There’s an awful lot of finger-pointing directed at Microsoft (NASDAQ: MSFT) , blaming the Redmond-based software giant for the mess that the entire PC industry is in. With PC shipments on track to be down about 10% this year, it’s certainly prudent to try to figure out just what happened. Most people blame the rise of tablets for the decline in PC sales. After all, before the iPad, people would buy multiple PCs. Today, those dollars are being spent on other devices, including tablets. But others claim that it’s Microsoft’s fault because Windows 8/8.1 weren’t all that great. So, what’s…
To keep reading, enter your email address or login below.
There’s an awful lot of finger-pointing directed at Microsoft (NASDAQ: MSFT) , blaming the Redmond-based software giant for the mess that the entire PC industry is in. With PC shipments on track to be down about 10% this year, it’s certainly prudent to try to figure out just what happened.
Most people blame the rise of tablets for the decline in PC sales. After all, before the iPad, people would buy multiple PCs. Today, those dollars are being spent on other devices, including tablets. But others claim that it’s Microsoft’s fault because Windows 8/8.1 weren’t all that great. So, what’s really going on here?
Apple is doing better, but with caveats
Apple‘s (NASDAQ: AAPL) sales are a good first place to look to determine if Microsoft is really the problem. MacOS is well-liked and it’s not a converged tablet/PC OS like Windows 8.1, which some claim is what throws off potential PC buyers. However, even the mighty Apple saw its Mac sales decline from 4.9 million units in the year-ago period to 4.6 million units — a 6% decline. Note that this is actually a less drastic decline than the general PC market. But also keep in mind that Macs are strictly high-end systems, and as a result, are less vulnerable to tablet cannibalisation than Windows PCs.
The ASUS T100 sold really well
One argument against the fact that Windows 8.1 “killed” the PC is just how well the ASUS Transformer Book T100 is selling. This is a hybrid that runs Windows 8.1 and is powered by a low-power Intel (NASDAQ: INTC) Atom processor. During the Black Friday time frame, this device was routinely at the top of the best-seller charts on Amazon.com. Even today, with supplies scarce and prices up, the device is still the No. 2 best seller on the site in its category. Clearly, Windows 8.1 isn’t a problem for the people clamoring to buy this machine.
It’s probably tablets and a lack of compelling low-cost PCs
It seems likely that the decline in the PC market has much more to do with tablets being a much more attractive as incremental computing devices than most laptops. However, as the ASUS T100 showed, a convertible at a low price — less than US$399 — is a great seller. Could it be that PCs will be attractive again once the flurry of low-cost, long-battery-life PCs based on Intel’s low-power Atom-based chips hit the market in force? Could the convertible Windows machines eventually end up being smash hits all around and win back share from pure tablet platforms like Android and iOS?
The ASUS T100’s popularity is certainly a great data-point, although it really remains to be seen how 2014 will go, when a new wave of low-cost PCs will be rolled out. There’s no denying that the iPad and other Android tablets have taken the place of many low-end PCs as incremental devices. While Windows convertibles could certainly gain back some of that share, there are still plenty of users that prefer iOS and/or Android, which means that wallet share is permanently gone.
Foolish bottom line
Did Microsoft kill the PC with Windows 8.1? It doesn’t seem like it. Macs are losing ground too, albeit in a less pronounced fashion, since they are high-end devices and less susceptible to tablet cannibalization. What’s going on here is a fundamental broadening of the computing landscape into new form factors. For some uses, tablets are simply better, and many people were buying PCs for uses that tablets are better suited to tackle. This is OK for Microsoft, since it now has a presence in tablets. It’s OK for Intel, since it, too, has a presence in tablets — and not just Microsoft ones, either.
The PC isn’t dead, but it’s time to accept that the “PC” now comes in a new form factor with new operating system flavors. Companies that understand and embrace this will do well and companies that try to resist this will fail. It’s just going to be a rough transition for both Microsoft and Intel, since there’s more competition in these new form factors than ever before.
The Australian Financial Review says "good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit." Get "3 Stocks for the Great Dividend Boom" in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!
A version of this article, written by Ashraf Eassa, originally appeared on fool.com.