• News
  • SAN DIEGO
  • Technology

Microsoft analyst Sherlund sees no PC market growth

The market for traditional personal computers has no growth left because people are increasingly using mobile devices to connect to the Web, said Rick Sherlund, an analyst at Nomura Holdings Inc. covering Microsoft Corp.

As consumers shun personal computers in favor of smartphones and tablets, the PC market will contract by 1.2 percent to 348.7 million units this year, according to IHS iSuppli, the first annual decline since 2001. The recent debut of Windows 8, the latest version of Microsoft’s (Nasdaq: MSFT) flagship operating system, hasn’t delivered a sales boost, according to NPD Group Inc.

“Windows 8 is off to a very rough start, not all the hardware is out yet, not all the hardware vendors have done a good job yet,” Sherlund said Monday in a radio interview.

Sherlund recommends buying Microsoft shares, according to data compiled by Bloomberg.

Microsoft said last week that it has sold 40 million software licenses since Windows 8 went on sale on Oct. 26. Some of that tally includes versions shipped to corporate customers with multiyear contracts, making it a poor indicator of consumer demand.

NPD said U.S. retail sales of PCs running Windows have been weak, with revenue declining 21 percent since the latest software release, compared with the same period a year earlier.

The decrease has been fueled by a 24 percent drop in sales of notebook computers as many customers opt for Apple Inc.’s (Nasdaq: AAPL) iPad or tablets powered by Google Inc.’s (Nasdaq: GOOG) software instead of Windows, NPD said. The report excluded Microsoft’s own stores, where the company’s Surface tablet is sold.

“People just don’t need PCs the way they used to,” Sherlund said. “They’ve got alternatives now for accessing the Internet. They’ve got smartphones and tablets, so there’s really no growth left in the traditional PC market.”

Microsoft said last week that it will charge a minimum of $899 for its Surface Pro tablet, the version that has an Intel Corp. (Nasdaq: INTC) chip, and is targeted at corporate customers or those who want to use older Windows programs. The high price has analysts such as Wes Miller at Directions on Microsoft concerned it will put off tablet shoppers.

To better compete with Apple and Google, Microsoft is moving to a new software development system for Windows that would involve issuing smaller, more frequent updates on more of an annual cycle, according to people familiar with the matter. The first such update is planned for next year.

It will take another quarter or two until Windows machines with compelling features and prices reach consumers, Sherlund said in the interview.

Leave Your Comment

Comments are moderated by SDDT, in accordance with the SDDT Comment Policy, and may not appear on this commentary until they have been reviewed and deemed appropriate for posting. Also, due to the volume of comments we receive, not all comments will be posted.

SDDT Comment Policy: SDDT encourages you to add a comment to this discussion. You may not post any unlawful, threatening, defamatory, obscene, pornographic or other material that would violate the law. All comments should be relevant to the topic and remain respectful of other authors and commenters. You are solely responsible for your own comments, the consequences of posting those comments, and the consequences of any reliance by you on the comments of others. By submitting your comment, you hereby give SDDT the right, but not the obligation, to post, air, edit, exhibit, telecast, cablecast, webcast, re-use, publish, reproduce, use, license, print, distribute or otherwise use your comment(s) and accompanying personal identifying and other information you provide via all forms of media now known or hereafter devised, worldwide, in perpetuity. SDDT Privacy Statement.

User Response
0 UserComments

Leave Your Comment

Comments are moderated by SDDT, in accordance with the SDDT Comment Policy, and may not appear on this commentary until they have been reviewed and deemed appropriate for posting. Also, due to the volume of comments we receive, not all comments will be posted.

SDDT Comment Policy: SDDT encourages you to add a comment to this discussion. You may not post any unlawful, threatening, defamatory, obscene, pornographic or other material that would violate the law. All comments should be relevant to the topic and remain respectful of other authors and commenters. You are solely responsible for your own comments, the consequences of posting those comments, and the consequences of any reliance by you on the comments of others. By submitting your comment, you hereby give SDDT the right, but not the obligation, to post, air, edit, exhibit, telecast, cablecast, webcast, re-use, publish, reproduce, use, license, print, distribute or otherwise use your comment(s) and accompanying personal identifying and other information you provide via all forms of media now known or hereafter devised, worldwide, in perpetuity. SDDT Privacy Statement.

Subscribe Today!