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This Is the Bad News Microsoft Was Telegraphing

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Gartner reports that PC sales slowed dramatically in the fourth quarter, though Apple is a notable standout.

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On Tuesday, Microsoft (MSFT) announced at an analyst event at the Consumer Electronics Show in Las Vegas that fourth-quarter PC industry sales would come in lower than expected due to supply-chain disruptions in Thailand -- a revelation that surprised me, given the fact that 1) it was a months-old problem and 2) every company in the supply chain had already spoken about it. (See Microsoft is Telegraphing Bad News.)

My take on the situation was simple:

Now I realize that I'm once again putting on my Captain Obvious hat, but it looks like Microsoft is trying to soften the blow of a really, really lousy quarter for the Windows business by blaming Thailand. As in, HDD shortage or not, Microsoft was going to have one stinky quarter.

It turns out, by golly, the Windows world did face a pretty tough fourth quarter:

Market-research firm Gartner just released its industry numbers, and reported that PC unit sales fell 1.4% globally in the fourth quarter, while US sales dropped by a whopping 5.9%. Note -- Gartner rival IDC also put out its numbers, but the numbers are largely interchangeable, so I'm not bothering to break both out.

Hewlett-Packard (HPQ) is still on top in terms of market share, though its sales fell by 16.2% year-over-year, at least partially because of uncertainty related to the potential spinoff of the PC unit, though new CEO Meg Whitman has decided to keep the business.

That contributed to a 7.8% sales increase at Dell (DELL). Lenovo and Asus also saw gains on a global basis.

However, it appears that Microsoft is losing the hearts of Americans.

Apple's (AAPL) global market share isn't sufficient to rank in Gartner's global rankings, though it does rank No. 3 here in the US.

According to Gartner's numbers, Apple saw unit sales skyrocket by 20.7% in the US, with market share moving from 9.0% to 11.6% year-over-year. Every other company in the top five saw sales drop.

In fact, if we back Apple's sales out of the US numbers, we come up with an 8.6% decrease for Windows PC sales.

So think about this.

After its 2010 release, the Apple iPad, which is not included in the above figures, basically walked up to the netbook and low-end laptop markets, pulled out a baseball bat, and cracked them in the knees.

The iPad's popularity has been a significant headwind for PC sales. And in an ongoing trend, Apple is steadily scooping up market share in what's left of the larger PC market. Thus, Apple is taking a heck of a lot more share in the broader computing market than that 2.6% increase would imply.

And that's just the US. Last quarter, Apple did huge business in Europe and Asia ex-Japan, so its fourth-quarter global market-share gains could have been even more significant than they were in the US.

Now looking forward, Microsoft bulls had better re-examine their expectations for the enormously profitable Windows business because the size of the fourth-quarter hit seems to have gone way beyond the impact of the floods in Thailand.

Folks should also be very wary of Hewlett-Packard. Its PC numbers were atrocious, and this morning's disappointment from Infosys (INFY), which followed Oracle's (ORCL) in December, does not bode well for megacap enterprise tech. As an aside -- the Infosys/Oracle debacles can probably be extrapolated to IBM (IBM) as well.

Can't wait for tech earnings season to really kick off -- it's gonna be a rollercoaster!

Twitter: @MichaelComeau

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