Windows with Bing boosts PC bounce-back as Windows XP effect fades

Cheaper notebooks are getting PCs selling again after a long lull.
Written by Steve Ranger, Global News Director

PC shipments in Europe have bounced back thanks to businesses replacing ageing hardware, and consumers lured by cheap Windows notebooks.

According to IDC, PC shipments in Europe, the Middle East, and Africa hit 23.7 million units in the third quarter of 2014 — up 10.4 percent year on year, in what the analyst firm described as a "clear return to growth" with now two consecutive positive quarters after a "difficult" 2013.

Consumers were a major factor in the 13.5 percent growth in notebook demand, boosted by back-to-school shipments and the run up to Christmas. In contrast, desktop PC shipments increased by just 5.2 percent.

The analyst group said the attractive pricing of notebooks running Windows 8.1 with Bing was another factor. Windows 8.1 with Bing is a low-cost version of Windows that Microsoft offers to makers of cheap PCs. It comes with Bing as the default search engine, although users are free to change this. The idea is to allow PC makers to compete with cheap Windows alternatives such as Chromebooks.

IDC analyst Maciek Gornicki said Windows 8 with Bing has had a bigger impact this quarter, particularly with preparations for the Christmas sales season. Notebooks with Windows 8.1 and Bing might cost €259 compared with the usual €349 entry price for notebooks that we have seen in the past, "so this is definitely an incentive for end users to upgrade their old notebook and to stay with Windows and not switch to a Chromebook device", he said.

"Lowering price points on notebooks is essential for vendors and Microsoft to increase sales and fend off competition from Google. It's more about competition with Chromebooks and offering lighter, more cloud-based devices — by creating a system with less expensive components, for instance, smaller capacity hard drives, vendors would lower costs of the device — rather than adjusting laptop prices to compete with tablets," Gornicki told ZDNet.

IDC said the increase in shipments confirms the rebound in the market and strong renewals on the consumer and enterprise side — but volumes remain below those shipped in previous strong years.

It also said the Windows XP effect, where businesses upgrade PCs as they junked the aged and out-of-support operating system, has now faded in smaller businesses, although larger enterprises continued to roll out new devices. As a result the growth in commercial PC shipments in Western Europe hit 12.5 percent.

Earlier this month figures from Gartner also pointed to a rebound in PC shipments, while tablet shipments are being squeezed between large-screen smartphones, or phablets, and the emerging PC hybrids.

"The slowdown we have seen in tablet shipments in Western Europe recently is more due to higher saturation of this market and end users being content with the devices they purchased one or two years ago. So they naturally start upgrading their old PCs, which already needed an upgrade for a while, and doing so more eagerly as lower priced notebooks are available in the market," said Gornicki.

The regional growth was mainly driven by the mature markets of Western Europe. The overall figure masks significant differences across the region, driven by local political and economic conditions. In Western Europe shipments increased 22.7 percent while the unstable situation in Russia resulted in central and eastern Europe shipments declining nine percent. The Middle East and Africa saw a 2.1 percent increase.

IDC calculated that the top three vendors now account for more than half of total PC shipments and the top five account for 70 percent.

The quarter was good for HP, which increased shipments 16.8 percent, thus grabbing another one percent of market share. Lenovo also posted strong gains.

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