Microsoft's decision to end support for the Windows XP operating system last year helped significantly slow the years-long decline in PC sales worldwide, giving a much-needed financial boost to system and component makers in 2014.
Shipments of PCs last year did fall—by 2.1 percent—over 2013, but the drop was not as precipitous as in previous years, and the strong sales of commercial systems as businesses migrated off Windows XP was welcome news to the industry, as evidenced by Intel's record revenues.
However, the magic from the Windows XP upgrades has tailed off, and PC shipments this year are again spiraling downward. Analysts from Gartner and IDC this week indicated second-quarter shipments fell 9.5 percent and 11.8 percent, respectively, when compared with the same period in 2014. Some tech vendors, like chip makers Intel and Advanced Micro Devices, were forced to reduce revenue forecasts due to slowing PC demand.
And they warned that—unlike last year's situation with Windows XP—Microsoft's release later this month of Windows 10 will probably do more to hurt than help the industry, at least in the short term. The myriad issues include Microsoft's offering a free upgrade to Windows 7 and 8.1 users for the first three months after Windows 10 is released, with the expectation that many users will simply update the operating system on their systems rather than buying new ones integrated with Windows 10. That will essentially extend the life of current PCs by at least three months.
At the same time, there is anticipation of upcoming new processors from Intel (Skylake) and AMD (Carrizo) that will convince some users to wait until systems with those chips hit the market this year. In addition, PC vendors and their channel partners, in anticipation of Windows 10, have reduced their inventory, the stronger dollar is driving PC prices up overseas and the market continues to be challenged by other devices, such as smartphones and—to a lessening degree—tablets.
"We're expecting the Windows 10 launch to go relatively well, though many users will opt for a free OS upgrade rather than buying a new PC," Loren Loverde, vice president of IDC's Worldwide PC Trackers and Forecasting unit, said in a statement. "Competition from 2-in-1 devices and phones remains an issue, but the economic environment has had a larger impact lately, and that should stabilize or improve going forward."
Gartner analysts, who expect total PC shipments for the year to hit about 300 million, a 4.5 percent decline over 2014, are seeing the same trends, though like their IDC counterparts believe Windows 10 will help boost shipments next year.
"We do not expect the global PC market to recover until 2016," Ranjit Atwal, research director at Gartner, said in a statement. "The release of Windows 10 on July 29 will contribute to a slowing professional demand for mobile PCs and premium ultramobiles in 2015, as lifetimes extend by three months. However, as suppliers and buyers adjust to new prices, Windows 10 could boost replacements during 2016."