Apple breezes to PC sales' top spot as Windows share decays

U.K. research firm, which lumps tablets with desktops and notebooks, says Windows PCs accounted for record-low share of total sales

Apple sold more PCs worldwide last quarter -- 21 million -- than any rival, retaking the lead it lost the quarter before, U.K.-based Canalys said yesterday. And because Microsoft lacks a tablet operating system, sales of Windows-powered PCs fell to an all-time low as a percentage of total sales.

Unlike other research firms, Canalys counts tablets 7 inches or larger as PCs, figuring that they're used for many of the same purposes as a notebook or even a desktop. Using that definition, Apple, which sold 17 million iPads and 4 million Macs during the period that ended June 30 -- shot to the top of the chart.

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Apple regained the No. 1 position in the second quarter after ceding it in the first to Hewlett-Packard. The Cupertino, Calif., maker of Macs and iPads had last been the world's top-selling PC seller in the fourth quarter of 2011.

Canalys pegged Apple's 21 million units as 19 percent of the sales share, well above both HP and Lenovo, the No. 2 and 3 manufacturers, which each sold approximately 13 million PCs for a 12 percent share. Rounding out the top 5 were Acer and Dell, with unit sales of 10.6 and 9.6 million, respectively.

On the back of its iPad sales, Apple posted growth of almost 60 percent over the same quarter the year before, joining Lenovo and Acer as the vendors that showed gains. HP's and Dell's PC sales each fell about 11 percent year-over-year.

While most research firms continue to split tablets and traditional PC form factors -- desktops, laptops and the quickly-vanishing netbooks -- Canalys argued that that's old-school thinking. "We define a PC as a self-contained personal computer, with a display 7-inch or larger, that can, if necessary, operate without an attached power supply," said Tom Evans of Canalys, in an interview Thursday.

"People aren't going to be purchasing tablets rather than mobile phones," said Evans, explaining the 7-inch rule. "We look at purchasing behavior, which shows, for example, that people are upgrading their own notebooks at a slower rate than they were before because they're buying tablets. And the netbook market is in decline because it's been directly impacted by tablets."

Tablets are such a huge part of today's PC story, Evans argued, that ignoring them is a mistake when estimating system sales.

One side effect of Canalys' approach is that it shows the PC industry is not in the dire straits declared by other research firms.

Using Canalys' definition of PC, the industry actually grew by nearly 12 percent in the second quarter over the same three-month stretch in 2011. That's a much brighter picture than the ones painted by Gartner and IDC, two U.S.-based research companies that last month pegged the quarter as down 0.1 percent from the same period the year before.

"If you're not counting tablets, [sales] certainly are dismal," said Evans. And he asserted that tablets are PCs, not only to buyers but also to hardware makers. "They need to know what products they want to release," he said, talking about computer vendors, called OEMs, for "original equipment manufacturers," in tech-speak. "They have to look at everything when they decide what to develop, and a big part of that is looking at tablets."

Of the 108.7 million PCs sold in the second quarter, 73 percent were powered by Windows, said Evans, a record low for the Microsoft operating system. "Windows PC shipments continue to disappoint," he said, adding that "ultrabooks," the thin, lightweight notebooks pushed by Intel, have not reached the price points that will get people buying.

Microsoft will release its next operating system, Windows 8, and the for-tablets offshoot Windows RT, in late October. But Canalys doesn't expect that the Redmond, Wash. developer's moves, particularly its decision to design and sell its own tablet line, will appreciably move the Windows meter.

"We expect the Surface pads to have a similar impact on the PC industry as the Zune did in portable music players," said Tim Coulling, another Canalys analyst, in a statement today.

Evans elaborated on his colleague's comment.

"Surface pricing is going to be high, too high to be competitive," predicted Evans, who doubted that the Surface equipped with Windows RT will feature a price tag lower than Apple's entry-level iPad, which lists at $499. "Pricing is a very, very important part of tablet [sales]," he said. "Microsoft has to convince consumers to pay more for the Surface, which will be very difficult."

Microsoft unveiled the Surface tablets -- a second, more expensive model will rely on Windows 8 Pro, and so be able to run traditional Windows software -- six weeks ago. Although it has not yet announced prices, it has said the Windows RT model will be "competitive with a comparable ARM tablet," and that the Windows 8 Pro Surface would cost about the same amount as "an Intel ultrabook-class PC."

Those rough guidelines led analysts to estimate that the Surface RT will range from a low of $400 to a high of $700, and the Surface Pro could cost anywhere from $800 to above $1,000. Many bet on the latter as the likeliest target.

"At those prices, the Surface will just not be competitive enough," said Evans, explaining Canalys' low expectations.

"Canalys does not expect the launch of Windows 8 to arrest Microsoft's market share decline until Q3 2013 at the earliest," the company said in its statement. "The Windows 8 launch budget guarantees attention during Q4, but users will only benefit fully from the new OS if they buy PCs with touch screens, which will significantly increase the purchase price."

Microsoft will launch Windows 8 and its Surface RT tablet on Oct. 26. OEMs will have PCs and tablets for sale at the same time.

Canalys urged Microsoft to subsidize its partners to the tune of $50 to $100 per PC for touch-enabled screens to lower prices of Windows 8 hardware, but held little hope its recommendation would be entertained. "Intel pledged to invest $300 million in ultrabook ecosystem players, but there is no indication, as yet, that Microsoft is prepared to make a comparable commitment to the PC supply chain," the company said.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed. His email address is

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This story, "Apple breezes to PC sales' top spot as Windows share decays" was originally published by Computerworld.

Copyright © 2012 IDG Communications, Inc.

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