In the wake of yet another quarter of flat-to-falling desktop sales and missed revenue estimates, PC manufacturers are pulling out the excuses once again and promising that a magical panacea lies just around the corner. “Blame the Thailand floods!” they cry. (No, wait; that was last year.) “Blame tablets! Ultrabooks will save us!” Actually, the NPD Group’s numbers say that Ultrabooks only account for around 2 percent of the total notebook market. Try again.
Here’s one: “Windows 8 will save us!“
No it won’t. There is no cavalry coming to rescue “struggling” desktop sales. Rather than being a savior, Windows 8 is more like a gateway drug, offering no hope for PC salvation. Let me explain.
Lackluster PC Sales: Blame tablets? Naaah
Nine out of ten industry analysts agree: Tablet sales are cannibalizing PC sales. Me? I’m the tenth guy.
I don’t believe that tablet sales actually eat into PC sales at any sort of noticeable scale. Some enterprise applications aside, I truly believe Microsoft’s “PC-Plus” concept has it right: People buy slates to supplement PCs, not replace them. In fact, I don’t know of a single actual person who has completely eschewed PCs for a tablet-only solution, despite hype that suggests that very scenario is playing out left and right.
So why are PCs faltering while tablets are booming? Market maturity, plain and simple.
The tablet market is not even three years old, and full of growth potential. Consumer PCs, on the other hand, are a very, very mature market, full cut-throat margins and products that don’t need to be upgraded very often to be functional. Simply put, most people who want a computer already have one, and a six-year-old Intel Core 2 Duo system can still handle everyday tasks capably enough for the Average Joe. If it ain’t broke, a lot of people ain’t gonna fix it, or more importantly, pay hard-earned money to buy a new one — especially in a recessed economy.
Those flat-lining PC sales will never hit dramatic new highs again. At this point, more sales will go to buying replacement PCs than buying new ones. The PC market is sustaining, not growing. (At least in the U.S.)
If you ask me, Microsoft knows that. The proof lies in Windows 8′s dual nature… and its dirt-cheap upgrade pricing plans.
Windows 8: Blame tablets!
As much as people have been panning Modern UI (formally Metro), the touch-tastic interface is a key component of Microsoft’s strategy. In fact, Microsoft’s future in the consumer PC-Plus world depends on it. The more familiar Average Joe is with Modern UI, the more likely he’ll be to pick up a familiar-feeling Windows 8 or RT tablet when he go shopping for his first slate, giving Microsoft a major leg up in the young and booming tablet market.
Since Microsoft makes a big chunk of change from licensing its operating system to manufacturers, it can succeed in the tablet space even if OEMs are generally left to squabble over cut-throat margins; no matter what price an OEM sells its Windows tablet for, Microsoft gets its flat-rate share. It’s a no-brainer revenue strategy that has worked like gangbusters for the company in the PC realm, but now that the PC market is so mature, Microsoft needs to transfer the model to mobile to continue increasing its profits and share price. The company rakes in dough hand-over-fist from licensing Windows on laptops and desktops, but investors hate stale revenues, even if said revenues are astronomical.
Enter Windows slates and the crossover Metro interface.
It’ll be interesting to see how Microsoft prices its own Surface tablet. If Microsoft can sell the Surface relatively cheap, it could move a lot of units and bring heavy consumer awareness to Microsoft’s mobile efforts, giving the company a chance to potentially pull back out of hardware, pass the torch to its OEM partners, and return to simply licensing operating systems and counting cash. Even if it’s priced at iPad-plus levels, Surface serves as an ambassador for Windows 8 slates and a design inspiration for Microsoft’s manufacturing product. Either way, Microsoft wins.
Of course, the idea hinges on consumers getting used to Metro and actually demanding Windows tablets. That’s where the upgrade pricing comes in.
Windows 8 upgrade deals: Bypassing the flat PC market
Once Windows 8 hits in October, it will be installed on virtually every new PC sold. That alone will bring Windows 8 tremendous mainstream face time; as flat as the market is, over 86 million PCs still shipped worldwide last quarter. Only 16 million-ish of those were in the U.S., however, where the market is at its most mature and people are simply hanging on to their older, still perfectly functional computers. Microsoft can’t afford to wait for people to buy a new PC; it needs to stimulate Windows 8 adoption now to start luring people onto the Metro bandwagon.
Enter Windows 8′s aggressive upgrade pricing. Some pundits have said it reeks of desperation. I think it’s a stroke of genius.
Microsoft plans to sell Windows 8 at greatly reduced prices through the holiday season. Boxed copies of the step-up Windows 8 Pro will sell for just $69.99 through January 31. In the same time frame, anybody running a computer with Windows 7, XP or Vista can digitally download Windows 8 Pro for only $40, while people who buy Windows 7 PCs from June onward can make the leap to W8P for $15 — roughly the same price as a large specialty pizza.
It’s win-win; Microsoft generates revenue from direct sales that wouldn’t be made otherwise while simultaneously introducing new legions to Metro. The low upgrade price stimulates conversion to Windows 8, and once a person is used to Metro, the familiar interface stimulates conversion to Windows tablets rather than iOS or Android alternatives.
Apple and Microsoft: the same, but different
If everything shakes down correctly, Microsoft should be able to have its cake — flat, but still sizeable PC license sales — and eat it too, with a Metro-led toehold in the rapidly expanding tablet market. Once you’re used to Modern UI, the Live Tile interface found on Windows Phones is a whole lot less intimidating, as well.
Interestingly, Apple is attempting a similar coup, but in the opposite direction; now that everybody and their neighbor has played around with an iPhone or iPad, the Cupertino company is starting to introduce iOS-like features to Mac OS X.
For the scheme to work, however, people have to adopt — and more importantly, like — Windows 8 and the new interface. Will they? How many mainstream users would actually pay to update their operating system? Those are the billion dollar questions. As Geoff Duncan said earlier this month, if customers hesitate and Windows 8 goes the route of Vista “it may take another two years before the company is positioned to make a real move into the mobile and tablet market—and it might not be able to wait that long.”
How do you think Windows 8 will pan out? Will Microsoft successfully stimulate demand for its mobile devices or will Metro spur on Mac adoption, instead?
Desktops will be going out of style whenever your local movie theater advertises newer tinier screens for their auditoriums. In other words, never. How large is the screen behind your desktop? Is it larger or smaller than the one you had there 4 years ago? How about 8 years ago? If the answer in your world is smaller then desktops are truly going out of style where you live.
Mine is 24″ and already I need a bigger one. There is no multitasking scheme that works anywhere near as well as opening say 4 applications on a huge 28″ screen. All four can be sized as large as a 14″ laptop screen is. Example flightsimulator out the windscreen view, flightsimulator dashboard gauges panel view, flightsimulator moving navigation world map, and flightsimulator communications radio panel.
Just try running that on a single 15″ laptop panel, let alone a hand held.
Or Word on one screen where you are preparing a research paper, the internet reference retrieval site on the the second, the current reference book your copying from on the third.
Or the long letter you are writing on one, the letter you are answering on the second.
Windows 8 works for the LOL, CUL, OMG crowd on the run doing something a computer isn’t necessary for, like shopping in the supermarket, or out making sales to customers. For real computer tasks windows 7 > windows 8.
I would suggest waiting for windows 9 which will be the ‘fixed’ version. Like windows 7 fixed Vista, Windows XP fixed ME, 98 fixed 95, and 3.1 fixed 3.0.
Fools rush in where wise men are waiting for the second edition. Windows 9 will allow power users an environment as good as (and no doubt much better than) 7. Windows 8 will be a rickety tree-house to live in. From there you can look down into the real house below. Down there through the picture window you gaze into a real living room where happy people live real lives.
‘gateway drug’—- llolol
‘gateway drug’—- llolol
Once driver programming for Linux becomes more than an afterthought, you’re going to see minimalist OS choices take the forefront of gaming.
I run 7 for one reason: gaming. Once I don’t have that excuse, why would I settle for windows?
If you think Windows 7 is not a 64 bit version of XP then you are dumb as hell. XP is good if you dont have a decent PC. LOL.
@Daniel Lowe i would be more than happy if major game publishers use linux as a gaming OS…looks like windows will be in major trouble within few months after next release
Windows 8 Should be shipped on tablets and desktop users should opt in. It should not be the standard system on Desktops and Laptops.
Having used the W8 UI consumer preview, I can say I am very happy with it. It’s basically W7 with a new start menu. When they advertise the new UI, I feel Microsoft should point out that the only thing really “metro” about W8 is the start menu and lock screen. Seeing as how cheap the upgrade from W7 is going to be to W8, I’m not passing up this chance. Good article!
To say that desktops are phasing out only makes it apparent of your foolishness.
desktops are slowly being phased out along with laptops…tablets are becoming more powerful and now with this release of the Microsoft Surface it shows that desktops really do need to start worrying..but just not right now..probably 3-4yrs from now..the desktop will only exist for hardcore gaming and media creation
I think they have some good ideas with windows 8 but you shouldn’t force the tablet experience on desktop users. There should be a choice when you install…is this for desktop or tablet and default to the proper desktop. They are forcing people to the Metro experience because they see $$ in apps. They want to become Apple but I don’t think this was the correct way to do it.
Linux distros have come so far that almost anyone can run it now. Plus it gets you off of the Microsoft plantation but doesn’t cut you off. I was looking at Suse with a Gnome desktop, but Mint seems to be pretty popular right now.
I have release preview version and I hate this OS, this is more for tablets and not for office or design work.
this looks exactly like the kid’s cash register in the “supermarket” at the Portland Children’s Museum. WAY TO GO MICROSOFT!
win7 all da waaaay