Why are Windows 8 sales apparently slowing down the PC market?

From the changing interface to an absence of a start button, the analysts came out with reasons that felt unsatisfactory. It isn’t a lack of quality, if you look at the reviews by the technology press of Windows’95, you’ll see a product that sucked in a way that made Vista look perfect by comparison; yet it went on to be the best-selling Microsoft product ever. Windows 8 has its problems, but in comparison to Vista its a really well made product. The fundamentally-flawed Windows 95 was the acme of Microsoft’s position in the marketplace. Given all this spurious debate, I thought I would throw some ideas out instead:

  • The economy – China now has single digit growth, economists generally agree that India isn’t living up to its economic potential. Brazil has problems, Europe is still going through the great restructure. The US is growing slowly but full of turmoil as government spending is causing uncertainty. All of these factors will affect purchases across IT and consumer electronics
  • The web – the biggest thing the web did was negate operating system specific file formats. You no longer need to write a document in Word or a spreadsheet in Excel. Enterprise applications no longer need to have a client piece of software running on a PC. This also means that you don’t need to follow software release cycles to keep your PC relevant. Given that the killer app for the PC is the web, replacement cycles for computers have lengthened. A friend of mine, recently had their iPad, iPhone 5 and PowerBook stolen in their house. Yes, that’s right I said PowerBook, their laptop which they were happy with was about seven years old…
  • Opportunity costs – So you have a computer that’s a few years old, but you are still happy with it and smartphones moving forwards more rapidly, so need to be replaced every 18 months to two years. The new PC purchase will get put on the back-burner
  • Substitute products – This is the classic butter-margarine example that economics teachers used to trot out before low-fat spreads caught the awareness of coronary wary consumers. But in a web-based world tablets that provide a PC like web experience are a substitute for a full-blooded personal computer. An iPad can run Myst, show video and communicate with others via the internet
  • A lack of a compelling reason to upgrade – Robert X. Cringely wrote his book Accidental Empires back in the early 1990s, had a whole chapter on the future of computing. One of the most striking parts of this chapter for me was a paragraph with a quote from Ken Okin who worked at Sun Microsystems at the time:  Ken Okin, who was in charge of hardware engineering for the Lisa and now heads the group designing Sun Microsystems’ newest workstations, keeps a Lisa in his office at Sun just to help his people put their work in perspective. “We still have a multitasking operating system with a graphical user interface and bit-mapped screen, but back then we did it with half a mip [one mip equals one million computer instructions per second] in 1 megabyte of RAM,” he said. “Today on my desk I have basically the same system, but this time I have 16 mips and an editor that doesn’t seem to run in anything less than 20 megabytes of RAM. It runs faster, sure, but what will it do that is different from the Lisa? It can do round windows; that’s all I can find that’s new. Round windows, great!”  So even back as far as the early 1990s there was a lack of a compelling reason to upgrade from machine-to-machine. This is even more of the case now. Cringely claimed that in order to have a radical jump in software appearance you would need a corresponding jump in the hardware. The last big jump that we had in personal computing was the tablet PDA
  • The declining power of the IT guy – between BYOD (bring your own device) and the rise of small or freelance businesses there are less traditional corporate users. The power of the Microsoft Certified system is diminished and with that decline has gone the ability to specify a Windows-based computer
  • The law of big numbers – Microsoft already has a huge installed user base, most sales will not be won from its competitors but from itself. That’s a tough place to be if people are looking for stellar growth
  • Paradigm shifts mean deskilling people – Metro represents a new way of using a computer. It threatens consumers current computer literacy knowledge. For many consumers there was no on-ramp
  • Divergence, convergence and the sitting room – a perfect storm of dedicated media server substitute products (Roku, Boxee, Apple TV), smart TVs, games consoles and tablets have squeezed the laptop, media PC and gaming machine in ‘lean back entertainment’ scenarios. We are seeing traditional brown goods being replaced by other goods (often providing a more convenient but poorer quality experience) in the living room that have also subverted multimedia computing

Does this all mean Microsoft is doomed? No.