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The 'Toasterization' of the PC, and Why Things Really Are Different This Time


The release of Microsoft's Windows 8 failed to revive PC sales.These days, the PC is basically a toaster. It's not a source of interest in and of itself -- it's a tool for getting a job done.

MINYANVILLE ORIGINAL Last week, PC industry bulls were hit with a major shock after NPD released some critical data regarding the reception to Microsoft's (NASDAQ:MSFT) Windows 8 following its October 26 release.

According to NPD, US Windows Device Sales fell 21% year-over-year during the initial four-week sales period. Notebook sales dropped a whopping 24%, while desktops decreased by 9%.

And during this period, just 58% of Windows buyers opted for Windows 8. The last time around, Windows 7 accounted for 83% of sales. NPD also said that Windows 8 tablet sales were "almost non-existent," echoing some Wall Street analyst reports which indicated that Microsoft Surface tablet sales were very weak on Black Friday.

Earlier in November, Microsoft CEO Steve Ballmer told the French newspaper Le Parisien that Surface sales were off to a modest start. Now there's a possibility that Ballmer was playing rope-a-dope in the name of keeping expectations low, but that's unlikely; if Surface were selling in large numbers, Microsoft would be obligated to let the public know to build confidence among app developers.

As it stands now, Surface does not have native Twitter or Facebook (NASDAQ:FB) apps, which is fairly strong evidence that Windows is pretty low on the totem pole in mobile.

Surface's likely disappointment -- we don't have definitive numbers yet, but the picture isn't pretty -- is easily explained by the Apple (NASDAQ:AAPL) iPad's runaway momentum, and competition from Google (NASDAQ:GOOG) Android tablets from the likes of Samsung (PINK:SSNLF), Amazon (NASDAQ:AMZN), and Barnes & Noble (NYSE:BKS).

That explains away the Surface issues.

But what's going on in PCs? Why didn't sales rebound with Windows 8?

PC sales have been lousy for several quarters, which could have meant one of two things:

1. people were waiting for Windows 8, indicating pent-up demand ready to be unleashed, or

2. there was a disturbance in the PC industry.

As you can tell by the title of this article, I'm voting for the second.

Here's why.

Let's fire up the time machine and head back to 2009 for the release of Windows 7.

In Q3 of that year, the quarter preceding the Windows 7 release, PC sales rose 0.5%, according to Gartner. But in Q4, PC sales rocketed up 22%. A major factor in that improvement was the easy year-over-year comparison (Q4 of 2008 was disastrous for PCs), but still -- 22% unit growth isn't bad for a relatively mature market.

So cycle-over-cycle, PCs are looking pretty lousy, especially when you consider that, like Windows 7, Windows 8 faces an easy year-over-year comparison. In Q4 of 2011, PC sales fell 1.4%, so it's not like there's a need to top a spectacular year.

We're not doing an apple-to-apples comparison here as we're comparing Gartner's quarterly global data to a slice of NPD's weekly US data, but it's obvious that PC sales trends look just plain bad relative to what we saw with Windows 7.
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