While Apple Tops Global PC Sales, Microsoft Will Need To Subsidize Windows 8 Devices

While Apple Tops Global PC Sales, Microsoft Will Need To Subsidize Windows 8 Devices

Microsoft will need to spend some serious cash if it wants to make Windows 8 and RT true iPad competitors.

Apple continues to top PC sales thanks to the iPad. Meanwhile, according to research firm Canalys, Microsoft  will likely need to heavily subsidize the price of touch-first PCs and tablets if it wants Windows 8 to be anything like a success.

Echoing Tim Cook’s about Microsoft’s Windows 8 strategy being like converging a toaster and a refrigerator, the research firm notes that Microsoft’s approach could jeopardize the Windows 8 launch. Canalys notes that the big issue is that most Windows 8 features are designed for touchscreen use. That means that existing PC owners won’t get the full value or experience that Windows 8 offers unless they upgrade their hardware to a tablet, touchscreen notebook, or a hybrid device that functions as both.

The Canalys report that points out that Windows PCs have reached a new low in the computing market while iPad sales are leading the tablet market to new heights. It listed Apple as the top PC maker in the world with combined iPad and Mac sales followed by HP, Lenovo, Acer and Dell. Canalys noted that Apple actually accounts for  nearly 20% of the global computing market when tablets are included with desktop and notebook PCs.

The research firm also acknowledges that Intel’s Ultrabook concept hasn’t made any substantive impact on the market.

Windows PC shipments continued to disappoint. Ultrabooks have not hit the price points that could excite large numbers of buyers and the share of the overall market taken by Windows fell to a new low of 73%.

Combine the slowing growth of Windows PCs with the fact that Windows 8 will likely require users to buy a new system (or at least new hardware) to take full advantage of the new OS, and Canalys says that the Windows 8 launch might generate “interest” but isn’t likely to turn around the decline that Microsoft is confronting.

If the company wants to make the Windows 8 launch anything close to a true success, Canalys claims that Microsoft will need to subsidize at least some of the cost of touchscreen systems to make them more attractive to buyers. If Microsoft doesn’t subsidize Windows 8 systems, it could take a full year or more before Windows 8 has a chance at recapturing the PC market.

The Windows 8 launch budget guarantees attention during Q4, but users will only benefit fully from the new OS if they buy PCs with touch screens, which will significantly increase the purchase price. Canalys does not expect the launch of Windows 8 to arrest Microsoft’s market share decline until Q3 2013 at the earliest. Canalys recommends that Microsoft helps its OEMs hit mainstream price points for Windows 8 touch-screen products, for example by subsidizing touch panel production costs by $50 to $100 per unit, to kick-start the market. Intel pledged to invest $300m in Ultrabook ecosystem players, but there is no indication, as yet, that Microsoft is prepared to make a comparable commitment to the PC supply chain.

As for Microsoft’s Surface tablets, which will launch with Windows 8 this fall, Canalys sees them being overpriced and uninspiring to users – calling them a PC version of Microsoft’s Zune media player.

Perhaps the biggest talking point of the quarter was Microsoft’s decision to launch its own pads – the Surface and Surface Pro. “The information available to date suggests the prices of both will be too high to capture significant market share, and a direct sales approach will prove inadequate. We expect the Surface pads to have a similar impact on the PC industry as the Zune did in portable music players,” commented Canalys Analyst Tim Coulling.

Canalys also notes that it has advised the hardware partners making ARM-based Windows RT tablets, which are designed to compete directly with the iPad, to hold of on launching them until Microsoft “rethinks the high license fee” associated with Windows RT.

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  • Aidan Taylor

    How can apple top PC markets if they dont make PCs?

About the author

Ryan FaasRyan Faas is a technology journalist and consultant living in upstate New York who has written extensively about Apple, business and enterprise IT, and the mobile industry. In addition to writing for Cult of Mac, he is a contributor to Computerworld, InformIT, and Peachpit Press. In a previous existence he was a healthcare IT director as well as a systems and network administrator. Follow Ryan on Twitter and Google +

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