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Windows 8: No saviour for Microsoft

Although the release of Windows 8 late last year was intended to rekindle the flame at Microsoft (NASDAQ: MSFT), it has so far failed to succeed.

With an initial public offering in 1986 following the release of the Microsoft Windows line, the company rose to dominate the software industry, where various versions of Microsoft’s operating software were found on most of the world’s computers.

The behemoth’s dominance in recent years however, has been somewhat dampened by the release of smart phones and tablet devices by companies such as Apple (NASDAQ: APPL) and Samsung.

Research conducted by firms including IDC and Gartner has shown the extent of the retreat of demand for the personal computer. For starters, global shipments for laptops and desktops for the March quarter fell 14% compared to the prior corresponding period, affecting Dell (NASDAQ: DELL) and Hewlett-Packard (NYSE: HPQ)two of the world’s largest computer manufacturers. These companies recognised declines in global shipments of 11% and 24%, respectively.

In an attempt to meet competition, Microsoft introduced Windows 8 as more and more consumers purchased smartphones and tablets (both having a touch-screen feature). However, IDC suggests that whilst Windows 8 has failed to spur more PC demand, it has actually “exacerbated the slowdown”, according to The Australian.

Whilst some critics have failed to see its functionality, Microsoft executives were quick to defend their product, insisting that it will take many months for consumers and businesses to catch on.

To make matters worse, data has also revealed that tablets powered by Microsoft’s Windows 8 are also lagging behind the market, where last year they accounted for only 1% of global tablet shipments.

Overnight, Microsoft’s shares fell 4.44%, reversing the gain of 5.5% that the company had realised over the previous two days.

Foolish takeaway

The functionality and convenience that smartphone and tablet devices offer has forced a shift in consumer demand, while many businesses have also chosen against upgrading to the new system. As such, with a diminishing market share and global shipments combined, analyst Stephen Baker believes that “the future for Windows-based machines (is) looking increasingly bleak”.

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The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

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