A trio of semiconductor stocks — NVIDIA (NVDA), Qorvo (QRVO), and Skyworks (SWKS) — earn...
Microsoft Plays PC Sales Killer for Remainder of 2014
10/03/2014 7:01 pm EST
The question for PC companies is not whether or not this software titan's upcoming, more traditional interface will be a winner or not, for MoneyShow's Jim Jubak, the question is, will it likely freeze the demand for PCs?Microsoft (MSFT) has just killed PC demand for the rest of 2014 and into early 2015.
Well, “killed” is probably an overstatement. But I think it is fair to say that Microsoft's plans for Windows 10 will put a big dent in not-so-strong-anyway PC demand in the next couple of quarters.
According to DIGITIMES, Microsoft will release Windows 10—the company is skipping Windows 9 to go straight to 10 from the current Windows 8—in the first half of 2015 with an official release early in the second quarter of 2015.
From early reports, Windows 10 will be a huge leap for Microsoft's operating system—into the past. With Windows 8, Microsoft tried to introduce a new look and feel for Windows with a tiled user interface and a heavy reliance on touchscreen technology as a replacement for the classic Start Menu and the traditional keyboard-and-mouse approach. The change wasn't exactly popular with the company's existing corporate customers who didn't have a lot of touch screen PCs sitting on cubicle desks. Windows 8.1, released in 2013, revived many of the core elements in Windows including the Start button.
Windows 10 would do away with a reliance on the tiled interface and replace it with a combination of tiles and a more classic Windows interface.
Will Windows 10 win orders from corporate customers who stayed away from Windows 8 and 8.1 in droves? Who knows, but it can't do much worse than Windows 8 and 8.1 did with this market sector. According to Net Applications, in August, Windows 7, the last purely classic Windows, was on 51% of desktop PCs and Windows 8 and 8.1 combined were on just 13% of PCs.
But the point for PC companies in the short run isn't going to be whether or not Windows 10 is a winner or not, but that the impending introduction of a new potentially more traditional version of Windows is likely to freeze demand. Companies contemplating big orders of Windows PCs are likely to wait until they can buy PCs with Windows 10 sometime in the first half of 2015.
PC demand already faced substantial challenges in the fourth quarter with orders for Apple's (AAPL) iPhone 6 and 6 Plus—along with next-generation iPads (expected to be launched in October) and a refreshed iMac—all cutting into the dollars that are available for spending on PCs. Notebook sales are likely to be hit even harder—sales in that sector were strong in the second quarter but dropped off in August as some customers decided to wait on Apple's launches before making a purchasing decision.
Intel's (INTC) own product plans look likely to add to the wait and see mood among corporate buyers. The company will launch its 14-nanometer Broadwell processors in December with mass production in February 2015. If Intel follows its usual practice, the introduction of a new chip line is likely to mean a repricing of much of its current chip offerings. Corporate buyers are likely to wait and see what price-points emerge from that effort before ordering.
Watch and see what PC companies such as Hewlett-Packard (HPQ) forecast about December quarter demand when they release September quarter earnings over the next few weeks.
Related Articles on TECHNOLOGY
In the quest for ever-faster data transmission and storage, many companies are working to developer ...
Richard Moroney focuses on small to mid cap stocks in his specialized advisory service, Upside. Here...
While acknowledging the risks, we think the case for long-term growth in developing Asia is so compe...