At some point, the cheerleaders—and yes, amazingly, they’re out there—are going to have to face reality: Windows 8 is selling slowly. More slowly than Windows 7 at launch, and more slowly than Windows 7 a year ago. And while a peek at NPD’s publicly released data for the holiday selling season can provide some clues as to why, I can tell you exactly what happened.
First, the publicly-released NPD data.
“Despite the hype, and hope, around the launch of Windows 8, the new operating system did little to boost holiday sales or improve the year-long Windows notebook sales decline,” NPD noted. “Windows notebook holiday unit sales dropped 11 percent, on par with Black Friday, and similar to the yearly trend, but revenue trends weakened since Black Friday to end the holiday period down 10.5 percent … . [Average Selling Prices, or ASPs] rose only $2 to $420. Touchscreen notebooks were 4.5 percent of Windows 8 sales with ASPs around $700. Sales of Windows notebooks under $500 fell by 16 percent while notebooks priced above $500 increased 4 percent.”
NPD only provides a small sliver of its data to the public, but it generates much more comprehensive reports, for a fee, for companies like Microsoft that have a stake in this market. But buried even in this single public statement is the clue we need to explain Windows 8’s slow start.
It’s the netbook.
I’ve written—and spoken about, on podcasts—about how Windows 7, somewhat miraculously and/or suspiciously, was able to maintain a steady selling rate of approximately 20 million units per month over its three year lifespan. And I’ve furthered that Windows 8 needs to reach that figure, at a minimum, because it targets two markets, that for PCs and that for tablets. To be truly successful, Windows 8 needs to sell far more than 20 million licenses a month.
The funny thing is, we’ve held up Windows 7 as the gold standard when it comes to Windows versions. It was non-controversial, lauded for cleaning up the Windows Vista “mess” (whether real or perceived), and is still generally regarded as a high-water mark of sorts. Those who pan Windows 8 invariably compare it, unfavorably, to Windows 7, and wonder why Microsoft simply couldn’t have made another Windows 7 instead.
But it’s simple. Windows 7 was a lie.
See, that 20 million figure—which I believe to have been massaged from a bookkeeping standpoint—was unfairly bolstered by sales of low-cost PCs, primarily netbooks. And that’s the clue we see in the NPD statement above. It says that the average selling price of notebooks “rose only $2 to $420.” The average selling price of Windows-based PC notebooks is barely above $400. Do you know what the ASP is for Apple’s Macbook line? It’s $1419. A full $1000 more than that of a typical Windows notebook. $1000!
It’s not pat to say that the Windows PC market went for volume over quality, because it did: Many of those 20 million Windows 7 licenses each month—too many, I think—went to machines that are basically throwaway, plastic crap. Netbooks didn’t just rejuvenate the market just as Windows 7 appeared, they also destroyed it from within: Now consumers expect to pay next to nothing for a Windows PC. Most of them simply refuse to pay for more expensive Windows PCs.
And this isn’t my opinion, it’s a fact. Despite being created as a “touch-first” OS, only 4.5 percent of Windows 8 PC sales including multi-touch capabilities. When you couple this with the fact that statistically zero percent of PCs that were upgraded to Windows 8 included touch capabilities, you can see that even in the tiny current market of Windows 8 users, virtually no one is using multi-touch.
(Before anyone else points this out, yes, the NPD’s data cited here does not include tablets, like Surface, nor does it measure sales at Microsoft’s own retail stores, which accounted for virtually all Surface sales in Q4. But let’s not pretend that Surface sales have taken off. Based on Microsoft’s silence, and what we do know about Windows 8 sales, it’s likely that Surface accounts for a tiny, tiny percentage of Windows 8 sales overall.)
In a privately distributed report, NPD concludes that “netbooks did an incalculable amount of damage to the PC market,” driving average selling prices down at an unsustainable rate. With Windows 8, of course, Microsoft is trying to reverse that trend, and it is doing so in two ways:
Tablets. Thanks to Apple, the average selling price of a capable, full-sized (~10-inch screen versions) tablet is about $650, with prices starting firmly at $500. (Some competitors finally began undercutting Apple in 2012, of course). Microsoft thus entered the market at $500 with a base Surface that basically requires at least another $110 to $120 of keyboard cover accessory, for a price of, wait for it, $610-$620. That’s $200 more than the ASP of a typical Windows notebook.
Multi-touch hybrid and traditional PCs. Those $420 PCs that everyone bought do not have multi-touch. According to NPD, the average selling price of a touch-based notebook is $700, about $300 more—almost double—the ASP of a typical Windows notebook. But touch-based notebook/hybrid PCs that cost $900 or more are twice as prevalent in the market as devices that cost $500 to $700. So PC makers made more of the more expensive devices, but sold more of the less expensive (non-touch) devices regardless.
These higher prices are better for both Microsoft and its PC maker partners. But no one is buying them.
Getting people to pay more for a product they were previously getting inexpensively is a tough one. Obviously, a touch-based PC is “more capable” than a non-touch-based PC. But I keep coming back to the same argument I’ve always had about the Surface in particular, which I’ll now make for all touch-based Windows 8 PCs/devices as well. They are too expensive.
And we’re reaching the point, given the actual sales data, where this too isn’t so much opinion as fact. Consumers are voting with their wallets, and the Windows PCs they’re buying today are cheap and non-touch-based. And the reason is that the touch-based machines are too expensive.
Years of relying on cheap netbook sales to bolster the shaky PC market have colored our perception of both Windows and the hardware on which it runs. For Windows 8 to succeed—reach or exceed that 20 million licenses per month figure—the average selling price of touch-based PCs and devices is going to have to come down. On a side note, I suspect this was the real impetus behind the push to get Windows 8 on ARM: ARM-based chipsets and devices are much less complex and thus less expensive to manufacture today than traditional PCs. That Microsoft then milked customers with higher Surface prices is, of course, unfortunate.
And while Apple has kept prices on its own ARM-based devices high, Android alternatives are flooding the market with cheaper prices. This is the part of the market the PC always occupied in its battles against the Mac. But I suspect that multi-touch Windows 8 PCs and devices can occupy a price range that fits neatly between that for Android tablets and that for iPads.
Regardless, prices need to come down. The 2012 holiday selling season has confirmed that these devices are too expensive.
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By George!!! I think you have NAILED it down to perfection. This is an excellent way to explain why the markets have evolved the way they have. I purchased 2 Netbooks for my children and they disappointed in their lack of performance but their portability quite made up for them...and yes! I don't feel like spending more than $400 for a replacement and this is exactly what a tablet becomes.
Great analysis Paul, and thank you for bringing this up to all of us.
Indeed, there's no doubt in my mind that price is a factor. Microsoft, and its partners, must reduce these hardware costs again. I've been buying $900 Dell laptops (with 3-year warranties) for my work staff, and the fact that Surface Pro and other touch/tablet models start at $1000 and go up from there makes it a very hard sell for my leadership.
Despite my own cheerleading for Windows 8 (I love the overall performance of the OS over Windows 7), and although my CFO's son works for Microsoft and is actively waiting for a Surface Pro to demo, he has ordered me to NOT purchase any Windows 8 equipment until my department has a couple viable devices and can demo and discuss it with our leadership.
I understand his perspective... he (and I, really) wants to make sure we adequately evaluate WinRT versus Win8 Pro to make sure that the right users get what's appropriate. We're trying to determine if email, Internet, and a copy of Office via WinRT are sufficient for some users and reserve Win8 Pro for the heavy users with legacy app needs.
But one thing missing from ALL of the hybrid models right now is a proper digitizer for pen support. I love the design of the Dell XPS 12, but without a digitizer it's pointless for me. All of my leadership is currently using HP Elitebook 2760's right now, and while some of them don't use their pens, my COO and all of us in IT require it for OneNote. No pen is a step back for us, as silly as it seems to some people. And yet, that XPS 12 is same price as the 2760, so that's a hard sell for me to justify when we can get cheaper options.
Right now Surface Pro is a viable hardware option, but I'm concerned about battery and screen size for full-time usage. I know I will use it at my desk with a monitor as will others, but that effectively puts us at $1500/user by the time all is said and done. It's absurd.
Also, I would remind everyone that while the new pricing is comparable with what Apple is charging for Macbooks... the whole reason nobody has switched to Mac en masse has been the pricing and lack of compatibility. Microsoft and partners can't afford take a step backwards in the PC world.
As a software development manager at a Fortune 1 company I can tell you we have more Macs than ever before and there are no big issue "compatibility" problems. In fact given our focus on technologies such as Hadoop and Cassandra running on RedHat etc., there is actually better compatibility for Mac based developers than those with Windows. Sure not "en masse" but a trend none the less.
I wholeheartedly agree with all that's been said. I have purchased one laptop per year for the last 5 years - selling the old one to a friend or on eBay, using the "recovered" money to make my next laptop purchase "cheaper". I have normally spent $500 - I don't need to go as cheap as some $250 netbooks, but I also don't need to spend $700 if a product isn't worth it overall.
Now, I think there's something to be added to what has been said so far: build quality. When I see the Ativ, the VivoTab, etc... I keep thinking: they're trying to charge me nearly $700/800 for a cheapo plastic machine. And while I agree that plastics have come a long way, it's still crappy plastic no matter how you look at it. Surface does this well in my opinion: while it's terribly overpriced when you consider the Tegra3 CPU inside, it's quite a good deal when you consider the extremely good build quality - what was it, VaporMG!
I wouldn't pay $900 for any ultrabooks I'm seeing with a gun to my head. Either a crappy metallic "finish" or simply plastic all the way. I would certainly pay $900 for a Macbook Air that I know is made of metal. Consumers aren't dumb and it's not just the prices they're accustomed to pay, build quality is obvious to people when they touch it and it's an important factor to take into account.
I myself would have bought a Surface a few months ago if it weren't for that Cortex A9 based T3 cpu. Once the gen2 Surfaces come out, most likely based on T4 - which we should learn tons about soon in CES - then Surface becomes enough for me, and at the same $500-600 price tag it's terrific value: bleeding edge cpu (which T3 no longer is, even by a long shot) with terrific build quality = yes please.
I own a Vivo Tab RT, and the back is metal, with the exception of a plastic strip to let the WiFi antenna and NFC work. The front is gorilla glass. I have usually liked Asus' build quality and this is certainly no exception.
Hey Paul I basically agree with you here the only thing I'd add is that the PC makers don't seem to have really put much effort into win8 machines. I don't know why but if you can't go to a electronics store and see a machine that makes you want windows 8 then of course you're not gonna buy one. I keep looking and nothing interests me at all at the moment.
However with CES, next gen Atom, Haswell ect all happening maybe October just wasn't the right time for PC makers to unveil new products?
This is because places like Best Buy suck at selling PCs. When I go in there, the PC section is a disaster. Notice how Apple has it's own employees inside of Best Buy selling their products? Now that MS has the Surface, it may make sense to start staffing these places as well. So if they can't sell a customer on a Surface, they could at least try to push them toward a Windows PC.
Hi Paul,
I feel that part of the challenge for MS is also coming from super-netbooks - 14" plastic laptops that are based on AMD dual proc chipsets, have 4GBs of RAM built in, a 500GB HDD and will run a 64 bit version of the OS. They are very cheap, extremely competent and in the UK sell for around £320 (probably around $400 or less). They are very compelling for users who want a portable device that will do 90% of what a workstation will do (but clearly do not have touch features). The fact of the matter is that technology has advanced to the point where even the most modest of laptops will do what a very large proportion of the computer buying public needs at very acceptable performance level. Folks spending more than $600 on a laptop are doing it either because they want/need the security, multi-tasking power or durability, or have been sold on the "Emperor's new clothes" approach to marketing emanating from Infinite Loop.
I have been very pleased with what Windows 8 does for the portable computing experience (I use a Samsung Tablet similar to the version supplied by MS at the Win 8 Developer conference) but I will most likely not upgrade to Win 8 for any of my Workstations or Laptops. My tablet has become my device of choice on the road and I have come to really love its size/weight to flexibility ratio. I agree that MS have missed a trick making the Surface RT as expensive as it is (especially the accessories). A sweet spot would have been to come somewhere between the Kindle Fire and the iPad. I look forward to seeing what prices other manufacturers can release tablets running Windows 8 with - I believe that similar to the super netbooks, this is where we will see the price vs feature, power and flexibility really come in to its own. Its a shame that Microsoft, with their significant development time advantage and resources, have not been able to capitalise on this and produce a device that can really compete both in price and with genuinely superior features and experience.
With warm regards,
Neal
....Aaaaand they'll all run Hyper-V client too!
Honestly, for average consumers, these machines are great. An E-450 is a pretty quick little machine for just casual use, but Office 2010/2013 and IE9 or 10 will also use the Radeon cores in the APU for GPU acceleration too. If you upgrade the drive to an SSD and install Windows 8 on it, you got the best "netbook" you can possibly get.
I really like Lenovo's 11.6" x131e. It's a kid-tuff "netbook" with some cahones, but it works great for a small biz ultraportable too. It sells for between $400-549CDN for most AMD models. You can get them with the older APU's (E-300, which is a slightly slower version of the E-350) or you can go up to a Brazos 2.0 E2-1800. Really though, there isn't much difference between the Brazos chips that AMD makes. They've only incremented the clock speeds in very small amounts, so an E-450 isn't a big upgrade from an E-300. The exception is that the Brazos 2.0 (E1-1200 and E2-1800) have Radeon 7000-series cores, so you'll get a longer support lifespan from the Catalyst drivers from AMD. They are awesome with Windows 8, and almost every model with a hard drive ships with a 7200-RPM speed drive, which is faster than the 5400-RPM drives that ship in most consumer laptops. Also, they have non-glare screens too (me likey!).
Nothing in the media makes more sense then this article. I just don't understand why Microsoft still doesn't understand their market. It's so obvious, but this article painfully explains why.
Cheaper computers may improve sales of Windows 8 but I would be concerned that they would not help the overall health of the (non-Mac) computer market. The PC makers are having a hard time making much of a profit as it is.
Is there any point in Microsoft trying to do its version of a Chromebook, given that SkyDrive is pretty solid and the new Office offering looks to be very good?
I could not disagree more, Paul. I know an entire group of people dying to buy hybrids or Surface Pro. They are simply not out there as you claim they are. I was in Costco yesterday, not to buy a PC, but none the less I was browsing. Only one laptop out of at least 10 was Touch-based. Just one! And it was a pure laptop, not a hybrid. Dell's Hybrid, not even for sale yet. The Sony Duo 11, best ship date is next Thursday and it slips every other day because Sony can't keep up with demand. No, I don't think they are selling millions of them. I think they making slightly fewer than they think will sell and as a result they are selling themselves short.
Some of the models that are out are ridiculously stupid designs no one would buy. Some of the Samsung product is off to a problematic start with reported keyboard issues.
All of this is brand new and customers don't really know what Windows 8 is at all. So the demand isn't there because most folks don't even have a clue it exists or what value it brings to the touch enabled devices.
You're such a poor salesmen, Paul. Immediately going for lower prices because you have no idea to add value perception. You, and people like you are absolutely the problem. Rather than promote the value of the opportunity and shed some light on where the money is going, why buying this at a higher premium is worth every dime, you cower and immediately lower your price to solve the problem. You freely admit the Netbook destroyed and did incalculable damage to the PC industry, and then state lowering prices as the solution. Sorry Paul, but the heck? What planet are you on?
Microsoft and the PC vendors need to hold firm. Stop thinking volume and start thinking profitable. Undo the damage that has been done. No one said it was going to be easy. None the less it needs to be done.
I myself am sick of the junk out there. You see a PC that looks nice, but that's where it ends. It's junk when you hold it in your hands. It's noisy. The touch pad is sub-standard. The keys feel weird. You constantly have to shop carefully, read reviews and hope that the vendor you chose didn't make something hopelessly worthless. All in the name of brining prices artificially low. You know why Apple has no problem selling a laptop $1000 above the PC laptop price? There is simply zero perception of garbage. Apple means Quality. Apple pays attention to the details. Your track pad is solid. Your keyboard works. There is a store for you to run to if you have a problem. Like you yourself said, you're willing to pay more for a Microsoft Signature PC. Why is that, Paul? Because it is of higher quality.
We need ACER, ASUS, Samsung, Fijitsu, Lenovo, Dell, HP and so on to stop making 12 different models of laptops that no one can tell apart without a microscope and to focus their efforts one 2 or 3 high quality products in 2 to 3 differing price ranges. Dell has got better, but HP and many other brands still follow their playbooks from a decade ago.
Why do you think it is that Microsoft decided to build the Surface RT and Surface Pro in the first place? Could it be to show these vendors what their products should? What kind of quality they should shoot for and what kind of price they should shoot for?
I myself was happily using Apple and Android products. I recently switched to Windows because of the Windows 8 product line. Specifically what I saw with Windows RT and the Lumia 920. And I can tell you that 100% of everyone I have given the 2 minute tour to has been impressed with Windows 8. None of them had any clue what it could or why it was even there at all.
Microsoft needs ads that say, this is why you want Windows 8. A lot of the ads they have recently are good. However, I'd focus on the why of it all.
I'm not a salesman.
But according to the retailing experts at NPD:
"We need more touch at $500+ to establish a value proposition for PCs in that price segment. Subsidized entry-level tablets will compete vigorously with entry-level PCs for market share. And PC makers need to think [dollars] and not units in 2013."
(revised 2 -- thx!)
Alex makes some good points. Also, the current generation of Win 8 hardware represents a "lost season" for Win 8. I think the biggest reason for the "slow sales" is that there is almost nothing worth buying -- nothing exciting. The OEMs have done a terrible job this season. There is a structural change in the market from standard PCs towards tablets and there are almost no Win 8 tablets worth considering. The options will look quite different in 6 to 12 months
The Surface RT is delightful to use, and is well worth the premium. People who say, "I don't need touch on a laptop" just haven't had a chance to find out what Win 8 is like in a *good* form factor. People with black and white TVs didn't miss color TV until they saw it.
I have been using a Surface RT as my primary machine for a month at home and at work and I am surprised at how little I miss Win 7. I have a Win 8 Samsung tablet available, but I only use it for Visual Studio and to access my Outlook archives. Win RT on the Surface form factor is just *so damn convenient*.
But it will take a while for the public to learn that there *is* value there, more value than an iPad at the same price. I think Win 8 sales will pick up when the public becomes more aware of the Surface "in the wild", and when the OEMs get their act together to compete with the Surface.
This doesn't address the original question of people looking for a $400 price point, or a $200 price point. Maybe Microsoft will produce a Surface Mini that has no keyboard and no Desktop or Office for this group. This would tier the market into a consumption-only model versus those who will have to pay for productivity in a nice package.
It wasn't the netbook that did damage to the PC industry - it was Intel. Intel is to blame for trying to sell tired processors time and time again. They are the reason why we had Vista Home Basic, XP for ULCPC's, and Windows 7 Starter. AMD always met the requirements for WHQL certification (what we knew as "Premium" certification because Intel wanted Microsoft to invent the low-class "Basic" certification level for their chips).
....and we all know how Intel has used their monopoly power abusively with OEM's. They thought they could win on mass volume low-cost market a few years back. Hindsight is a bitch though.
Thank you Alex, I could not agree more. In fact, I registered here ans I'm making my first post just to say so.
Windows 8 is just fantastic. It is the LACK of good hardware -- not the price of it -- that is the problem. I so desperately want to replace my 30 inch monitors with multi-touch versions, but they DON'T EXIST. And I guarantee when they do come out, they will be sub-par, perhaps lower resolution or something.
No wonder hardware companies are slow-walking everything: with the incredible mountain of negativity concocted by the tech media, hardware manufacturers must be nervous.
But I'll tell you what, check out Lenovo's Yoga convertible. The silver version (obviously the most popular color) has been sold out since early December, a couple of weeks after it debuted, and current orders are so backed up they aren't estimated to ship until February.
Why is that? Because it's a really great machine, NOT because it's cheap.
"Thanks to Apple, the average selling price of a capable, full-sized (~10-inch screen versions) tablet is about $650, with prices starting firmly at $500"
Paul, your analysis/advice is superb, but you aren't doing Microsoft any favors by omitting the $400 iPad 2, which Apple probably sells a lot more than MS sells surfaces, and for cost conscious consumers falls right in the $420 Windows machine ASP range. Indeed you shouldn't be omitting the $330 7.9" iPad Mini either, as it compares very favorably we many of the Netbooks now being replaced for users in the basic web browsing/email/Netflix/Skype with the kids category. Until the Surface is competing in this price range, it won't be getting any traction.
So far as touch based Windows 8 laptops selling for prices that were being charged for Netbooks, that may indeed goose sales, but it will do even more damage to the PC industry than Netbooks did. The race to cheap, near zero margin notebook computers is not a sustainable model for the PC industry going forward. And Microsoft needs a healthy PC industry to prosper. The only choice they have is to stay out of the low, cheap, disposable, reputation destroying end of the market.
You are dead-on.
I have two boys, ages 12 & 14, who have iPhones who desperately want a laptop. I talked to them about getting a netbook or Surface but unless it can run games like WoW or CoD it's useless to them. They said that for web-stuff their phones were fine, but that for just "a phone with a bigger screen anything over $300 is a waste of money and we should save up for a 'real' laptop (discrete GPU) iinstead."
These were their thoughts as young consumers, not mine as an 20+ year IT veteran. They just don't see the value proposition sans the caché of an iPad. I think the same type of decision is being made by a lot of people. If you want to work, really work, or play, really play, you want a regular laptop and don't care about touch. If, however, you want to couch surf with your fingers, netbooks are too clumsy and the Surface, at its current pricing, offers no compelling argument versus using their phones or an iPad.
Quad-core A8 and A10 AMD systems will play the games they want to play (all AMD A-series 4000 chips will suffice), and on a cheaper budget than an Intel with a discrete GPU.
I agree on the usefulness of iphones and ipads, and the uselessness of netbooks, surface and cheap laptops. But I had to comment on the idea of saving up for a 'real' laptop for gaming. As an IT vet, you should be making your kids proud by building them gaming PC's.
I couldn't agree more. I have been saying this since the prices of these tablets were announced. MS and their OEMs cannot expect Apple margins on their tablets. MS has to work with the OEMs on their licensing price structure to get the costs of these tablets down to $399 with 7 inch RT tablets coming in at 199 to 299.
"Touchscreen notebooks were 4.5 percent of Windows 8 sales with ASPs around $700. Sales of Windows notebooks under $500 fell by 16 percent while notebooks priced above $500 increased 4 percent"
There definitely were people looking for laptops with touch costing more than $500, since those were the sales that increased. I wonder if the holiday sales would have been better if stock was available. Most every device I looked at was unavailable or on 4 week backorder.
In my family, we purchased one Surface (love it) and one Asus VivoBook w/Touch for $549. It was available some places for $499. My daughter loves that laptop.
At work, I purchased a Dell Lattitude 10 tablet with all the accessories at the beginning of November, we still haven't received it. If I can order the Surface Pro before the Dell ships, I will probably be cancelling the Dell order.
If we can get a tablet that is easy to dock with two monitors, has a core i5 processor and an active stylus we will be migrating from the laptop form factor to tablet form factor for most of our users. In our company, laptops are primarily a BCP issue and for travel. Most prefer a tablet when traveling and the Surface form factor is fine as a laptop for occasional use.
I personally think that supply issues have seriously hampered the Windows 8 launch. Every time I see a Windows 8 commercial I have to laugh since virtually none of the devices advertised are actually available for immediate purchase.
Supply and demand of touch panels may have kept prices artificially high this season. Had Windows 8 touch devices been produced in volume, we may have seen more discounts. However, with all of them sold out or unavailable, there was no reason to drop prices.
Of course, if that was the case, we would be reading a story about how Windows 8 was failing so badly that prices had to be slashed to get it moving.
As long as software continues to be developed & supported for existing Windows XP, Vista & 7 computers it's safe to assume Windows 8 and RT sales will be slow. The safe choice for consumers considering a tablet is the iPad. Perhaps Microsoft should've rushed out with a Windows Phone 7-like operating system for tablets & touchscreen laptops in 2010 as a response to the original iPad?
I bought an used netbook this fall so my daughter could have something semi-disposable to study overseas with. It was underpowered with Windows 7. When I put Windows 8 on (with a registry tweak to allow for the minimum Metro resolution), however, the Metro versions of Netflix and Skype are SO much better and all Metro apps are more convenient to use than desktop.
I think the bigger mistake was that Microsoft underestimated the strength of a target market to force people to pay twice as much for a touch screen. Netbooks are bread and butter for the folks I know who work in more modest jobs at restaurants and retail who shop at Wal*Mart. Chromebooks were the top seller for laptops at Amazon this season. That could have been Windows 8 in there. http://www.ibtimes.co.uk/articles/419828/20130102/samsung-chromebook-top...
Personally I think there's another factor. Windows Vista got such a terrible reputation to the extent that many people just avoided it. But they didn't buy something else instead (what real alternative was there?), they waited for the next version of Windows to come out. By the time Windows 7 came out, and was declared as Windows fixed, there was a much bigger group of people who were ready to upgrade their now obviously out-of-date PCs but had waited for Vista to be superseded. I think that skews the Windows 7 sales numbers and so I don’t think comparing Windows 8 sales numbers with Windows 7 sales numbers from the same period is relevant.
I don't know the numbers. I wonder if the apparent "boom" of Windows 7 sales is just the counter to the dip of Windows Vista. Maybe the more recent Windows 7 sales and subsequent Windows 8 sales is just the end of that effect and a return to the normal fairly flat line?
I wouldn't discount the effect of the crash of 2008 and subsequent recession on the downward pressure on prices. There are a lot of people who might have otherwise bought a decent Win8 PC who simply can't afford to (or are concerned enough about the economy to put off the purchase).
I also agree with some others that many of the new Windows 8 offerings just weren't compelling enough (and those that were, were indeed priced pretty high... see the Dell XPS One 27", a great system, but it's Mac-pricey).
I think some of the issue is also "perception", and perception will change over time. I think sales will pick up.
I also think that MS dropped the ball when it came to explaining and training people for Windows 8. There's almost no out-of-the-box help, or even pointers to help, to learn the new system and how it works and why. Dell helped pick up some of the slack with some training videos it included on all its new Windows 8 PCs, but they're minimal and there's simply a lot they don't cover. Media reaction hasn't helped either.
Personally, I love Windows 8, and am constantly annoyed when I have to go back to Windows 7 at work. But it took few weeks or so to get here. At first I was very frustrated and annoyed. And I think many other users are experiencing this. If they don't make the effort to "come out through the other side" of the learning curve, they'll have a bad taste in their mouth. If they do make that small investment, they'll be quite happy in the end.
(I tried editing an earlier post of mine and it apparently got lost in the shuffle. Here's a shorter, maybe clearer version.)
Why isn't Windows 8 selling especially well? Paul has part of the reason - the comparison to Windows 7 is suspect, the role of netbooks in setting a lower price point for what people are willing to pay for a Windows computer - and so do my fellow posters, who point to the economy, the questionable need for touch on a laptop or desktop.
As a consumer, I think the trend toward cheap, decent computing devices is a good thing. I own a Nexus 7 and it's a fine machine. I'd like to be able to buy the Windows 8 version, and would pay a small premium ($249 vs. $199) for it, but no more. Reality is, you aren't going to stuff the price genie back in the bottle. People want laptops that cost less than $400. We want $200 tablets. And I disagree with Alex, who singles out Apple for praise - the industrial design of Apple products is very good, but in my experience they break easily and expensively, and besides, there's only room for one Apple, I think.
That said, people want nice stuff, and if Microsoft can offer a genuinely nice alternative with Windows 8 that is still cheap, people will buy it. I say go for market share now, and get your money back in services like SkrDrive and Office.
I have four problems with your article. First, Windows 8 is not simply off to a slow start, consumers have flat out rejected it. You can see this on Amazon's Top 100 list and I've seen it myself monitoring various retailers throughout the holiday season. I wrote this up in my personal blog: http://computingcompendium.blogspot.com/2012/12/watching-computers-and-t...
Right after Windows 8 release, you could see lots of people in Best Buy looking at Windows 8, as the holiday season progressed, no one looked any more. They want to get their tasks done, not learn a new paradigm.
Second, you assume people actually WANT touch on a laptop. Who wants to do their word processing/spreadsheets through a smeared screen? And unlike with tablets, the use of a capacitive stylus really isn't practical with a laptop. Many of the nicer, lighter, touch ultrabooks move every time you touch their screen. For standard PC tasks, just what does touch give you?
Third, netbooks were underpowered crap because Intel and Microsoft forced the OEMs to use substandard chips and substandard software. OEMs realized that consumers wanted cheaper, light-weight laptops, but Intel and Microsoft tried to protect their profit margins. Netbooks did not ruin the Windows laptop market, the Windows laptop market failed to meet customer's needs. The best selling laptop on Amazon throughout the holiday season was a $249 Samsung ARM-based Chromebook. I am writing this message from one of these. This Chromebook unequivocally proves that a decent sub-$400 laptop, with NO FAN, nice trackpad, decent screen, etc is perfectly possible.
Fourth, when you talked about Apple tablet pricing and Microsoft needing to find a place between Apple and Android, there are some things you should know. Having watched Amazon's top 100 throughout the holidays, the average price of Android tablets was sub-$300, possibly sub-$200. New 4th gen iPads were not selling very well, it was iPad 2s and iPad minis that were the ones selling in the top 40. The point here is that people want _inexpensive_ devices that do what they need. No new Windows 8 machine of any sort comes close to meeting those needs in a reasonable price range. You acknowledged to some extent the pricing problem, but I'm arguing that Microsoft and Intel needs to do a fundamental realignment with what the consumer wants.
Windows 8 is what Microsoft (and Intel) wants, not what the consumer wants.
I have only one problem with your comments: It's just your opinion.
I've simply provided a reason for why Windows 8 sales are slow--not "rejected by consumers," just slow--based on data from NPD. Let's not go off on some bizarre tangent.
It is not fair to say it is "just my opinion". It is true that some of my data is anecdotal, but the data from Amazon's Top 100 is fact. If you like I can zip up snapshots I took of the top 20 from Amazon's web site and send it to you (couldn't save the 21-100 due to dynamic loading issues - I only started formal collection on 12/12, though I had monitored from Black Friday). My blog post was a summary.
Can you show any sign that Windows 8 _is_ wanted by consumers? Because most of the OEMs force Windows 8 on consumers, yes there will be sales, but that is far different from consumers wanting Windows 8. Lots of sources show that the Surface and Windows 8 touch machines are not doing well. How is rejection of those machines made for Windows 8, not a rejection of Windows 8? Really, go down to your local Best Buy mid-day on the weekend and watch people look. [While you are there check out the nifty Samsung Chromebook.]
This article:
http://www.bloomberg.com/news/2013-01-10/microsoft-intel-pcs-to-keep-los...
talks about a new research source that support my earlier statement that consumers have rejected Windows 8.
"I have only one problem with your comments: It's just your opinion."
So...just like this entire article.
Your article is nothing more than an unsubstantiated assertion wrapped in a bunch fluff:
"Most of them simply refuse to pay for more expensive Windows PCs.
And this isn’t my opinion, it’s a fact."
It's such 'a fact' that you didn't bother to supply any evidence to support your assertion.
Perhaps you overlooked this minor failing of you article in your desperation to rationalize that the computing world is going through a major transition and Microsoft is becoming increasingly irrelevant to large numbers of computing consumers.
Feel free to quote or link to the surveys that substantiate your claims about Windows 8 sales crashing and burning due to netbooks causing consumers to refuse to pay the price of Windows 8 based desktop computers.
Actually, this is based on NPD data provided to Microsoft and is a fact. Their conclusion, as I noted in the article, was that “netbooks did an incalculable amount of damage to the PC market," and since they are Microsoft's trusted source for retail data I suspect they know what they're talking about.
But then I'm also sure you actually read the article.
Sorry dude, but the actual facts trumps your point:
http://news.investors.com/technology/121712-637318-google-chromebooks-st...
ChromeBooks have been a failure so far, for pretty obvious reasons, as far as I can say: glorified netbook.
Speaking for myself (a consumer), I really wanted a Surface RT, and I was personally looking forward to it (fully cognizant of what it lacks). However, the price-point was simply too high for my budget. And in searching for viable alternatives at a lower price, I couldn't find any - none whatsoever. Not only that, but even if I could afford the Surface RT I can't seem to justify the purchase ($600-700 after taxes) for something that is basically a scaled up iPad. The VivoTab RT is more or less the same price, the Dell XPS 10 is the same -- like seriously, what did these guys truly expect here?
Windows RT units should have been priced (on their own, no keyboards/docks) at most $399, or optimally, $349. Clover Trail units should've come in at $50 more on average...maybe $100 if it includes a digitizer and stylus.
I decided to wait it out a few months and save for the Surface Pro, but in my home it'll assume the positions of (a) work-station, (b) consumption tablet, (c) work tablet for notes and presentations, and (d) laptop i.e. mobile PC. This is the only Windows PC I'm going to buy, at this time there is no room (or pressing need) for anything else in the way of computing...except a commuter tablet (Xbox Surface/HTC 7-8 inch).
1- MS made Win8 jarring enough for users to not desire it. I've upgraded 2 PCs for curisoity's sake, first thing I did was install ClassicShell to get rid of Metro
2- MS made one of Win8's key feature Touch, which is expensive, not broadly available, and, frankly, a pain in most use cases
3- the 2nd key feature is Live Tiles, which are nowhere near as useful as widgets (android) nor gadgets (vista/7)
4- they killed the cheap netbook version, handing that market over to Chrome OS, which was badly in need of some success. Google must be laughing their asses off right now. Half the computers I have been buying/recommending over the last 4 years have been $250 netbooks...
5- I'm still looking for a Win8 feature I desire. RDP, but TeamViewer is good enough.
So, MS:
1- gave us no reason to upgrade. Actually, made us *not* want to upgrade with a less functionnal, different UI, that's geared to touchscreens noone has, nor wants
2- made sure they wouldn't sell into the biggest, lowest-price segment
and are now wondering why sales are bad ?
Do you all remember back to when Microsoft (with Bill Gates at the helm) woke up one day and figured out that they needed to Internet-enable their software? I don't remember the year, but I remember reading an article that described how Bill Gates got all the dept. heads at Microsoft in a room and decreed that every single product made by Microsoft had to be Internet-enabled. Every single one. It was like a critical mission statement, because Gates knew that the company was would swept away without it.
Well, my opinion is that hardware manufacturers need to take the exact same approach to hardware, with respect to multi-touch.
The fact is that majority of computer hardware revolves around Microsoft Windows (server or client), and building hardware for Windows 8 without multi-touch is advertising that some of the best features won't ever work on that hardware. You can't retro-fit multi-touch, you just can't. In other words, non-touch-enabled hardware is doomed for failure.
Hardware manufacturers need to snap out of their stupor and touch-enable everything. And yes, that means there will be cheap touch hardware, which is only natural once supply ramps up.
A great thing about Windows 8 is that Microsoft set nice standards for Windows 8 touch certification, so when you buy a touch-enabled PC with Windows 8 certification, you can expect that the touch component will not be a piece of junk, even if it is cheap.
Want to know why consumers aren't rushing to upgrade or buy Windows 8 laptops? Because their scared...yes scared. Scared of the comments they heard about how different everything is in windows 8.. Do you really think the retiring baby boomers or untech savvy people want to ditch their 3 year old pc's for a scary experience. They know they need to upgrade but think Windows 8 is too difficult to learn and will simply postpone the purchase with a tablet...most likely an apple because they are considered by all to be simple, well made and great priced. I was one of these people as of Yesterday. Then I saw this cool Microsoft deal to upgrade my laptop to Windows 8 for just 40 bucks. I thought...heck...I'll just upgrade my laptop and see if my wife can run her stuff that she needs. If she likes it, we can replace that sputtering desktop. SOOOO....I upgraded and I think Windows 8 is easy to understand and far better than Windows 7. Here's the lowdown....that scary tiled start screen is nothing more than a nice clubhouse lobby before entering the desktop. It's colorful, lively and is a sure pick me up for anyone with the blues. The two things I changed was moving the desktop tile to the upper left so all I have to is press enter (upper left is default location for enter key) and presto bam I'm in the desktop. If I want a start menu on the desktop, I just put the cursor at the very lower left corner of the desktop and right click on that picture of the start tiled page. Bam presto...I have more options than I need.
You know what the best reason to upgrade is....Xbox Music Pass.....17 million songs Free at your fingertips with a commercial sprinkled in every now and then.
The Microsoft ecosystem works beautifully....Xbox 360...pc....phone...unfixed account....it's simpler than Apple now. The only mistake Microsoft is making is by not giving away free Skype credit with your upgrade so you can experience just how good real phone calls are on Skype. Skype phone calls on regular phones using skype credit is the Trojan horse that will tip everyone over the fence to Windows 8. They need to sell Skype telephony on their Microsoft ecosystem...sell it hard...in your face advertising.
I've been amazed by the price of Windows PC. My stingy friend got an 15.3" HP laptop last year, with a Core i3 processor, for $399+tax. Will I be able to persuade him to spend $600 to get a touch laptop next time? I don't know. So far the only incentive for him is to play Wordament.
Great article and a very persuasive argument. However given the enduring popularity of the iPad 2, and the fantastic reception the iPad Mini is getting there's no way the ASP of iPads is going to stay over $500. If Microsoft can't compete at that price point, going forward they're going to find it even harder.
As happened with the Zune, Microsoft is struggling to compete with last year's Apple products and has no answer for the latest generation of Apple devices and price points.
I don't agree. Windows 7 is a good OS, but it's not an universal solution for consumers and businesses. In my opinion Microsoft should split the business and consumer divisions. The firms cannot afford the experiments that Microsoft are making. The netbooks era was a signal for Microsoft about the market change. We are in a crisis so it's logic that we try to buy something as cheaper as possible. Why we should buy something expensive for fun or relative low level use? Especially when you know you will buy another one in 2-3 years. OK if you'll use it in a bussines or something productive you will buy something more expensive for 5-6 years refresh rate. The computers are more reliable hardware and software than ever. Think about how many computers were selled because the old ones died or because they were underpowered. It's the end of the line for high end computers, there is no need for a more powerful more reliable computer. We need cheaper, energy efficient devices.
About the split, Apple made a better decision by making a simplified version of OS X in iOS. Why is Microsoft unable to expand the Windows Phone to tablets and Xbox? It's a problem of consumers and a problem of branding. Windows brand it's very bad to the consumers and very good in the business, while Xbox brand it's very good to the consumers.
So don't blame the consumers or Windows 7. The market has evolved, the businesses have evolved, the world is in crisis, the consumers have more devices that ever. You don't buy one device to make all in one anymore. Blame Microsoft for being so slow, or just blame Balmer. I do. He was so idiot for firing Sinofsky in such a critical moment. Balmer has no idea how to turn Microsoft on the consumer side. He is a great businessman but such a bad visionar. He needed someone like Sinofsky to bring the necessary changes and he was afraid for his chair. Such a big bad pussy.
Great article Paul! Price is very important factor. I don't mind paying £800 for a decent desktop because I know it will last me at least 5 years and I will do some real work using it.
But when we talking about portable consumption devices (where Microsoft wants to get in), price is the key. I bought Nexus 7 for my wife for Christmas. It does great job for watching videos while commuting, checking Facebook, and accessing odd website. And this all she really needs a tablet for. Windows RT could do all this and more with no issues, but there is simply nothing to choose from if you want smaller size and/or reasonable price.
I think the base argument is 100% incorrect. OEM Sales with new PCs is a relatively small side show. The volume is in SELECT and Enterprise Agreements, and as soon as a new version of Windows ships, they get counted in the monthly increment of the three year volume term of those licensing schemes.
While those units get counted as Windows 8 shipments by Microsoft, physical deployment is a much slower game in town. 6 months ago, penetration of deployed Windows 7 licenses in larger Enterprises was circa 25-30% of installed PCs, and Microsoft are all out trying to get that up to 70% by end June 2013 - for Windows *7*. Windows 8 is a consumer play.
No-one seems to describe the methodology used to count new Windows licenses. Microsoft can in theory count the number of organisations buying Windows licenses under SELECT, SELECT PLUS or ELAs, and deduct any estimate of how many folks exercise their version downgrade rights.
So, while it's a black art. Microsoft have never had ambitions for Windows 8 to be the volume selling version. At least yet.
Microsoft's primary competition remains the previous versions of its own products. It's also a massive compliment that 11 year old XP is still regarded by so many to be "good enough" to this day.
The market for Windows is tied to a base of Intel clients that is not going to grow much now, and if anything fall into a shallow decline. Windows is now a cash cow to milk for all it's worth. Windows 8 is not something Microsoft need to rely on to keep money coming in the door; Enterprises will aim at V8 or V9 once Microsoft have finally got people on their upgrade cycles again. In my humble opinion, of course!
Microsoft’s whole pitch with Windows 8 is that you don’t need to spend $400 on an iPad to go with your $400 Windows 7 PC, because now you can buy a Windows 8 touch PC with some iPad features.
That pitch only works if:
a) the Windows 8 touch PC is also $400
b) the Windows 8 iPad features are just as good as iPad
… neither of those things are true. The Windows 8 touch PC is $800 and is no match for iPad in touch features and touch apps. If a Swiss Army Knife costs more than buying the separate instruments, that is a fail.
Me, I think of the iPad as paper and the Mac and its clones as a printing press. They are fundamentally 2 devices. You don't want to lug around a printing press to read a book. Even when creating a book, you want to work on a printing press (Mac) but see the separate book coming to life as you work (on iPad.)
If you imagine 2 users with $800 I-T budget:
- one has an $800 Windows 8 touch PC
- one has a $400 Windows 7 PC and $400 iPad
… the one with 2 devices will drink the other user's milkshake all day long. The second screen alone boosts productivity by about 25% according to every study. The iPad goes for 10 hours and has the best touch apps — the other user is out of juice after 4 hours and has almost no touch apps. The Windows 7 PC takes advantage of legacy Windows skills — the Windows 8 user has no Start menu and can't even find the Control Panel.
The Mac is also way, way ahead of Windows in touch. The Mac trackpad is multitouch for about 5 years. Mac users flick to scroll, swipe to switch apps, and use gestures to see the app launcher, Desktop, and notifications. And Mac users have an App Store that includes the OS and major applications. If Apple ships a Mac tablet, the software and apps and even users are ready for it. But those uses are high-end users, not the same users as iPad. Windows 8 is a Swiss Army Knife that not only costs more than the separate instruments, there is almost nobody who wants those instruments stuck together. Their separation is a great feature.
I think most of the better windows 8 "pablets" or "TCs" (shout out to MaryJo) just aren't out there yet. They exist, but you'd never know it unless you REALLY look for them. Heck, the Acer W700 is a great machine - i3/i5 with windows 8 running @ 1080P means I can browse the web/movies in HD and still play plenty of my steam games when I want. But had I not been actively looking for this device I wouldn't know it existed. Granted, it's 700+ but I'm willing to pay because it's exactly what I want. Do I want to wait for a Surface pro? No. Why? Because the w700 comes with a dock, keyboard AND leather case. all for 700+, Surface pro - I get only a stylus...for 900+ I guessed that MS was basically giving OEMs this holiday season but they wasted the opportunity. Hardly any compelling hardware anywhere to be found = no sales.
Lower pc sales doesn't mean its a windows 8 problem though. Windows 8 works well on older systems. Upgrade price is dirt cheap. New Windows 8 hardware was very hard to come by since launch. That can easily account for a big chunk. Microsoft even said upgrades were outpacing Windows 7 upgrades,therefore it could mean hardware sales loss.
NPD also doesn't track Microsoft stores. Didn't Microsoft open 30 new popup stores? There could be a lot of sales there.
But even if Windows 8 sales are slow,they are still bigger than anything else out there. And we all know developers follow the money trail. Lots of users = more developers. More developers = more apps. More apps = better software library. Better software library = More sales.
Here's an experiment. Take a Surface, and take an Ipad. Keep everything about them the same,but swap their software libraries. Now sell them. What would happen?
Microsoft needs to now focus on bringing top quality software to Windows and Windows Phone. What happened to the old ruthless Microsoft that would fill the pockets of game developers that were only making exclusive content for the Playstation 3 to get them on their platform? If you're late to the game,you need to pony up some cash.
Windows 7 replaced the (alleged) bad Vista
Windows 8 is trying to replace the excellent Win7
There is just no reason to update to Win 8 if you have a working Win7. It will increase market share as people replace systems. I had no real problem with Vista, like Win 7 and Win 8 is great
Listen, Apple's biggest weakness is that you need to pay through the nose, and Windows has been so successful because it targeted that weakness. Even though Windows is better, it will never succeed as long as its price is nearing that of Apple's. The reality is that there needs to be low cost PCs, and Windows can still grow and evolve while fitting that model. Windows 7 wasn't a lie, it was what the customers wanted. But now there is the chromebook, which costs $200. See, the netbook isn't dead, it has made a comeback, but this time, instead of being for Windows, it is against, and if Windows will quit on people that need low cost computers, then they won't simply stop computing, they will turn to Google. This is why I was so heartbroken about the surface. I was honestly hoping that the Surface was $200, because everyone would buy it and see how amazing it really is. But it's $500, so most people have no reason to buy it because it doesn't even undercut the iPad by a cent.