Michael Mace on the plummeting PC sales:
This is an existential shock for the PC companies. It’s like discovering that your house was built over a vast, crumbling sinkhole.
Great read. Just as much about Microsoft’s future as Dell’s. And he makes a good case for Dell seeing the signs of the PC industry decline (slightly) early and the bid to go private being a direct result of that. It’s easier to transform a ship into a submarine when it’s not already underwater.
A warning that only PCMAG could conjure…
Horace Dediu:
If this estimate is considered then the operating profits from PC operations imply that Apple generates more profit than all the top 5 PC vendors combined.
Assuming further that “other” vendors have the same profitability ratio as the top 5 combined yields a figure of 45% “profit capture of PC market” for Apple. This is not as good as its performance in the phone market, where Apple has about 72%, but it’s not bad.
That’s pretty incredible. But the real key, as Dediu notes, is that volume used to make up for the low margins for the other PC makers. Of course now that volumes are falling…
It seems that Apple is the only company that successfully achieved a cruising altitude when it comes to the personal computer business. The rest are going to fall out of the sky.
Roger Kay for Forbes:
With Windows 8, Microsoft entirely screwed the pooch. A badly conceived OS, designed to compete with Apple’s iOS and yet remain a traditional PC, did neither. It only confused and repelled users. Windows 7, a decent replacement for Windows XP, finally, could have sustained the industry easily for a decade.
The dilemma facing the industry is familiar to anyone who knows the children’s “cookie jar” story: if you drop half the cookies, you can take your hand out of the jar with some cookies and then go back for another modest handful. Instead, we have the stupid industry, sitting there on the stool with its hand in the cookie jar, fistful of cookies unable to pass the rim, red-faced, crying, and looking like a fool.
No compromise, indeed.
It should be noted that Kay has a rather odd conflict: his firm, Endpoint, used to consult for Microsoft. But in the past year, Microsoft terminated the relationship. Why? In Kay’s own words:
Because they don’t like independent analysts, who have to tell it like it is even when the picture isn’t pretty. They want “message force multipliers,” tame hacks who will help their public relations efforts. Tell them what they don’t want to hear, and you’re shown the door.
No compromise, indeed.
I know I already snarked this up. But it really is incredible that not only is Microsoft’s worst nightmare coming true, it’s all playing out in a way that’s exactly the opposite of how they thought it would.
Then-Windows-chief Steven Sinofsky, talking about Windows 8 just seven months ago:
Our goal was a no compromise design.
And:
We chose to take the approach of building a design without compromise.
And:
You don’t have to compromise!
And:
Our design goal was clear: no compromises.
Fast forward to today. Ian Sherr reporting for The Wall Street Journal on the latest PC numbers:
Indeed, IDC said that Windows 8 hasn’t only failed to spur more PC demand but has actually exacerbated the slowdown—confusing consumers with features that don’t excel in a tablet mode and compromise the traditional PC experience.
I mean, the dichotomy is almost poetic. Especially to those of us who knew that this is exactly what would happen.
Scott Weiss of Andreessen Horowitz:
Well, it’s a good thing all of these companies also play a big part in the $55B server market — that’s not going away anytime soon, right? The worst days are over and hopefully their collective market caps will recover? Not so fast…
Very smart post. When you say the PC business is dying, so many are quick to jump on the “yeah, but the server business is robust!” bandwagon. It is. But not for long for most of the incumbents. Maybe all of them. This is what happens. In every industry. Change.
Matthew DeCarlo for TechSpot:
Tablets are due to outship desktops in 2013 and notebooks in 2014, while both of those PC segments will either lose ground or see relatively flat growth. The desktop market is expected to shrink consistently through 2017, when growth is expected to be -1%.
Q: Why is Microsoft worried?
President Obama, during his State of the Union speech last night.
No mention of PCs.
Mary Jo Foley for ZDNet:
It’s a tumultous time to be a Microsoft OEM, no doubt about it. The PC market is in decline, revenue-wise. Microsoft is competing with its own OEMs with its Surface line of products. And now Microsoft is providing $2 billion loan to one of its largest OEMs, Dell. I wonder how many Windows OEMs will still be in existence in a year or two, and how many will be backing Windows as just one of several different platforms to hedge their bets.
Glory days, well they’ll pass you by.
chartier:
PPPLLLEEEEAAASSSSEEEEEEE
FOR THE LOVE OF GOD
START.SHOPPING.NOW
WHAT ELSE WERE YOU GOING TO DO TODAY? NOTHING, THAT’S WHAT
PPPPPLLLLLEEEEAAASSEEEEEEEEEEEEE
“Dell recommends Windows.” Consider that $2 billion check cashed.
