Windows 10 will win yesterday’s battle, but what about tomorrow’s war?

The next version of Windows, which will start arriving tomorrow, won’t do a couple of the things that you’d normally expect a new operating system to do as standard.

It won’t immediately make Microsoft a lot of money from licences because it’s going to be a free download for the majority of consumers. And it won’t provide a much-needed shot in the arm for PC sales either, because many existing PCs will be able to run it, sparing consumers the need to buy a new machine to use the new OS. Windows 10 is the clearest illustration yet of how much the business model around Windows has changed in just a few years.

What Windows 10 will do, however, is fix many of the perceived problems that made Windows 8 so hard to sell: even now, three years after launch, it only has scraped together a 13 percent share of the PC market; Windows 7 (51 percent) and Windows XP (24 percent) still outrank it, according to NetMarketShare.

With Windows 8, Microsoft was generally considered to have put too much emphasis on making the OS look good on a tablet and not enough on making it work well on a PC, which is where it would mostly be used. This upset and confused Microsoft’s loyal customer base; Windows 10 walks that back, at least a bit.

Microsoft’s ambitions still reach beyond the PC, however. It eventually wants one billion devices to be running Windows 10 – including smartphones and tablets, as well as PCs. From that point of view, Windows 10 is not about selling Windows licenses or PCs, but something far bigger and broader.

The problem with that ambition is that there are already operating systems for smartphones and tablets which are doing a sterling job, namely Android and iOS, and it’s not clear that there’s enough in Windows 10 to unseat either of them.

“Microsoft will face a long road ahead to gain Windows share in mobile,” said Forrester analyst Frank Gillett in research on the new OS. “While it will win a growing share of enterprise tablet purchases, the plans for Windows 10 don’t show enough potential to create a differentiated mobile experience that will draw developers and customers away from iOS and Android.”

That’s an issue because, while the PC market isn’t going anywhere soon, it isn’t growing fast either: much of the growth in hardware around the world is likely to come in the form of tablets (perhaps hybrid PCs) and smartphones – and maybe even wearables. Windows 10 does address all of those form factors, but Microsoft doesn’t have as much momentum in those areas as its rivals.

Still, Windows 10 is likely to strengthen Microsoft’s position in the PC world – a free upgrade means that most consumers will take the plunge, followed eventually by businesses. That standardization of so many customers onto one version of Windows should make it easier for application developers to reach more customers more quickly.

And because it should be much easier to make Windows 10 apps run on tablets and smartphones as well as PCs, that consolidation might just create – over time – that critical mass of apps that Microsoft needs to reignite its mobile ecosystem. Equally, its rivals have an enormous head start that it is hard to see Microsoft overturning any time soon.

By getting it right where Windows 8 went wrong, with Windows 10 Microsoft may well win the battle it lost in the past – but it remains to be seen if it can win the war it must fight in the future.

via Windows 10 will win yesterday’s battle, but what about tomorrow’s war? | ZDNet.

Analyst claims PC game revenues have surpassed console game revenues

Market research firm DFC Intelligence believes that revenues from PC games have now surpassed revenues from console games, in what is an interesting call on a market that is often branded as “dying” by various people involved with the gaming industry.

David Cole, head of DFC, told UK website PCR that the shift to PC games as the leading revenue stream in the gaming market wasn’t expected to occur until 2015, but free-to-play and multiplayer online battle arena (MOBA) titles continue to perform strongly. Cole stated that MOBA games such as Dota 2 and League of Legends are the dominant force on PC, followed by a mix of MMOs, strategy games and first-person shooters.

Cole says that “among core gamers there is a heavy overlap with most console gamers also playing on a PC. The big difference is that consoles are now the luxury item and PCs are the necessity. Just a few years ago the reverse was true. This means PCs have the broader audience.”

While DFC didn’t reveal the numbers behind their statement – you’ll have to purchase their $2,995 report for a detailed analysis – Cole did mention an interesting statistic. According to their data, no game released in 2013 made the list of top 20 most played games that year, although new titles Hearthstone, DayZ and Rust have entered the list in Q1 2014.

It’s always good to hear that PC gaming continues to be popular around the world, and it’s not too surprising that free-to-play games are leading the way. With that said, it’d be interesting to know how well paid AAA games on PC (like Borderlands 2 and Skyrim) sell compared to their console counterparts, and whether that gap is about to close any time soon.

via Analyst claims PC game revenues have surpassed console game revenues – TechSpot.

PC sales continue to plunge, but the drop is less steep

The PC market moved into its sixth straight quarter of declining sales, analysts reported on Wednesday, although the dip was less pronounced than one firm expected.Market research firm Gartner reported that third-quarter PC sales dipped by 8.6 percent to 80.3 million units for the July-to-September quarter. IDC, with its own report, said the drop was 7.6 percent to 81.6 million units; the firm had previously projected a worldwide decline of 9.5 percent.
Normally, the third quarter marks the beginning of the upswing for the PC market, as students and educators invest in new hardware during the so-called back-to-school buying season. But sales apparently failed to materialize, either an indication that students are turning more to tablets or simply were using notebooks that they had bought previously. On the other hand, emerging product categories and a greater assortment of Windows 8-based models pushed sales volumes slightly higher, IDC reported, as did the migration from Windows XP to Windows 7.
“Consumers’ shift from PCs to tablets for daily content consumption continued to decrease the installed base of PCs both in mature as well as in emerging markets,” Mikako Kitagawa, principal analyst at Gartner, said in a statement. “A greater availability of inexpensive Android tablets attracted first-time consumers in emerging markets and as supplementary devices in mature markets.”
Rajani Singh, an analyst with IDC, noted that the U.S. market was essentially flat at 0 percent growth, helped by Chromebooks and what the company called “ultraslim” devices.
“Whether constrained by a weak economy or being selective in their tech investments, buyers continue to evaluate options and delay PC replacements,” Loren Loverde, an analyst with IDC added. “Despite being a little ahead of forecast, and the work that’s being done on new designs and integration of features like touch, the third quarter results suggest that there’s still a high probability that we will see another decline in worldwide shipments in 2014.”

IDC PC Sales Q3 2013
According to IDC, Lenovo led the pack of PC vendors for global sales during the third quarter.

Both Gartner and IDC said that Lenovo had again edged out rival Hewlett-Packard for a second straight quarter, with Lenovo showing a 2.8 percent increase in unit sales to 14.1 million units. HP and Dell also demonstrated 1.5 percent and 1.0 growth, respectively. But Acer’s sales plunged 22.6 percent, followed closely by Asus, with a  22.5 percent decline in shipments. However, both Acer and Asus have shifted their focus towards the tablet market, Gartner said.
Lenovo’s market share is 17.6 percent, followed closely by HP, at 17.1 percent, Gartner found. Dell, Acer, and Asus make up 11.6 percent, 8.3 percent, and 6.1 percent, respectively.

IDC PC Sales Q3 2013
HP was the top PC vendor in the U.S. during the third quarter.

According to Gartner, HP was the top U.S. PC vendor, with a 26.9 percent market share. Dell (21.0 percent) and Apple (13.4 percent) followed, then Lenovo (10.5 percent) and Toshiba (7.0 percent). Apple was the only vendor among the top five to record a drop in shipments, down 2.3 percent.
IDC largely agreed with Gartner’s numbers (as shown in the above chart), although the firm said that Acer and Asus recorded a steeper drop in shipments.
Both IDC and Gartner typically release tablet sales as part of a separate report, which will provide more insight into how the overall market will fare.
So far, the promise of Windows 8.1 has failed to ignite the PC market, as has the new “Haswell”-based notebooks from Intel’s PC partners. Will the fourth quarter show some signs of life, as Microsoft has predicted? So far, the best news is that it looks less gloomy than predicted. And that isn’t saying much.
via PCWorld

The PC fights back: U.S. sales decline is slowing

Last week, the headlines screamed that computer shipments had plunged roughly 11 percent in the second quarter, after dropping a disastrous 14 percent the quarter before that. While it’s hardly good news, we’ve known for a while that the rise of tablets, “good-enough computing,” and (maybe, just maybe) a lackluster response to Windows 8’s new-look interface have been bad for PC sales.
But wait! A closer look at the numbers shows an interesting trend—if not exactly upward, then less steeply downward. Some signs indicate that we may be past the worst of the bleeding—though you shouldn’t expect to see actual growth out of the PC industry any time soon.

Making scary numbers slightly less scary

Enduring a 14 percent drop in one quarter and then an 11 percent drop in the next one definitely isn’t good, but it’s important to note that those drops don’t mean PC sales are down a total of 25 percent for the year. The data is year-over-year, comparing each 2013 quarter to its corresponding quarter in 2012. So computer shipments in the second quarter of 2013 dropped by 11 percent compared to the second quarter of 2012, not compared to the first quarter of 2013.
Got it? Knowing that, the latest numbers are less devastating.
Yes, the first quarter’s year-on-year decline was the sharpest ever, dropping from 88.6 million PCs shipped in Q1 2012 to about 76.2 million PCs in Q1 2013, according to IDC. (Data from Gartner, another research group, yields roughly the same numbers.) Fourteen percent! Geez.
But when you compare the Q2 2013 shipment number to the Q1 2013 shipment number, you realize that the drop hasn’t been excruciating over the past seven months alone. According to IDC, 75.6 million PCs shipped in Q2 2013—a drop of just 600,000 units from the first quarter of the year.

According to IDC, the decline in PC sales in the United States is slowing—and a few vendors even saw an uptick.

Also, the top five PC vendors all moved more computers in the second quarter of 2013 than they did in the first quarter. The quarter-to-quarter unit loss came solely from “Others.” (Sorry.)
Remember: Shipments are down a lot compared to last year. But comparing one quarter to the next, the PC shipment decline may be slowing down.
Even more heartening, the drop in shipments was considerably smaller in the United States than in the rest of the world: Gartner says second-quarter U.S. shipments declined by just 1.4 percent year over year, while IDC says U.S. shipments dropped by 1.9 percent year over year in Q2.
Why such relatively smooth sailing? Simple: In the United States, we may—may—already be over the worst of the tablet hump.

Much ado about tablets

“We know that a lot of tablet buyers feel that a lot of what they needed to do with a computer has been taken care of by a tablet,” says Jay Chou, a senior research analyst at IDC. “That said, no one in our research feels that a tablet can 100 percent replace a PC. It’s not a perfect substitute.”
As I and many others have said before, tablets are a big part of the reason why PC sales are hurting. No, most people aren’t replacing PCs outright with tablets, but people are delaying their purchase of new computers, satisfied with the base-level oomph that their slates provide. Chou reiterated that the practice is definitely occurring.

Tablets remain very popular, of course, but Gartner thinks that the category’s damaging effect on PC sales in the United States will diminish as the market matures.

Here’s the thing: Growth in the PC industry requires both sales to new customers in developing countries and regular upgrades by people who already own computers. If happy tablet users delay buying new PCs en masse, that’ll put a big hurt on PC shipments. And what do you know! PC shipments have plummeted over the past two quarters (remember: compared year-over-year), and have been shrinking for more than a year.
But Mikako Kitagawa, principal analyst at Gartner, says the slim drop in U.S. figures during the second quarter may indicate that things are starting to stabilize.
“The U.S. industry is definitely the most advanced [in terms of tablet adoption],” says Kitagawa. “So the U.S. market might see some slowdown of tablets eating into the PC space.”

We’re not out of the woods yet

“But in other regions, [the loss of PC share to tablets] is going to continue quite a bit,” Kitagawa continues.
And make no mistake: Even with a minimal quarter-to-quarter drop, the PC industry is still in the doldrums, especially on a global scale.
“Usually, you see a seasonality in PC shipments, where the first quarter is the lowest of the year, and every quarter after that should be a little bit higher, really peaking in the holiday season,” says Chou. “[The second quarter] results thoroughly bucked the seasonal trend.”

The light at the end of the tunnel

Indeed, both Gartner and IDC anticipate two to three years of continued decline in worldwide PC shipments. (Here’s hoping the United States fares better.) But to put a somewhat optimistic spin on things, current estimates predict that the PC’s decline over that time will be slight. The second-quarter results matched predictions from IDC and Gartner, and both Chou and Kitagawa say their firms anticipate that the worldwide sales slump will taper off to a low, single-digit decline for the rest of 2013.
The ship is still rocking, but not as hard. Queasy stomachs, take heart.
“Once the PC becomes a certain level of market size, shrinking into the size it’s supposed to be alongside tablets, it’s going to settle down and go back to more steady growth—not strong growth—going forward,” says Kitagawa.

If PCs—and Windows 8.1—can give users compelling reasons to upgrade, they just might stop being the underappreciated microwaves of computing.

Chou agrees, saying he expects tablet growth to taper off starting in 2014 or 2015, and PC sales to stabilize. Kickstarting the PC market will take more than tablet saturation, however: “A lot of that will depend on things like pricing, and how well Windows 8.1 turns out—how comfortable people feel using that.”
Indeed, the PC’s stall is due to a wide variety of factors, but that’s a whole different story. For now, rejoice in the fact that, while things are still looking down, the PC industry’s prospects aren’t quite as bleak as they appeared earlier this year. And hey! If you consider tablets to be PCs in yet another form factor, the future has never looked brighter.
via PCWorld