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Don't Blame Microsoft Corporation for the Death of the PC

By Ashraf Eassa - May 3, 2016 at 12:45PM

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The data seems to point to structural demand problems that aren't likely to go away.

Image source: Microsoft. 

A lot of people blame the current dire state of the personal computer market on Microsoft's (MSFT 1.07%) mistakes with its Windows operating system. In particular, Windows 8 -- which launched in 2012 -- was widely panned and Windows 8.1, though better, didn't make things radically better.

Microsoft's recently released Windows 10, however, was much better received than Windows 8/8.1 were. Though not perfect, the operating system is much better suited for traditional desktop and clamshell personal computers than Windows 8/8.1 were.

Despite having been on the market for nearly a year, Windows 10 doesn't appear to have helped PC sales. In fact, I would go a step further and say that the PC decline that the industry experienced over the last several years probably wasn't Microsoft's fault. Allow me to explain.

If people hated Windows 8/8.1 so much, Windows 10 should have driven a "snap back"
A popular hypothesis is that customers loathed Windows 8/8.1 so much that they put off upgrading to newer systems simply due to a significant preference for the prior-generation Windows 7 operating system.

I would argue that Windows 10 is a much better operating system than Windows 8 and 8.1 were. If Windows 8/8.1 were really the problem, then it stands to reason that those who held off on buying new personal computers because of how terrible Windows 8/8.1 were would finally pull the trigger on upgrades once Windows 10 became available.

This wasn't the case, however. PC chip giant Intel (INTC -2.86%) reported that its notebook processor shipments were down 14% in the third quarter of 2015 and that desktop shipments plunged 15%. Such shipments dropped another 10% and 9% year over year in the following quarter.

It's clear that Windows 10 was no cure-all for the PC market's woes. 

Even Apple's results have taken a turn for the worse
It has long been the case that Apple's (AAPL 1.62%) Mac computers, which run on the company's proprietary Mac OS, have been gaining share against PCs powered by Windows.

Last quarter, Apple reported that its Mac shipments were down a full 12% year over year, with revenue falling 9%. Apple CFO Luca Maestri says that the company believes that it "gained market share" last quarter.

If Apple is failing to grow Mac revenue even as it gobbles up market share, then the idea that less-than-stellar versions of Windows were what did in the PC market loses a lot of credibility.

At worst, Windows 8/8.1 made a bad situation worse
At the end of the day, I don't think that successful Windows launches in 2012 would have done much to stave off the decline in the PC market. Despite the PC vendors putting out systems that are better than ever, and despite the much-improved Windows 10 operating system and impressive new processors from Intel, customers simply aren't buying PCs like they used to.

Smartphones and tablets fundamentally captured share of wallet that consumers had previously allocated to PCs, and this isn't something that can be "reversed." The PC market decline is real and I don't think there's anything that Microsoft, Intel, or the PC vendors can do about it.

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