Market Overview

Consumers Want Windows 8, Not a New PC

By selling 40 million Windows 8 licenses, Microsoft's (NASDAQ: MSFT) new operating system is already a hit. But while some consumers have been eager to upgrade their existing machines, few are trading up to new devices.

According to industry researcher NPD, the consumer Windows PC and tablet market has yet to get a boost from the domestic launch of Windows 8. In a new report, NPD said that Windows device sales fell 21 percent from October 21 through November 17. This excludes sales of Surface, Microsoft's first tablet, which are not currently tracked by the researcher. (It should be noted that Windows 8 was not released until October 26 -- five days after NPD began its analysis of Windows device purchases.)

Notebook sales endured the most painful decline, falling 24 percent. Desktop sales dropped nine percent.

This suggests that while tablets are hurting the growth of the notebook market, it is not having an impact on desktop PC sales, which began to shrink several years ago.

"After just four weeks on the market, it's still early to place blame on Windows 8 for the ongoing weakness in the PC market," Stephen Baker, Vice President of industry analysis at NPD, said in a company release. "We still have the whole holiday selling season ahead of us, but clearly Windows 8 did not prove to be the impetus for a sales turnaround some had hoped for."

Unlike the previous upgrades, Windows 8 was optimized for a multitude of devices. But while its touchable features have garnered a significant amount of media attention, some consumers have been attracted to its light upgrade requirements. From day one Microsoft promoted the fact that Windows 8 will make older machines perform better. This is good for Microsoft, as well as cost-conscious consumers. But it could be bad news for Hewlett-Packard (NYSE: HPQ) and other PC manufacturers that were hoping Windows 8 would spur new hardware sales.

Despite the negative report, Windows 8 is having a positive impact on a few hardware makers. Acer, Sony (NYSE: SNE) and Dell (NASDAQ: DELL) sold a notable number of desktops, notebooks and Intel (NASDAQ: INTC) Ultrabooks at the Microsoft Store.

Regardless, it seems that the PC industry may continue to suffer. Overall sales are expected to decline for the first time since 2001.

Dell shares have risen more than five percent since Windows 8 was released on October 26. Hewlett-Packard dropped more than nine percent during the same period. Sony, which manufactures a multitude of electronics (including TVs and gaming devices), has declined more than 17 percent since Windows 8 was released.

Comparatively, Hewlett-Packard rose nearly four percent during a similar period (October 22, 2009 to November 24, 2009) after the release of Windows 7. Dell dropped more than seven percent while Sony lost roughly nine percent of its value.

Follow me @LouisBedigianBZ

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