebook eventually as a traveling companion, but it won't replace either my desktop or laptop. They will be replaced when they need replacing which I sincerely hope won't be anytime soon.

    Windows 8 for me is an anti-enticement. If I'm lucky, I'll be able to hold out until it dies and is replaced by a real operating system.
  • Microsoft's stuff too early to judge, the others, yeah, no innovation

    Look at the general interest here and other places on the net over "post-PC" things. Heck, even the Raspberry Pi was a hot news item, despite the low performance and general hacker-only appeal.

    This is because PCs companies aren't innovating. The PC industry hasn't been interesting for a decade or more. This is often a sign of a mature market. Innovation isn't a thing you design in -- it's a judgement. The thing you're doing is a risk... a successful and useful risk is an innovation. One that fails is a punchline on someone's "worst of the year" list.

    Microsoft has been pretty far from innovative recently. They have done a few things that ought to be risky and have failed, like the almost universally loathed ribbon interface. But with a lack of significant competition, even bad ideas are accepted by the industry.

    Windows 8 is not even slightly innovative for the PC industry -- it's entirely poised to take on the post-PC industry, and inflict the sensibilities of that onto the typical PC user. If people grow to love it, sure, it'll be acclaimed as an innovation, and rightly so. If it's rejected, though, that's not innovation. Change just for change's sake, change in a company's interest rather than the users', that's not likely to be innovation.

    Another sign of a mature industry is lowered growth. And I think there's some serious disconnect here between the PC industry and reality if Lenovo is actually complaining about "only" 28.3% growth over a quarter. I mean, seriously -- best estimates have the US GDP growing by about 3% per year over the next few years. Outside the PC industry, a few other industries are relatively "on fire". Solar panels are a huge new business, in recent years, expected to grow 9.8% in 2012... all of 2012, not just three months. The self-tanning industry has been exploding for the last ten years, primarily due to skin cancer concerns... that's growing about 18% in 2012. Social Network Gaming is another rapid growing business, expected to top 20% growth in 2012. The 3D printer industry is also on fire, and that's also only about 20% yearly at this point.

    The PC business overall shrinking on 2012 is not a shock... there are more substitute devices than ever, the economy has only been slowly recovering, and there's plenty of FUD right now over Windows 8.