Quick, someone add "Nearer My God to Thee" to Steve Ballmer's Xbox Music queue. Microsoft's CEO has a real problem -- well, at least his OEM partners. Simply stated: US Windows PC sales still suck and got absolutely no lift from Windows 8's release. So much for 40 million licenses sold in the first month (and we know it really was longer, since license sales to businesses started in August). Then there is increasing context for Windows chief Steven Sinofsky's sudden departure. The new operating system sinks like Windows Vista. Cue the violins.
New Windows version is supposed to lift PC sales, but they're down 21 percent since the October 26 launch. Notebook sales slumped 24 percent and desktops 9 percent, for the same time period a year ago. "Clearly Windows 8 did not prove to be the impetus for a sales turnaround some had hoped for", Stephen Baker, NPD's vice president of industry analysis, says.
But he cautions: "After just four weeks on the market, it’s still early to place blame on Windows 8 for the ongoing weakness in the PC market. We still have the whole holiday selling season ahead of us". NPD measures US brick-and-mortar and online retail sales.
Tablets sink Faster
Not that manufacturers demonstrate enough commitment to Windows 8. The Modern UI and emphasis on convertibles and tablets should have brought bunches of new designs to market -- and consumer sales with them. Three years ago, Windows 7 launched about the same time of year and accounted for 83 percent of PC unit sales during the first month. Windows 8: Just 58 percent. That says much about what's for sale and what people buy.
Third-quarter PC sales already were bad and left some collateral damage for Windows 8's launch. "The bad Back-to-School period left a lot of inventory in the channel, which had a real impact on the initial sell-through rates for Windows 8", Baker says.
Most surprising -- and I'm seeing Sinofsky's pink slip before my mind's eye -- NPD describes Windows tablet sales as "almost non-existent", accounting (cough, cough) for just 1 percent of sales. Have you seen the Best Buy commercial with the kid using Apple gadgets to contact Santa? With retail partners like this, what are Windows 8 slates' chances?
Still, there's room in the lifeboats to save something from this sinking ship. "The strong performance of Windows 8 notebooks with touchscreens, where Windows 8 truly shines, offers some reason for optimism", Baker says. "These products accounted for 6 percent of Windows 8 notebook sales at an average price of $867 helping to re-establish a premium segment to the Windows consumer notebook market".
"Premium" is not a word often associated with Windows PCs -- rather Macs. But Windows 8 lifts average selling prices. Let me tell you from covering this market for so long, Windows PC ASPs usually only go one direction. Down. But, year over year, notebook ASPs are up 80 bucks to $477 (not exactly Mac pricing territory), while desktop ASPs are up 10 percent. NPD attributes the rise to costlier touchscreen models.
Surveying Wreckage
There has been much debate, particularly the past 10 days, about Windows 8's success or failure. Early holiday PC sales are simply tragic. Not that this misery is new. Ten months ago, IDC described 2011 as the worst year for PC shipments since 2001 -- the year terrorists attacked the United States and during a recession. There is no good news since, just more bad for PC manufacturers -- that despite Intel's efforts to rally the market around ultrabook.
In January, following disappointing Q4 2011 PC shipments, I asserted that "Only Windows 8 can save the PC market now". The new OS has come, and unless something really dramatic happens between now and Christmas Day, fourth quarter is a lost cause -- all while Apple sells iPads faster than the US Mint can print money.
If Sinoksky is captain of this ship, he isn't going down with it. Or stated differently, the crew threw him overboard and he is first casualty of the sinking. His future name is Scapegoat Sinofsky. No matter that the rudder was too small, the ship too big to turn around the iceberg.
Perhaps Windows 8's sinking was inevitable, as people shift buying to other device types. You know, tablets. That's the category where Microsoft bet the larger Windows ecosystem would give great sales lift. Not among US consumers. Sinofsky will be blamed, whether or not he deserves it. He's separated from Microsoft and surely won't risk any severance package by disagreeing too loudly.
For those left behind, I say this: Man the life boats. Women and children first.