A sobering new report from research firm IDC suggests that Steve Ballmer’s sudden retirement was timely.
PC sales are now expected to fall 9.7 percent this year, worse than the 7.8 percent decline that IDC had previously been expecting. the firm said.
A major factor is dwindling PC sales in emerging markets that had buoyed the industry in recent years.
Overall sales of PCs are expected to decline “through at least 2014, with only single-digit modest growth from 2015 onward, and never again the peak volumes last seen in 2011.”
Despite its diversification and makeover into a devices and services company, Microsoft’s earnings are still closely linked to PC sales and the industry has counted on its technology and business leadership to sustain and increase its growth.
The worsening outlook and inability of Microsoft to revive a legacy PC business that still revolves around Redmond was no doubt a major factor in Ballmer’s early departure announced last week. Especially since he was likely to be blamed for the industry’s struggles to evolve as personal computing proliferates into all sorts of devices beyond the PC – regardless of how well Microsoft handles the transition itself.
International growth in the PC business has plateaued now that the 30-year run has made its way through developing countries, where consumers are now getting more excited about tablets and smartphones. China in particular is expected to see double-digit declines in PC shipments this year, IDC said.
Slower government spending in the U.S. is another factor, on top of generally weaker demand.
“Advances in PC hardware, such as improvements in the power efficiency of x86 processors remain encouraging, and Windows 8.1 is also expected to address a number of well-documented concerns,” IDC analyst Jay Chou said in the release. “However, the current PC usage experience falls short of meeting changing usage patterns that are spreading through all regions, especially as tablet price and performance become ever more attractive.”
IDC expects a “slow rebound” after 2014 driven by consumers finally replacing PCs that are lasting longer and longer, and businesses finally deciding to replace Windows 7 systems.