In 2014 the huge drop-off in PC sales came to a halt. Analysts had been expecting sales to decline about 7 percent each quarter, yet they’re little changed, yielding global sales of 300 million for the year as a whole. Manufacturers are optimistic that come 2015 PCs will be on the rise again.
That flat sales can be considered a victory provides some sense of the grim prospects facing legacy PC makers such as Hewlett-Packard (HPQ) and Dell. There are bright spots in a few corners of the industry—China’s Lenovo (992:HK), which took the No. 1 spot away from HP last year; Apple (AAPL), which charges about twice what other companies do; and Chromebooks running Google’s (GOOG) operating system. ABI Research estimates that by yearend, Chromebook sales will have doubled from 2013. “Chromebooks may have more of a place in the market than originally anticipated, especially as more vendors jump on board,” says analyst Stephanie Van Vactor, citing design and low price as factors. In addition to four of the top five PC makers, Google itself is selling them.
Microsoft (MSFT) has noticed. The Windows maker has cut the price it charges manufacturers for its operating system by as much as 70 percent on cheaper models. It’s spending big to make sure the PC industry’s primary bet in 2015 will be on Windows 10, the first version that can run across PCs, phones, tablets, smartwatches, and whatever else Microsoft can think of. “We can say Windows 10 is for everybody,” says Joe Belfiore, who heads the company’s design division. The software is due out late next summer.
Microsoft’s pitch for Windows 10 is that it will be a massive step forward. That and research suggesting people prefer round numbers account for why the company skipped directly from Windows 8 past Windows 9. Judging from early test versions, the new OS is a return to a look and feel users are comfortable with, restoring the Start menu dropped from Windows 8 and placing less emphasis on that version’s blocky title icons. Microsoft is also promising corporations that Windows 10 will give them better control over the apps employees use on their company-issued devices.
The big PC makers, including Lenovo, have to hope that Microsoft can woo corporate IT chiefs with Windows 10. Hardware makers have spent years waiting for companies to ditch their aging computers and to upgrade. Windows 8, released in 2012, alienated corporate clients with its unfamiliar look and feel and did little to spur sales of PCs.
That Microsoft has already let people download test versions of Windows 10 suggests the company recognizes that this one has to work. “We’ve never been this open this early,” Belfiore says. Giving everyone an advance look, he says, will help the company better tailor the OS to client demand—an unthinkable move for Microsoft even a few years ago.
While the company refines Windows 10, the PC industry’s big five—HP, Dell, Lenovo, Acer (2353:TT), and Asus (2357:TT)—are struggling to differentiate themselves as Apple has. If HP follows through on its plan to split off its PC and printer business into a standalone company, the rechristened HP Inc. will have about $57 billion in annual revenue. It won’t have a lot of sitting-around time, though: Lenovo became the world’s largest computer seller partly by cutting prices, but its revenue, about $39 billion last year, has been growing roughly 20 percent a quarter.
(Bloomberg Businessweek)
