By Shira Ovide And Cat Zakrzewski
New versions of Windows have usually sparked sales of personal
computers, but it isn't clear whether Microsoft Corp.'s release of
Windows 10 on Wednesday can reverse a four-year slide in PC
sales.
Market researchers and industry players disagree about
whether--and when--Windows 10 can give the industry a boost.
Gartner Inc. expects PC sales to return to "slow and steady growth"
next year. IDC predicts sales will decline slightly in 2016
followed by "limited growth" in coming years.
"There is no clean analysis," said Mike Nash, a vice president
of Hewlett-Packard Co.'s printer-and-PC division. "I'm neither
smart enough nor dumb enough to forecast the future."
There are concerns about economic turbulence and a glut of
gadgets vying for technology budgets. But the biggest wild card:
Microsoft's decision--for the first time in its history--to give
away free Windows upgrades to tens of millions of computer
owners.
In the past, Microsoft charged a fee to update older computers
to the latest Windows version. Few consumers opted to pay roughly
$100 or more to do so. Many decided to buy a new PC instead.
The industry could use a spark. Sales of personal computers have
fallen each year since 2012, and they have dipped more than
expected this year, according to IDC. The research firm estimated
shipments of about 289 million personal computers in 2015, about
21% fewer than shipped during the industry's peak year of 2011.
Microsoft's decision to give away Windows 10 shifts the
traditional alignment of financial interest between Microsoft and
its allies. PC makers and Intel Corp. generate revenue on each new
PC sold. The software giant is moving from making money just
once--when it sells a fresh version of Windows as an upgrade or
included with a new PC--to generating long-term revenue by selling
apps, videogames, Web-search ads and other add-ons. Microsoft aims
to make money whether or not users buy a new computer.
Intel Senior Vice President Kirk Skaugen said his company's
interest remains aligned with Microsoft. Officials from PC makers
said their collaboration with Microsoft on Windows 10 has been
stronger than ever. A spokeswoman for Microsoft declined to
comment.
Dell Inc. said roughly 60 million of its computers in use were
eligible for a free Windows 10 upgrade. If the owners of half of
those devices opted to upgrade rather than buy replacements, they
could dent the PC market by roughly 10%. Executives from other PC
makers said they believed Windows 10 would help the PC market.
Microsoft hasn't said how many computer owners it expects to
take advantage of the free update. The company traditionally makes
roughly two-thirds of its Windows revenue from sales to companies,
and there, too, a free upgrade may also hold back new PC sales.
Free operating system upgrades haven't necessarily hurt sales of
other computing devices. Sales of new smartphones continue to rise,
even though Apple Inc. and Google Inc. release annual updates of
operating software for iPhones and Android smartphones. Apple lets
people upgrade older Mac computers to the latest Mac OS version
free, and Mac sales have climbed.
PC-industry executives and analysts said new computer designs
and features would lead people to buy new computers despite free
Windows 10 upgrades. Mr. Skaugen, who leads Intel's chip business
for PCs and mobile devices, said sales of new PCs would be
propelled by a new Intel chip coming soon and by elements in
Windows 10 that work best on new machines. These include Cortana, a
Siri-like voice assistant for Windows computers, and the ability to
log into computers with an image of a user's face instead of typing
a password.
"To really take advantage of Windows 10, they need new
hardware," said Mr. Skaugen.
That new hardware, however, is reaching the market at a pace
that resembles a marathon more than a sprint.
Three years ago, when Microsoft launched the current version of
Windows, the company counted more than 1,000 new computers and
tablets that had been certified for the new version. Last week,
Microsoft Chief Executive Satya Nadella said PC makers had
"hundreds of new hardware designs" in the works for Windows 10, and
the "first of these exciting new devices will start to be available
on Windows 10 launch date."
PC makers and Microsoft don't fully agree on the relative
paucity of new Windows models, and they say they expect full
complement of Windows 10 devices for the holiday shopping
season.
Dell, for example, plans to release 13 computer or tablets
models with Windows 10 starting this week. The company said it
offered only eight new models tailored to Windows when the current
version launched in 2012.
Write to Shira Ovide at shira.ovide@wsj.com
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