MSFT Windows 8 Blamed for Steepest PC Shipment Drop Ever

Market research firm IDC blamed a sharp decline of PC shipments in the first quarter of 2013 on a consumer and business rejection of Microsoft (NASDAQ:MSFT) Windows 8, the software giant's most recent operating system update and the first one designed to unify the world of PCs, tablets and phones. The nearly 14 percent decline in PC shipments marked the worst quarter since IDC began tracking the PC market quarterly in 1994. What other factors led to the huge drop in shipments?  We'll identity the answer.

The report also blames a lack of innovation in the PC market. While PC makers focused on extending touch capabilities and ultraslim systems, the expense of the components to enable those features hurt the effort. And PC makers further struggled with differentiating PCs in a way that showcased the benefits they offer that are not available from other products on the market such as tablets and smartphones.

IDC Personal Computing Research Director David Daoud said the reduction in shipments shouldn't be a surprise, but the steepness of the decline shows a need for concern.

"The industry is going through a critical crossroads, and strategic choices will have to be made as to how to compete with the proliferation of alternative devices and remain relevant to the consumer," he said. "Vendors will have to revisit their organizational structures and go-to-market strategies, as well as their supply chain, distribution and product portfolios in the face of shrinking demand and looming consolidation."

According to the report, mini notebook shipments (netbooks) had taken a rather large piece of the low-end market, while tablets and smartphones continued to redirect consumer spending. Slow demand has resulted in the reconstructing of HP (NYSE: HPQ) and Dell (NASDAQ: DEL). Lenovo, on the other hand, started closing in on HP's market share.

Still, while there are a few contributing factors to the decline, others continue to focus the blame on Microsoft.

"At this point, unfortunately, it seems clear that the Windows 8 launch not only failed to provide a positive boost to the PC market, but appears to have slowed the market," said IDC Program Vice President, Clients and Displays, Bob O'Donnell. "While some consumers appreciate the new form factors and touch capabilities of Windows 8, the radical changes to the UI, removal of the familiar Start button, and the costs associated with touch have made PCs a less attractive alternative to dedicated tablets and other competitive devices. Microsoft will have to make some very tough decisions moving forward if it wants to help reinvigorate the PC market."