Don't Blame Us for Windows 8's Slow Sales, PC Makers Say

As Microsoft publicly touts its Windows 8 sales figures -- 40 million licenses sold! Windows 8 outpacing Windows 7 upgrades! -- another story of disappointing sales lingers in the shadows. But who is to blame?
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Microsoft showed off Windows 8 devices from various OEMs in a city landscape at its Windows 8 launch event in New York.Image: Noah Deveraux/Wired

Microsoft is publicly touting its Windows 8 sales figures -- 40 million licenses sold! Windows 8 outpacing Windows 7 upgrades! Windows Store apps double since launch! -- but it isn't all sunshine and smiles in Redmond.

Microsoft is said to be unhappy with the rate of Windows 8 adoption since its Oct. 26 launch. Windows 8 device sales have not met Redmond's internal projections, and the company is blaming it on lackluster hardware from OEMs. Microsoft is citing PC makers' "inability to deliver," according to SuperSite for Windows, which would underscore its push into the hardware space with the Surface tablets.

No one in Redmond is complaining publicly, of course, and the company is offering the same bland comment it's been repeating since the Windows 8 launch. "Microsoft has worked deeply with our OEM partners on the design and capabilities of new Windows 8 PCs and are excited to bring these PCs to market together," a company spokeswoman said. The company did not provide Wired with device sales figures or forecasts.

And what do the OEMs making all those PCs have to say about it? Don't blame us.

The general consensus among companies Wired spoke to is Windows 8 device sales are meeting, or almost meeting, projected sales. That's not to say Windows 8 is selling superbly. On the contrary, one OEM said it had lower expectations for Windown 8 than previous launches simply because the field is so much more crowded. There are many more services and platforms, an underdeveloped supply chain for touch components and slow consumer education stemming to scattered branding and PR.

"We had a little bit different expectations for Windows 8 than previous OS launches," Jeff Barney, VP and general manager of Toshiba America’s PC and TV business, said. "In the past Windows was the only game in town, when it was Windows 7 or Vista it was the big event of the year. These days it's a different environment."

Windows 8 device sales are "going as predicted," he said. "It sounds like they were a little more optimistic," Barney said of Microsoft.

It's the same story at Sony, where VAIO product manager Dave McFarland said the company has seen comparatively slow Windows 8 device sales, but that Sony is about where it expected to be prior to the launch -- although he wouldn't share specific numbers.

"The expectations of what we forecasted for -- I don't want to say we're right on track -- we're probably close to being on track to where we predicted," he said. "If I had to compare Windows Vista to Windows 7 versus Windows 7 to Windows 8, our sales numbers aren't as high as from the Vista to Windows 7 era."

McFarland said he thinks this might be because Windows Vista was a wash, so people were more willing to make the switch to Windows 7. Consumers could be happy enough with Windows 7 that they don't want to upgrade. He also noted launching the OS in October, when people might be tighter with money ahead of the holidays, may have played a role. Whatever the case, Sony isn't worried.

"I'm not saying it's all gloom," McFarland said. "The outlook looks pretty good for us."

Barney and McFarland expect Windows 8 momentum to continue growing in 2013, though neither would offer any sales forecasts. Sony and Toshiba say they are committed to the platform and that consumers should expect more polished, touch-focused Windows 8 devices.

"To be frank, the OEM community will bring better form factors to market," Barney said. "This first generation is a rush to get there in the beginning. They are not as commercially viable as they are media viable. Over time you will see a lot more commercially viable products that take advantage of Windows 8."

Neil Hand, Dell's VP of global end user computing, says the transition to Windows 8 has gone as expected in both the consumer and commercial spaces. One area where Dell has seen stronger than expected demand is in touch devices, especially with its convertible XPS 12.

"The support and messaging from Microsoft around it is extremely strong," he said. "Any big transition like this takes more than few weeks to take hold."

(Lenovo and Samsung declined to comment for this story. HP did not reply to requests for comment.)

Barney doesn't agree and thinks the branding and marketing around Windows 8 could use improvement.

"We've learned some lessons over the launch," he said. "Everyone is in a big hurry to be first and loud and be seen. It's not always conducive to your company to blast the same message that others are blasting because you want to stand apart."

As Windows 8 moves out of its launch phase, Barney says OEMs and Microsoft must join together behind a cohesive message. "The message needs to become more focused on touch and touch as a key feature," he said. McFarland went further, noting that consumer education is important. Although Microsoft "has worked very, very well with us," both sides could do more to tell consumers why they need Windows 8. Touch, for example, will be extremely important for Sony.

Touch-focused messaging, however, could be a problem because there aren't a lot of affordable Windows 8 touch devices. NPD Group analyst Stephen Baker says OEMs and Microsoft must consider the wisdom of aggressively touting the value of Windows 8 features for which there are few if any products or, worse, products they can't afford.

That said, Baker says the blame for slow Windows 8 device sales does not rest solely with OEMs. An NPD report released Thursday found Windows device sales have fallen 21 percent compared to the same period last year. Windows 8 sales account for 58 percent of device sales compared to the 83 percent Windows 7 device sales made up in the same launch period. Everyone -- OEMs, Microsoft, retail channels and the supply chain -- is responsible for that, he said.

"I don't think there's anything fundamentally wrong or broken with Windows 8," he said. "There's something wrong and fundamentally broken with the computing device market. The problem for retailers and OEMs is that many of them are concentrated in the traditional PC market and that isn't a growth part of the computing device market... The supply chain still isn't set up to provide what the value proposition Windows 8 brings to the market."

Toshiba, Dell and Sony agree that slow initial sales are due to a number of factors beyond the quality of their devices.

"Both parties need to work together," McFarland says. "It's one without the other, you don't have the hardware, the software can't be there, and vice versa. Both groups shouldn't be blaming each other, both groups should be closer. If it's not doing well, we should figure out how we can all better figure this out and see why."