Many industry watchers think they have caught the foul whiff of a PC sales slump. Their increasingly negative market outlook is beginning to affect share prices of tech behemoths like AMD and Intel. Now, that negative outlook has elicited a very strong reaction from Microsoft. A slowdown, or mere talk of a slowdown, is the last thing the company needs at this stage. After all, Redmond has been waiting for the PC market to fully recover from a previous slump so it can make the most of Windows 7's phenomenal show.
Bill Koefoed, Microsoft's General Manager of Investor Relations, accused analysts of hastily jumping to conclusions during Oppenheimer’s Annual Technology, Media & Telecommunications Conference in Boston. “I don’t know that I would take two guys that go visit some ODM (original design manufacturer) in Taiwan as a reference on what the market looks like. I would gather a lot of information and then decide what you think that it looks like.”
He is not really alarmed by the constant “chatter” about the PC market slowing down: “You know, whether or not the market’s up or down one month or another, I don’t know, there tends to be, since I’ve had this job, there tends to be a lot of chatter.”
Another top Microsoft executive was also quick to downplay all such apprehensions while speaking at the Pacific Crest Leadership Forum on August 10. Robert Youngjohns, Microsoft SVP and president, North America Sales & Marketing, reminded everyone that besides PCs, “a substantial part of our business in North America is selling infrastructure software like Windows Server 2008, like SQL Server, like System Center, the stuff that runs the enterprise not just the PC.”
Windows 7’s launch may have turned in an impressive 234% growth in sales over Vista, but at least one industry analyst report is suggesting it may not be enough to bring Microsoft out of the red. Boxed copies of the software enjoyed strong pre-orders, but as many of you know, the vast majority of these were sold at a significant discount with an average selling price of only $76 in the week ending October 24th. Sales of PCs through the OEM sales channel also grew by 95% during the launch week, but it has since settled down considerably.
According to the report, Microsoft’s fortunes in 2010 will largely depend on whether the global economic conditions improve, and if IT budgets increase along with it. Strong sales to consumers is one thing, but getting businesses to embrace a tech refresh is the real trick to Microsoft’s recovery. Microsoft Chief Financial Officer Chris Liddell suggested that his company is planning for the worst, and is being “reasonably cautious” about the prospect of enterprises adopting Windows 7.
"It looks like the Win7 inspired upgrade cycle can start in late 2010 and run through early 2013," Katherine Egbert, an analyst with Jefferies & Co., wrote in an Oct. 12 report. "We expect new hardware purchases to precede the software upgrades by about 6 months." Either way, business will need to replace aging hardware and software eventually, but the big question for Microsoft is “when”.
He blamed digital distribution and rampant file-sharing for broadcast TV’s woes. He has a point as digital distribution hasn’t even fully taken off and the Youtubes and iTunes might just be the precursor of bigger things to come, and digitally distributed content will hold sway be it game consoles or TVs.
However, broadcast TV is not going anywhere in large parts of the world that still don’t have a high broadband penetration rate. We have all been told how a certain technology or gadget is headed for its grave only for it to survive; even the radio has managed to survived till now. Tell the whole world what you think about broadcast TV’s fate in the comments section.