Proof That Wintel Needs Windows 8 Posthaste

The PC market ain’t what it used to be. Both Gartner and IDC released their preliminary estimates on the state of the PC market in the second quarter, and the results are mostly uninspiring.

Both researchers pegged the overall PC market at relatively flat, decreasing just 0.1% in total to about 87 million units, give or take half a million or so, depending on who you ask. Although, within the ranks, there was a notable amount of shuffling, with players from the Far East growing market share at the expense of their stateside counterparts.

Show me your digits
Dell
(Nasdaq: DELL  ) and Hewlett-Packard (NYSE: HPQ  ) both ceded some of their worldwide pie slices to the likes of Lenovo, Acer, and Asus. Here are Gartner’s estimates.
 

Company Q2 2012 Units Q2 2012 Market Share Q2 2011 Units Q2 2011 Market Share
HP 13 million 14.9% 14.8 million 16.9%
Lenovo 12.8 million 14.7% 11.1 million 12.7%
Acer 9.6 million 11% 9.3 million 10.6%
Dell 9.3 million 10.7% 10.6 million 12.1%
Asus 6.1 million 7% 4.4 million 5%
Worldwide PC shipments. Source: Gartner (July 2012).

For comparison, here are IDC’s digits.
 

Company Q2 2012 Units Q2 2012 Market Share Q2 2011 Units Q2 2011 Market Share
HP 13.4 million 15.5% 15.3 million 17.6%
Lenovo 12.9 million 14.9% 10.3 million 11.9%
Dell 9.6 million 11.1% 10.9 million 12.6%
Acer 9 million 10.4% 9 million 10.3%
Asus 6.1 million 7.1% 4.4 million 5%

Worldwide PC shipments. Source: IDC (July 2012).
 

In both cases, the broad "others" category actually comprises more than 40% of the market. While there are some minor discrepancies between the data sets, they’re mostly consistent, and paint the same picture of domestic players declining, while Asian players gain. HP still claims top dog status, but it’s losing its lead quickly, as Lenovo closes the gap.

It’s a wonder why TV maker Vizio just jumped into this cutthroat, commoditized market. What’s not a wonder is why HP and Dell continue to try and broaden their horizons and expand more heavily into software and services.

Home court iAdvantage
The domestic picture is a little different. Apple (Nasdaq: AAPL  ) was the winner in the U.S. PC market. The Mac maker grew its market share by both accounts, and sits near 12% of the domestic market. Apple has been outpacing the broader PC market for years, and this quarter was no different.

Both market researchers estimated that the domestic PC market shrank to 15.9 million units in the second quarter. It’s worth noting that none of these figures include tablet shipments like the iPad, and some could argue that tablets, in general, qualify as PCs. Microsoft (Nasdaq: MSFT  ) certainly considers tablets in the same category as PCs.

Because the software giant has yet to release its tablet-bound Windows 8, the PC figures don’t foreshadow a whole lot of upside for Microsoft or for Intel (Nasdaq: INTC  ) . Even with Intel’s big Ultrabook push, PC shipments haven’t really gone anywhere. Both Gartner and IDC noted that Ultrabooks had little impact on the market, despite high expectations.

Hurry up, Windows 8
Following up the figures, analysts aren’t sweating the soft PC numbers, saying that the next big catalyst will be Windows 8, which is due out in a matter of months. Still, the bigger picture storyline at play here is tablets beginning to disrupt PC sales.

On one hand, this is precisely why Microsoft critically needs Windows 8 to succeed. The operating system will straddle the line between tablets and PCs, with one market booming with growth while the other languishes. The OS will also be Intel’s entry into tablets, as it’s just now making its way into smartphones.

For Wintel, Windows 8 can’t get here soon enough.

Apple's swift disruption of some of Microsoft's core markets isn't even complete yet, so the Mac maker still has plenty of room to run. Sign up for this brand-new premium Apple research service to read more about all of the company's opportunities, as well as the risks it faces in the coming years. Microsoft is one of the Dow's dividend-paying stocks, but it's not one of these three that dividend investors need. Grab this free report to find out why these companies might be worth a look.

Fool contributor Evan Niu owns shares of Apple, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Microsoft and Intel. The Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Intel, Apple, and Microsoft. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 14, 2012, at 4:15 PM, melegross wrote:

    Maybe Win 8 is getting here TOO soon. This OS has had a decidedly mixed reaction. It could be another Vista, or worse. I'm not so sure that people are

    putting off purchases because they're waiting for 8. We saw an even bigger drop the last quarter of 2010. And Windows sales have been flat to down for Microsoft all year.

    It could simply be that Windows has peaked, and now we'll see a slow downward drop. Usually, when this happens, in the beginning it's an irrational move from slightly up to slightly down, but then, after the trend takes hold, it's a constant drop.

    That could be happening now.

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