Just days after Microsoft touted Windows 8 license sales of 40 million, the trusted market researchers at NPD offered a far more sobering assessment of the system’s first four weeks in the market: PC sales dropped an alarming 21 percent when compared with the same period a year before. And with just weeks left to go in the holiday selling season, some are already beginning to write ’s obituary.
I have good news and bad news.
First, the bad news: NPD isn’t just a trusted resource; it’s the firm that Microsoft uses internally to understand how well its own and competing products are doing in the US market. NPD’s numbers are sound.
The good news? It’s early yet. As I reported previously (and as was confirmed in "Tami Reller Talks Windows 8"), although Microsoft might be upset internally that PC makers didn’t show up with their promised varied collection of new Windows 8-based PCs and devices in time for the launch period that NPD measured, those promised machines are finally starting to arrive.
Of course, there’s still the question of whether consumers have any interest in Windows 8 or the stunning array of new—and sometimes weird—PCs and devices on which it runs.
According to NPD, sales of new PCs plummeted 21 percent overall—and an incredible 24 percent for portable computers—during the first four weeks of Windows 8’s availability. The firm doesn’t have similar data for Windows 7 during its first four weeks on the market in 2009, but first-week sales of the previous Windows version triggered a 49 percent leap in PC sales, as one might expect. Night and day, in other words.
That portable computer bit is important because sales of Windows 8 tablets—the device type which comes in the most varied of form factors this time around—are “almost non-existent,” according to NPD. Three years ago, when Windows 7 launched, low-priced netbooks played a big role in that system’s launch. Today, netbooks are essentially gone from the market, replaced by tablets like the iPad, Google Nexus, and Amazon Kindle Fire HD. Microsoft’s strategy for competing in this evolved market was to make Windows 8 into a hybrid system that works equally well on PCs and tablets. But fewer than 1 percent of all PC sales in the first four weeks of Windows 8’s availability were tablets.
I opined over the weekend that Microsoft’s mobile strategy is correct, by which I mean that the self-proclaimed “devices and services” company is wise to try and take its Windows user base of 1.3 billion people forward to this new system. (The alternative was to try and sell a separate mobile platform, which I’ll call Metro, to compete with the iPad and its ilk.) What’s unclear is whether the implementation of this strategy—Windows 8 and Windows RT—will prove successful with users. So far, it doesn’t appear to have moved the needle very much.
Some have wondered how Microsoft’s pronouncement about Windows 8 “sales”—40 million licenses sold in the first four weeks—could appear so starkly different than NPD’s more dour report. NPD tracks actual retail sales, and in the United States only, while Microsoft counts sales of Windows 8 licenses differently. That is, Microsoft registers a sale when a PC maker buys a license that will be bundled on a new PC, or when a retailer orders copies of Windows 8 retail packages to sell to users. Those licenses are indeed “sales”—that’s when Microsoft gets paid, folks—but they don’t always or immediately translate into “a user actually using the product in the real world.” Many of those 40 million licenses were sitting on new PCs that hadn’t even been delivered to retail, let alone sold to end users.
Frankly, I keep coming back to the same culprit that Microsoft has: PC makers are to blame. Not only have these slow-moving firms not delivered the promised collection of new devices, but the few models they’ve delivered have shown up in insufficient volume to meet demand. This behavior more than justifies Microsoft’s decision this year to enter the PC market with its own Surface devices, I think. PC makers have been screwing up the Windows ecosystem for years.
And if this dysfunction continues, I wouldn’t be surprised to see the current situation reversed somewhat, with PC makers having to come to Microsoft, hat in hand, to convince the company to sell their wares at its Microsoft Store retail establishments. In this dystopian view of the future, Best Buy and other electronics retailers will have been wiped out or severely diminished, and Microsoft Store and other boutique retailers will have become the major in-person outlet for PC and device sales. Sound far-fetched? Tell that to Circuit City, CompUSA, and Incredible Universe.