Windows 8 Sales Grind to a Halt

Four months after being released into the wild, no one seems to care that Microsoft (NASDAQ: MSFT  ) Windows 8 has been desperately trying to reinvent the desktop PC experience. According to Net Applications, February was a downright awful month for Windows 8; it only gained 0.4% more of the desktop PC market. Since its debut, Windows 8 has only picked up an embarrassingly low 2.67% market share. For those keeping track at home, this pace is so awful that Microsoft Vista actually commanded more of the market after the same amount of time. Yikes. Considering that 65% of Windows-based PC sales are based on consumer spending, there's no possible way this development could be a good thing for Microsoft investors looking for share appreciation.

Feeling the effects
Judging by the last decade of share performance, Microsoft investors are most certainly feeling the effects of living within a post-PC world. The company failed to adapt to the first wave of the mobile computing revolution, which in turn has put increased pressure on the prospects of its Windows 8 franchise. In terms of current growth options, if PCs sales aren't going to pick up -- big time -- it largely boils down to how well received Windows Phone 8 becomes.

Although far behind the Apple and Google (NASDAQ: GOOGL  ) duopoly, time has not run out for Microsoft. Currently, the world has only reached 25% mobile smartphone penetration, which to me says there's plenty of opportunity for Windows Phone 8 to pick up some market share. Naturally, the challenge for Microsoft is that it's starting with essentially zero mindshare in the mobile world. However, if viewed in the right light, challenge becomes opportunity.

Nokia to the rescue?
Working in Microsoft's favor is the fact that the majority of the next 2 billion Internet users coming online over the next three to five years will experience the Internet for the first time on a mobile device. Moreover, the majority of these users will come from emerging markets, which could potentially work to Microsoft's advantage because these markets are likely to have less mindshare. In other words, its nascent ecosystem may not prove to be much of an issue and instead, it may come down to a price versus value decision.

That said, partnering with a company like Nokia (NYSE: NOK  ) could become Microsoft's winning strategy in emerging markets. Like Microsoft, it failed to dominate the first wave of the mobile computing revolution and is hoping to make up for lost time. As a result, Nokia has taken an aggressive stance toward increasing its rate of smartphone uptake in markets where smartphone penetration still remains low. The $230 Nokia Lumia 620 could become both Microsoft's and Nokia's secret weapon in combating Google Android's stronghold in emerging markets, which has largely gone unchallenged in the sub-$250 emerging-market segment. Investors may be underestimating that the Lumia 620 is priced to sell, offers tremendous value, and could actually give Android a run for its money.

All roads lead to mobile
There's no question the world is becoming increasingly more mobile with each passing day. Even PC-heavyweight Intel has made creating a smartphone presence a top priority in the years to come. Ambitions are great and all, but let's not lose sight of the fact that PC-entrenched companies have had a notoriously difficult time cracking the mobile code. How many mobile devices need to be sold in place of one lost PC sale? Although we may not know the exact answer, it stands to reason that a PC company transitioning to mobile needs to be wildly successful in mobile in order for it to benefit the bottom line. It would really help companies in this position if PC sales stopped declining, improving chances to report mobile growth that didn't come at the expense of the PC. Judging by the current uptake of Windows 8, it doesn't look like this prayer will be answered this year.

It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In this brand-new premium report on Microsoft, our analyst explains that while the opportunity is huge, the challenges are many. He's also providing regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.

Read/Post Comments (26) | Recommend This Article (8)

Comments from our Foolish Readers

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  • Report this Comment On March 05, 2013, at 7:20 PM, drfalu wrote:


    Windows 8 OS is a colossal failure..

    Windows 8 OS based phone will be a gigantic success

    Can you splle OXYMORON

  • Report this Comment On March 05, 2013, at 7:20 PM, DaveS01 wrote:

    I'm guessing one of the important reasons for the slow Windows 8 start is that to take advantage of all of its features a hardware upgrade is also required. It doesn't make much sense to upgrade from Windows 7 if your hardware isn't capable of using the touch screen features of Windows 8. As users upgrade equipment, Windows 8 adoption will grow.

  • Report this Comment On March 05, 2013, at 7:31 PM, techy46 wrote:

    Agree with Dave501. I've been waiting for the right hardware to buy a Windows 8 13-14" Ultrabook that folds to be a parttime tablet without paying too much. The right combination coould be the Dell XPS12 or Lenovo Helix but $1200-1500 is way too much to pay so I;ll have to wait for Intel's Haswell to arrive by mid-2013. The Lenovo Yoga 13 looked promising but fold the keyboard under have been received well and Surface Pro is too small with 10" screen.

  • Report this Comment On March 05, 2013, at 7:37 PM, moueon wrote:

    This article contained several inaccuracies, at least according to Tomi. ;3

    1. Microsoft has plenty of mindshare in mobile. Recall that until Windows Phone 8, Windows Mobile/WinCE WAS the second ecosystem.

    2. Microsoft Windows Phone marketshare has continued to collapse. It has actually DECREASED since WP8 came out.

    3. Going with WP has decimated Nokia. They have literally collapsed faster than any other company in history. (Stop and digest that.)

    3. Echoing what happened in the realm of technology, the future is grim for everyone whose livelihood or portfolio depends upon their success. Your platform is burning!

  • Report this Comment On March 05, 2013, at 7:58 PM, jeffreber44 wrote:

    At least we can all agree BlackBerry is a bust and Nokia has the most innovative phones on the market. Better than Apple and you know that Samsung steals most designs anyway.

  • Report this Comment On March 05, 2013, at 8:49 PM, soliberating wrote:

    I'm sure windows 8 is perfectly capable on phones and tablets... however Microsoft has allowed themselves to be painted as bad option from the get go.

    I know plenty of people who make fun of Windows 8 phones and the Surface tablets and I've asked them if they've even tried them... NOT ONE. They are in such a tough spot mostly because the self perpetuating Apple marketing machine thrives on making fun of PCs.

    That being said my Windows 7 laptop is extremely nice and more capable than an Apple alternative for about half the cost and I have no interest in upgrading to Windows 8 because there is literally no advantage in doing so for me. Windows 7 has a better interface for traditional laptop users.

  • Report this Comment On March 05, 2013, at 9:01 PM, Skyviewer wrote:

    I wanted SOO BADLY to buy a nice new PC these past few months. Afterall my old one was getting tired with all the bloatware. Yet when the local I'll call it Computercenter sold out of all the decent Windows 7 computers I was downhearted. Corporations these days seem woefully clueless as to what consumers want. People want more control, not less. They want more time saving not less. They want skinny software, not bloated and glitchy. They want compact but with an optical drive. They don't want a computer to control them, they want to be able to control it. The latest outbreak in the past two years of LESS customizable software has become a real problem. That goes for webpages that jump all over your screen when they are loading. Go back to old fashioned HTML for fool's sakes. So I chose to opt out of buying a new PC all together and am learning to live life without one, the way we did 15 years ago and I haven't regretted it. Microsoft is completely clueless of whom their market is. They are people who like to do things themselves, people who like to tweak, many of them drive stick shifts that they work on themselves. The other OS the Fruit is for the fruit that don't care if they are controlled, the Penguin is for the real eggheads. You get my drift?

  • Report this Comment On March 05, 2013, at 9:33 PM, gee2beme wrote:

    Users are intelligent, they know what they want and need. Give them a choice, Windows 7 or Windows 8.

    I didn't like Windows 8, couldn't afford to upgrade from XP to Vista to Win 7 so I'm trying Linux Mint 14. I like it so far and still have XP.

    Microsoft do an intelligent thing and offer both.

  • Report this Comment On March 05, 2013, at 9:38 PM, AsokAsus wrote:

    To skyviewer:

    Dell sells ALL of their biz class PCs with Windows 7 Pro x64 preloaded since they know business and enterprise are not Windows 8.

    Check out their Latitute E5x30 & E6x30 laptops in the Dell business channel. I think they're very nice, good quality laptops. I like the Optiplex 7910 desktops too. As for the rest of Del's PCs, I'm not too impressed with the quality.

  • Report this Comment On March 05, 2013, at 9:39 PM, Gr8tone1 wrote:

    I hate Windows 8. I wish I had never bought it and would love to "downgrade" to Windows 7. If you want your computer to be an over-glorified cell phone, then Windows 8 is for you. If you need a computer for productivity, don't even think about Windows 8.

    I hate Windows 8.

  • Report this Comment On March 05, 2013, at 9:39 PM, techy46 wrote:

    Microsoft is still selling plenty of Windows 7 PCs to enterprises since enterprsies use their software assurance agreemenst to load whatever OS they want. Windows 8 will slowly take over by 2014 and that just fine for Microsoft's long term revenue. Why don't you guys write about XBox 720 which will be announced in April 26th?

  • Report this Comment On March 05, 2013, at 9:49 PM, drandyd wrote:

    I bought a new HP computer with windows 8 .

    Absolutely terrible system. My old Dell with vista out performed it.

    Terrible . Terrible.

  • Report this Comment On March 05, 2013, at 10:28 PM, dirtydeedz wrote:

    drandyd, sorry, I have been in the computer industry forever. Vista sucks, windows 8 while horrible for the user, turns on in 15 seconds, Vista is a memory hog that takes forever to turn on. I still love XP and windows 7 is growing on me. Microsoft seems to forget what most people want from an operating system, speed and the ability to surf the net and ease of use. One of the best parts of windows 7 is that it is easy to turn off and navigate, windows 8 went backwards.

  • Report this Comment On March 05, 2013, at 10:30 PM, twmoody wrote:

    Own a new Windows 8 laptop and Nokia phone with windows os. Also own andoid tablet and Motorola bionic. my take.

    The Windows phone OS is good, needs more apps but user friendly.

    Why they took out the start menu in Windows 8 by default on a conventional laptop is beyond me. You are always looking for a crazy way to do something that was very easy before. The metro interface is designed for touch not a mouse.

    They need to come up with a windows 8 pro laptop/tablet in the $700-800 range that is actually functional (runs apps with enough free space etc) and the windows 8 will have a chance. Otherwise Windows 7 is still more user friendly for the average PC user.

  • Report this Comment On March 05, 2013, at 10:50 PM, arugol61 wrote:

    I have a AMD dual core laptop with WIN 7 on it,and I'm happy with what I have.It's not top of the line (got it almost 2 years ago) but it does what I want and,anyway,I'm just getting comfy with win 7 so I plan to stay put.Microsoft needs to keep 7,along with 8,for us laptop users.

  • Report this Comment On March 05, 2013, at 11:07 PM, RandomMeaning wrote:

    "Why they took out the start menu in Windows 8 by default on a conventional laptop is beyond me."

    I agree. Metro started out as the Zune interface which they adapted for phones and then desktops.

    Microsoft was hoping that their dominance of desktops/laptops marketshare would result in people's acceptance of Windows 8 which would create a halo effect where people then bought Windows 8 phones.

    Obviously, it hasn't worked out that way. Windows phones have been in decline. If I recall, their high point was 11% of smartphones when their main competition was RIM's Blackberries. Now their down to what? About 2-3% in the most recent stats. And Nokia used to dominate the entire phone market selling over half of the world's phones!

    Meanwhile, it's becoming clear that there is quite a bit of resistance to Windows 8. I'm not going to debate the hows and whys now but the stats are quite clear. And that was when it was being sold at a discount with a deadline everyone knew about. I don't think Windows 8 sales are going to win a giant increase with the price increase.

    Windows 8 will gradually increase over time. It has to, it's the only Windows OS that comes pre-installed on those low cost, low margin computers the average person tends to buy. It's just going to be a lot slower with the competition from low cost tablets/iPads.

    The question to me is, is the decline in revenue and profits from lost sales large enough for Microsoft to notice? A few hundreds of millions probably won't worry them much. They'll just figure they'll get it all back on the next OS release. If losses get into the billions (cost of advertising - already $1.5 billion +, lost revenue, money invested in Microsoft stores, decline in price and profits from Office, etcetera), Microsoft might actually notice the change.

  • Report this Comment On March 06, 2013, at 1:03 AM, eatmeeh wrote:

    I am a A+ certified pc repair tech been working on computer for a very long time.

    Windows 8 failed and so will there phone for the main reason people are sick of "proprietary" technology

    Windows 3.1, 95, XP and 7 where succesfull because they actually opened the door for the technology of new computers to utilized, each upgrade allowed the use of more memory hard drive space and greater CPU power, and leftthe door open for everything to be used on it

    Now the "new upgrades" are nothing more then the same old stuff but with less options, less control, as said proprietary!

    Office 2007 looks nice but does less then 2003, now windows 8 comes out and it is so controled the users who have spent years learning to use there computers are being told to be funneled into using facebook and twitter all the time WTF!

    Sry but make a operating system that can use a 100 core cpu, 100 gigs of ram, and 100 terabyte hard drive and I will be first in line to buy it!

  • Report this Comment On March 06, 2013, at 2:53 AM, uncouthtoad wrote:

    Microsoft products all suck until they have had seven to ten years of fixes and patches and then they end support for for them to try and make you buy into their latest failure of a product. I still use XP and will not upgrade and I hate that they are forcing hotmail users into the new outlook thing. They highjacked my email and automatically routed it to the new outlook. I dont want to have to waste my time relearning a bunch of crap in programs that I will never use. F.U. Microsoft.

  • Report this Comment On March 06, 2013, at 3:07 AM, nireyaj wrote:

    As my Windows 7 system croaks, I am getting an older, refurbished, Windows XP system with which to do my internet surfing, online shopping, and emailing. All of my serious computing-word processing, accounting, photo editing, etc-will be done on a Mac which is not connected to the internet. Windows 8 has nothing I want.

  • Report this Comment On March 06, 2013, at 3:19 AM, Mahadragon wrote:

    I will agree Win8 adoption will grow over the next year or so only because people don't have much choice. Because of this, Win8 adoption will be very slow, almost Vista-like.

    For me I wouldn't even bite at the $29 price special price tag. I went and bought a 27" iMac. Unfortunately many people won't go this route because they can't afford to or simply don't want to.

    I'm surprised at the lack of MS evangelists on this comment board. Usually there's a handful of them all saying the same thing: "Windows 8 is easy to use, took me all of 5 minutes to figure out! It boots up faster than Win 7 and is the best operating system out there!"

    Problem Microsoft has is, they have no taste. I know that's what Steve Jobs said but it's true. They don't have designers running the show (Sinofsky was an engineer). They need people with a good industrial design sense to help design the software and hardware, sort of like what Jony Ive is doing.

  • Report this Comment On March 06, 2013, at 3:56 AM, Rujikin wrote:

    Try using Windows 8 and you will understand why it is failing. It is like trying to take a TERRIBLE mobile interface and combining it with the windows 7 interface, but it doesn't stop there. In order to cause grief they don't seperate the windows 7 interface and the mobile interface. Instead they FORCE you to switch from the windows 7 interface to the mobile interface because they decided the start button was out dated.

    I can repair the boot sectors in a 4 OS multi-boot PC along with repairing any issue that doesn't require soldering and it took me almost an hour to figure out how to get into the control panel. Finding "My Computer" took 45 minutes.

    It is designed to be confusing and user unfriendly. I am happy with windows 7 and will wait till whoever designed windows 8 gets fired and see how windows 9 is. If I am for some reason forced to use windows 8 I am going linux as it would be easier than using the windows 8 interface.

  • Report this Comment On March 06, 2013, at 8:06 AM, theflew wrote:

    A lot of you must not be looking at Windows Phone 8 data because it is trending up and is not on a decline. It has more market share than Blackberry in 24 countries and has double digit marketshare in several.

    It was just reported that the Lumia 920T sold in China just reached 2 million. That in just over 2 months time on a device that that has been back ordered in a lot of countries. So WP8 is doing ok.

    As far as W8 it's going to take time. Consumers aren't just going to toss their W7 computers just to upgrade to W8. If you've purchased a computer in the last 2-3 years it's probably working fine and has plenty of speed. And most large enterprises are just now migrating to W7 so W8 will be years down the road probably after W9 is released.

  • Report this Comment On March 06, 2013, at 8:27 AM, WhatdoIknow1 wrote:

    My kids and wife love it but we were basically moving from XP to 8. I was a little worried about the new learning curve ( I'm not that savvy ) but my kid showed me that all I have to do to make windows 8 into seven is hold the windows button and press D. So it really winds up being the best of both worlds. I really like the Metro live tiles and touch but I also like to default to something that's a little more familiar. A little more like we use at work. It's a great system.

  • Report this Comment On March 06, 2013, at 2:49 PM, ybnvsbu wrote:

    Okay then -- thanks for the memories. I am a big Nokia Lumina fan, but let's face it, Nokia's lack of product during the holiday season had a major impact on the failure of Windows 8. I wanted a phone at Christmas and had to settle for a soup can.

  • Report this Comment On March 25, 2013, at 10:05 PM, nilepz wrote:

    @eatmeh "Windows 3.1, 95, XP and 7 where succesfull because they actually opened the door for the technology of new computers to utilized, each upgrade allowed the use of more memory hard drive space and greater CPU power, and leftthe door open for everything to be used on it

    Now the "new upgrades" are nothing more then the same old stuff but with less options, less control, as said proprietary!"

    Rubbish. XP wasn't a breakaway success until SP2. When it came out, businesses were still using NT and possibly upgrading 2000. Windows 7 was great, but by the time it came out, Vista ran about as well as it did.

    Finally, when 7 came out, most people were still using 2GB of ram and PC's typically shipped with 4GB. There is NO ADVANTAGE to getting a 64bit OS with 4GB of ram. What you gain in addressable RAM, you lose in ram used. 2 years ago, our Dell PC's at work came with x32 and 4GB of ram. That's now changed, but the bottom line is people weren't upgrading for addressable ram.

    And FYI, there was plenty of complaints about 7 UI changes. I'm not sure what you mean by proprietary, unless you mean the app store. I fail to see how that matters, since all desktop apps still work. It may matter for Windows Phone and RT devices, but for the desktop, all your old apps still work.

  • Report this Comment On April 15, 2013, at 9:07 PM, dhugos wrote:

    My first smartphone is a Lumia 920 W8 phone. It's really been gorgeous. I have a lot to keep track of, and frankly don't know how I lived with out it.

    It has its faults for sure, but it has been overall an exceptionally sweet experience using it. I, despite previously having sworn to not use a smart phone, have been very satisfied.

    Sure the phone lacks certain apps, but overall, it is very usable and the apps it has are snappy and gorgeous, with new ones steadily emerging.

    At home I have a Win 7 computer which has been excellent, and near totally-dependable. It never crashes. Took awhile but my Vista box stablilized to, though it was real shakey at first.

    Overall, I know kinds of people that have long since decided they hate Microsoft forever and that's fine. But realize that Apple sues everything that moves, and Google isn't much better.

    All three are now huge, and all engage in highly debatable business practices, not just MS. So don't go on with this nonsense of Microsoft's evil practices of like 15 years ago. It's tedious.

    On the other hand, if MS doesn't realize that there at least seems to be a perception problem for them, they should think about getting that together. And Ballmer - I don't know...

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