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Windows 10 blamed for continued drop-off in system shipments, flat IT spending

Windows 10’s launch last year was a huge success for Microsoft. In the past year, the number of systems running Windows 10 has grown enormously, spurred by Redmond’s free upgrade offer and a number of less-upstanding practices. From a strictly numbers game, however, the shift has been a success.

What’s been less clear is the negative impact this shift has had on the wider PC business. In the past, the release of a new Microsoft operating system gave the PC OEMs at least a minor sales bump as consumers and businesses upgraded to the new operating system. That bump always depended on the release’s overall quality — Windows 7 was more significant than Windows 8.1 — but it existed. Windows 10 didn’t improve sales at all, and a recent Gartner discussion with The Register suggests why. According to Gartner, one in five customers that upgraded to Windows 10 ultimately decided not to replace their PC with a newer one after seeing how well the OS ran.

“People with older PCs upgraded to Windows 10 and held onto them. Microsoft didn’t expect that number to be so high,” research director Ranjit Atwal told the Reg. “Microsoft has a different vision of of where it is headed, which means that it will not be completely aligned with the PC makers.”

That’s something of an understatement, but it’s not clear how the PC makers themselves can adjust to this new future. For decades, the Wintel alliance was seen a virtuous cycle in which Microsoft delivered new software with additional features, while Intel and AMD kept silicon performance advancing year after year. Now, with clock speed increases dead and the entire tick-tock model moribund, efforts have shifted into pushing smaller, lighter, and thinner hardware to the market. The problem with this approach is that consumers simply haven’t responded to it the same way they flocked to higher clock speeds and multi-core CPUs. Machines like the Razer Blade Stealth are better systems than the ultrabooks of 2012, but ultrabooks haven’t stemmed the continued decline of the PC market, which shrank a further 5.2% in Q2 2016. This marks the seventh consecutive quarterly decline in PC sales and IT spending for the entire year is now expected to be flat worldwide.

While 2-in-1 sales and PC gaming continue to be fairly robust, these segments aren’t nearly large enough to offset the continued decline in general PC sales. We might see a very small bump to overall sales once Windows 10 goes off free upgrade status, but no one is projecting one — the rate of monthly upgrades has slowed enough that relatively few people are likely to run out and buy PCs just to have the new operating system. Unless Microsoft goes back to its old distribution model, future versions of the Windows 10 OS will probably arrive free for a limited time as well — further dampening any upgrade sales that OEMs might have otherwise enjoyed.

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