With Windows 8, Microsoft's playing a scene from Groundhog Day

With Windows 8, Microsoft's playing a scene from Groundhog Day

Summary: As I read the coverage of Windows 8's initial reception, I feel like Bill Murray waking up in Punxsutawney to relive the same day over and over. We've played this scene out before. So how does it end this time?

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TOPICS: Windows, Microsoft
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ed-and-groundhog-blog

I swear I can write this post over and over and over again and never run out of new material.

Every bit of reporting I've read lately on Windows 8 could just as easily have been written in 2001, at the dawn of the XP era.

Like a scene out of Groundhog Day, we now get to read, again, that Microsoft's death spiral has begun because PC sales have slowed down. Here's our very own Adrian Kingsley-Hughes with a representative prediction of doom just this week:

PC sales are in a tailspin, and it looks like no one remembered to pack the parachute. This puts Microsoft on track for a world of hurt.

How long can the Redmond, Wash.-based software giant remain a giant in the face of dwindling PC sales and increasing competition from the likes of Android and iOS? My guess is not for long, unless the company takes some swift and serious action.

It's true: People aren't rushing out to buy Windows 8 PCs. The launch of Windows 8 didn't cause a spike in the consumer market. In fact, overall sales of PCs might even be down.

That's a trend in the overall PC market, which is down year over year. In the third quarter of this year, PC sales declined dramatically from the previous year:

The worldwide PC market contracted sharply in the third quarter of 2012 (3Q12), with shipments declining 8.6% from the third quarter of 2011.

[...]

The U.S. market came in slightly weaker than an already negative forecast, contracting 12.4% compared to a forecast of –9.5%. This reflected weaker consumer demand, including a weak back-to-school season, and an industry-wide inventory clean up. The consumer segment was particularly affected as buyers focused on competing products.

You know, just like in 2001.

Right after XP launched, the BBC published this post: PC makers hope for XP boost. It was filled with doom and gloom and this startling statistic about the need to revitalize the "flagging market":

For the first time since 1986, demand for PCs is flagging. During July to September, sales plummeted 11.3%, according to computer research firm Gartner Dataquest.

Plummeted.

More from XP's launch in 2001:

So will consumers go out and buy PCs just to get a new operating system that will make their computer screens look like a bright and colourful Apple Mac without losing the familiar wording of Windows' drop-down menus?

A closer look at Microsoft's own figures shows that the XP boost may be smaller than the hype suggests.

[...]

In relative terms, Microsoft expects XP to be less successful than Windows 95.

At research firm Gartner, analysts warn that while "Windows 3.x, Windows 95 and Windows 2000 did wonders for sales", Windows XP "will not be a primary driver of PC sales in 2001 and 2002".

Sound familiar? You know, like NPD saying Windows 8 is "off to a slow start":

“After just four weeks on the market, it’s still early to place blame on Windows 8 for the ongoing weakness in the PC market,” said Stephen Baker, vice president of industry analysis at NPD.  “We still have the whole holiday selling season ahead of us, but clearly Windows 8 did not prove to be the impetus for a sales turnaround some had hoped for.”

Groundhog Day.

But here's what's interesting: Every repetition of that cold day in Pennsylvania is not the same. Some ended well, some ended comically, some ended very badly.

So how does this scene play out for Microsoft in 2012 and 2013?

Let's examine the landscape:

PC purchases go in cycles. That's especially true of businesses, which don't buy as many PCs when worldwide employment is down as it is now. But Microsoft's business side is strong enough to fund a big transition on the consumer side.

The market for conventional PCs is declining, for a variety of reasons. Consumers and businesses alike are stretching out the useful life of PCs, which means that the installed base remains constant as fewer machines are replaced and retired. A down cycle in a declining market is not pretty.

Tablets (specifically the iPad) are soaking up lots of money from consumers and increasingly from businesses. Those are budgets that might have gone to a PC previously.

In a world where individuals have multiple computing devices, the PC probably has the longest replacement cycle. Mobile phone owners turn over their devices every two years or so (some more often). The iPad hasn't been around long enough to establish any meaningful trends, but early iPad adopters seem willing to replace their devices every two years, handing down or selling the old one.

Microsoft and its OEM partners are trying to shift the definition of a PC so that it encompasses some of the capabilities for which people would otherwise choose a tablet. But getting those smaller, more mobile products into the market just takes time. The first wave of touch-enabled PCs are offering a glimpse of some of these new formats: hybrids and slates and notebooks that flip and contort.

And PC manufacturers are taking their own sweet time rolling out new products. A Bloomberg report today noted:

At a September event, Intel said nine PC makers, including Dell Inc. and Hewlett-Packard Co., would have devices with its newest low-power chip [Clover Trail] on sale when Windows was released in October. More than a month later, only four manufacturers do. Of those, only two have products in the U.S., Intel said.

It will take a year or two for those new hardware designs to sell in sufficient quantity so that they seem normal instead of strange and different. Even a weak PC market will crank out and sell hundreds of millions of devices in two years.

XP succeeded because Microsoft was persistent and the hardware improved dramatically over time and no strong competitors emerged until years later.

This time around, conditions are unlikely to line up as neatly and favorably as they did in the years after XP's launch. In particular, Microsoft has a very strong, focused competitor in Apple and an erratic but determined competitor in Google. It's unlikely that both will stumble at the same time.

Many developers abandoned Microsoft to work on pure web-based projects and on apps for iOS and Android.  Luring them back to Windows, even a new and improved Windows, will be a challenge. And it will take time.

There's no guarantee that this scene ends well.

Topics: Windows, Microsoft

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257 comments
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  • Here's what's new, Ed: It's not 2006

    Microsoft has for years capitalized on the naivete of computer users, and before iPhone changed the world, people who really just wanted to surf the web and check email and manage photo albums thought they "needed" a Windows Desk Top to do it.

    The world of mobile computing completely reset the paradigm.

    The reason tablet sales are destroying PC sales (with companies deciding to drop their entire PC line) is because people realize they don't need a PC. Everything they want to do can be done from the palm of their hand.

    That doesn't account for work - yet. But with the failure of Surface it's a two-horse race between Android and iOS for the future of mobile computing. That's where the attention and that's where the dollars are.

    Microsoft is living in 2006 and the business model is slipping. That's what's different. The old war horse is about to be put out to pasture.
    gregv2k
    • Ed you should have included some iPad reactions after first month...

      So that we can make fun of the failure of the Surface guy here.... :)
      JimmyFal
      • 70% of human interaction with outside world is done visually

        ... and it'll remain so FOREVER, which means all these mobile devices can only play secondary roles in the personal computing world b/c it's their daddy desktops rather than the mobile devices that power the 27' screens. Hate to bust you ABMers' pipe dream.

        For those of you mobile fools that want to deny it, just look back how iPad became successful when Jobs simply put the same iPhone OS in a bigger screen. There you have your answer. People love big screen user experience.

        Thanks for playing tho.
        LBiege
        • So you think putting a phone OS

          The public, in general, has rejected on everything is a good idea? How many WP 8 phones have been activated? How many WP 8 computers are in use?
          Troll Hunter J
        • that's bull

          27" screens, 8" screens, 50" screens can and are powered by small mobile devices. We have come to the point where we can create powerful machines in small boxes. You can connect them to your monitor or TV and use them to display web pages, movies, presentations, applications, or anything currently on their screen. This can currently be done with phones, tablets, micro ATX desktops, mini ITX desktops, and an array of other non-traditional computing platforms. There is no longer a need for giant desktops. May not even be a need for any hardware but a wifi nic soon. Can you imagine the world in 10 years? You carry around one small lightweight device. You go on the train to work and play games, write an e-mail, surf the web, or do real work. Then you get into the office, and a wireless monitor picks it and displays it's screen in a higher resolution using it's processing power. In fact that's not something that is being researched. It's possible now. There are wireless monitors. They're just in the process of making it better and more accessible. The future world that you see on TV and movies is in fact here today. The many futuristic technologies that are available now are just either too expensive or not perfected for dependent use. Windows 8 is merely screwed because they forgot who their customers are. They pushed a new OS which you need to use a different way. They simply went the apple path and forced changes on people. Many people don't own Macs because of that. Windows is the new Linux. It's going to be an OS for geeks primarily 5-10 years down the road. People simply like being restricted and not thinking about what to do. If that means losing some valuable control or productivity so be it. Microsoft on the other hand is swaying away from their users having control. Windows used to be an operating system with a few applications built in and now it's a mama operating system making you do what it thinks is best. People like me don't want or need it.
          Omego2K
          • Small = Big

            Zappo.... Nothing more to say. Readers do your homework. Zappo links most smart tv's to your iPad, iPhone, Samsung TV/VCR so that you can view media on the web through your LARGE TV. I even push my Android Phone media to my VIZIO TV via my Apple TV.
            eleaders
          • Small = Big

            Did I say a SMART TV is necessary? Thats not true. If you go through a smart device hooked to your HDTV you dont need a smart tv. An Apple TV or a Samsung Blue Ray player can be passed through easily.
            eleaders
      • You're right ...

        I looked at a Surface as a replacement to my aged, venerable iPad I and my aging pc desktop at home. After seeing the price of the Surface I went right back to Apple and purchased an iPad III and said the heck with it. My 7 year old PC with 4gb of memory runs Windows 7 and Office 2010 just fine since all I use it for is creating the occasional MS Word doc or PowerPoint Presentation. Everything else my iPad III does just fine, TYVM.

        Surface just isn't competitively priced vs. the iPad and there's no compelling argument for Surface when a 7 year old PC does the job. If Microsoft really wanted to disrupt the consumer tablet space they'd price Surface lower than the iPad.

        Since they haven't done that, it's pretty clear (to me anyway) that they're after the Enterprise Market with Surface since Microsoft Enterprise Management Tools will be able to manage a Surface device and Apple's lack of management tools of a similar class and rich feature set as Microsoft has for their platform doesn't exist for Apple. I talk to my Apple Enterprise Account Rep every month on this topic and Apple shows no inclination whatsoever to develop enterprise management tools. They seem perfectly complacent just pumping out iPads. Who can blame them, look how much $$$ they're making? They've disrupted the PC market space and are making a killing. Capitalism, gotta love it. (Unless you're that Obama character...)
        leb4
        • "like that Obama character"

          Denial + ignorance = GOP..... gotta love it
          Ravi100
          • Projection.

            It's what liberals do best.
            baggins_z
          • So ...

            like Obama you don't understand how our economy works either then do you?
            leb4
          • ...

            Make believe land + fiscal uneducation + hands out +lazy = Dem
            Fletchguy
          • STFUKthanx

            Go fight somewhere else. Kthanxbye
            Duke E Love
          • Like many Socialists

            You feel the Government needs to run everyone's lives. Your boy Barraka (Yes he's an African Arab), has an Agenda. It's the one his Muslim handlers have told him to pursue. You do know Barraka Hussein Obama is a member of the Muslim Brotherhood, the same Muslim Brotherhood that supports Al Quedia.
            Troll Hunter J
          • Keep to the Subject - stop evangelising your political naivety

            We all have political and religious views. This is NOT the place to air them so kindly shut up, you politicos and take your "arguments" elsewhere.
            If I'm interviewing someone for a job, I look at their technical capabilities, not whether they're Muslim, Christian, Buddhist or Hindu, nor whether they're Conservative, Labour or Liberal (Republican or Democrat). These aspects of life have no place in technical forums/discussions.
            JohnOfStony
        • My home computer is even older...

          and running XP. 2.6 GHz P4 processor, 1.5 GB ram, and a decent older graphics card. It does everything I need my home PC to do. Work is a different story, but home? A faster computer won't load the web pages any faster, and neither will a newer OS.

          The older one is doing a fine job, (Just like that Obama character...)
          mlashinsky@...
          • Some PCs are good enough to last a long time.

            I've seen homebuilt PC's from 98 that work well with Xp still. I find it silly to buy a new $700 computer every 3-5 years. Linux does this job well with PCs from around 1995.
            spineshank155
          • ....

            Lol if you call the giant mess Obama is in doing well then your in a lot more trouble then you know lol...Oh and yeah a faster computer and new os will load web pages faster not sure if you really have a home pc if you don't know that.
            Fletchguy
          • Off subject I know!

            Just a quick question, how can you yanks blame Obama total for the so called mess when the Republican's old the balance of power and won't let him implement his plans fully.
            martin_js
          • Guys... focus...

            ...technology please... this isn't a political rant blog... as much as Ed Bott sounds like a Fox News anchor, he's centered and has big opinions... this is not a partisan chat... move else where...

            That Obama character is the U.S. president. Mitt Romney is Governor. You can make fun of both, but elsewhere.
            cosuna