Microsoft loses big time as IDC revises PC sales down

IDC officially lowered its estimate for 2011 PC sales, and Microsoft must be trembling to learn that China is the exception to the downward trend

IDC has officially adjusted its estimate for year 2011 PC sales. In February, IDC figured PC sales would increase 7.1 percent between 2010 and 2011. The new number pegs the increase at just 4.2 percent.

To look at it in a slightly different way, four months ago IDC predicted worldwide sales this year of 371.6 million units. Now the estimate stands at 361.6 million.

IDC says that Q1 2011 PC shipments were down 1.1 percent worldwide from Q1 2010, "with double-digit declines in Western Europe, the U.S., and Canada." The only redeeming segment? Emerging markets. Sometime in the next quarter or two, PC makers will sell more boxes in China than in the United States -- and the PC sales trend in the United States is down, while that in China is up.

(That fact, by the way, sheds a lot of light on the numbers I published in April, where some simple arithmetic showed that more than one-third of all new PCs sold -- maybe closer to 40 percent -- don't have Windows 7 licenses to go with them. Microsoft doesn't publish enough numbers to pinpoint the source of the shortfall, but there's a good reason why Microsoft isn't selling many copies of Windows in China.)

IDC predicts a 3.7 percent decrease from 2010 to 2011 in the number of PCs sold in mature markets such as North America and Europe. The only reason why the PC industry isn't in a tailspin, according to IDC, is the buoying effect of emerging markets, where sales are expected to increase by 11.5 percent from 2010 to 2011.

Again, to look at it in a slightly different way, in 2011 IDC expects folks in emerging markets to buy a whopping 26 percent more PCs than those in mature markets. Yes, you read those numbers correctly -- kind of gives a new perspective to the term "emerging."

Microsoft must be trembling. Its core market -- the mature markets tallied by IDC -- is expected to fall 3.7 percent between 2010 and 2011. But those sales numbers include Macs. And Macs are headed anywhere but down: Between Q1 2010 and Q1 2011, Mac sales in the United States were up 18.9 percent, according to Gartner. Where does that leave Windows?

Windows fans tend to dismiss the effect of the iPad on Windows proliferation, but the numbers speak for themselves. The iPad has been available for almost 15 months now and Apple has sold 25 million of them. According to Tiernan Ray at Barrons, two well-known Apple analysts are estimating sales of 8.0 to 8.3 million iPads this quarter -- twice as many as last quarter. Heaven only knows how many iPads Apple can make (much less sell) this year -- 30 million? 50 million? -- but the number is certainly significant when compared to the 160.3 million total PCs that IDC expects will be sold in mature markets this year. I don't think there's any doubt that iPad sales are eating into -- actually, decimating -- netbook sales, particularly in North America and Europe.

When PC sales go down, Microsoft loses. When PC sales go down, Mac sales go up, and more of the PC sales go to countries with a history of scoffing at Windows licenses, Microsoft loses big time.

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Copyright © 2011 IDG Communications, Inc.