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Microsoft: Windows 8 selling well despite PC slump

Wednesday - 11/28/2012, 7:49pm  ET

By MICHAEL LIEDTKE
AP Technology Writer

SAN FRANCISCO (AP) - Microsoft believes the latest version of its Windows operating system is off to a great start, but it's going to take more than that to prove the revamped software will win over enough people to revive the slumping personal computer market.

About 40 million licenses to Windows 8 were sold in its first month on the market, according to figures that Microsoft released in conjunction with the company's annual shareholder meeting held near its Redmond, Wash., headquarters.

While that number may look impressive, it's difficult to know what it means without more insights into how many Windows 8 devices have been sold in stores, said technology industry analyst Patrick Moorhead of Moor Insights & Strategy. That's because PC manufacturers pay for most Windows 8 machines, leaving it unclear how many have been purchased by consumers, companies and government agencies.

Microsoft didn't provide further details beyond saying that Windows 8 is being embraced by a list of companies that include Johnson & Johnson, British Telecom and Bank of America Corp.

The initial reception to Windows 8 appears to be "good, but not great," Moorhead said. "Is this going to be enough to turn around the PC market? No."

Another analyst, Rick Sherlund of Nomura Securities, said he thinks it's going to take longer than he initially expected for Windows 8 to make a significant difference in a computing market that is moving away from desktop and laptop PCs and tilting toward smartphones and tablet computers.

Microsoft built Windows 8 to enable people to control their PCs by touching on the display screen, just like mobile devices. A similar operating system called Windows RT is running on a tablet called Surface that Microsoft created to compete against Apple Inc.'s popular iPad and similar devices designed by Google Inc. and Amazon.com Inc.

Sherlund, though, said other manufacturers aren't introducing Windows 8 devices that highlight the software's touch-control features as quickly as he expected. What's more, Nomura Securities projects sales of traditional PCs in the fourth quarter to decline by 7 percent from the same time last year. Another research firm, HIS iSuppli, already has predicted that this year will mark the first time annual sales of PCs will have fallen from the previous year since 2001.

In a research note issued Wednesday, Sherlund underscored his more sedate outlook by lowering his financial forecast for Microsoft. The revision trimmed his previous revenue estimate for Microsoft's fiscal year ending in June by 3 percent, or $2.3 billion.

Microsoft's stock price gained 28 cents Wednesday to close at $27.36, leaving them slightly below where they stood before Windows 8's Oct. 26 release.


(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)