IDC recently increased the decline it expects for PC shipments in the March quarter to 7.7% decline. Given the change in the computing landscape, it may prove difficult for the PC market to experience growth. We expect PC shipment revisions to continue a negative trajectory. The enterprise refresh which has driven results in the Windows segment has past its peak as over 60% of enterprise desktops worldwide are on Windows 7 according to the company.
Microsoft’s traction in the SmartPhone and Tablet marketplace remains lackluster. Tablet growth is estimated by IDC to reach 190 million units and post 49% growth. We estimate that smart phone shipments could exceed 1 billion units in 2013, as emerging countries increasingly turn to inexpensive Android phones for their mobile computing needs. Microsoft’s minimal participation in these markets is becoming an increasingly urgent problem that may be prove difficult to reverse.
Access to Office productivity tools as a hook to drive phone and tablet / surface sales has not proven to be a meaningful sales catalyst in our opinion. Google’s increases overlap between the two operating systems to reflect some of Android’s massive popularity onto Chromebooks. We expect consolidation of the Chrome and Android platforms under Sundar Pichai inexpensive Chromebooks may start to gain traction.
Any change in leadership at Microsoft showing the doors to in-competitive Steve Ballmer is still going to face the above problems, and there are no fast fixes for Microsoft to the current shift in computing trends with lethargic work-force lacking innovation at all points.