Even while Microsoft fights to make Windows 10 the most successful operating system platform in the company’s history, it does so in a market where personal computer sales continue to decline. While 270 million users are running Windows 10 across a slew of machine types, including desktops, notebooks, tablets, 2-in-1s, smartphones, Xbox Ones, and others, that doesn’t necessarily mean that Microsoft is in total grabbing a larger share of a growing market.
According to Gartner, PC growth (which includes desktops, notebooks, and ultramobile premium machines) hit an all-time low in Q1 2016, with less than 65 million units shipping worldwide. Global growth over Q1 2015 was down 9.6%, which is the sixth consecutive quarter of slowing sales. The reasons are varied:
“The deterioration of local currencies against the U.S. dollar continued to play a major role in PC shipment declines. Our early results also show there was an inventory buildup from holiday sales in the fourth quarter of 2015,” said Mikako Kitagawa, principal analyst at Gartner.
“All major regions showed year-over-year shipment declines, with Latin America showing the steepest drop, where PC shipments declined 32.4 percent. The Latin American PC market was intensely impacted by Brazil, where the problematic economy and political instability adversely affected the market, Ms. Kitagawa said. “The ongoing decline in U.S. PC shipments showed that the installed base is still shrinking, a factor that played across developed economies. Low oil prices drove economic contraction in Latin America and Russia, changing them from drivers of growth to market laggards.”
PC sales in the U.S. were marginally better, calling “only” 6.6% in Q1 2016 year-over-year:
Dell and Lenovo were winners in the U.S., growing 3% and 14.6% respectively, with all other vendors including Apple falling (albeit Apple was close to breaking even). A total of just over 13 million PCs were shipped in the U.S. in Q1 2016. In addition, the 2-in-1 market (which includes Microsoft’s Surface line) continues to show strength, even as more traditional desktop and notebook segments remain weak:
“Vendors that had a strong consumer focus struggled to increase sell in shipments,” Ms. Kitagawa said. “There was no particular motivation for U.S. consumers to purchase PCs in the first quarter of 2016. There have been increased sales of two-in-one PCs, but not enough to offset the decline in desktop and traditional notebook sales.”
With these kinds of numbers regarding PC sales, and with Windows 10 Mobile still failing to make a dent in the market, Microsoft will need to keep aggressively upgrading existing machines to get to that magical one billion Windows 10 users number. Although the company is roughly 25% there already, there’s a bit of a distance to make up, and falling PC sales don’t help.
