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Ditch XP movement finally helps PC business

Gregg Keizer | July 15, 2013
But the 'XP effect' was small and not enough to turn around the industry's fortunes, as some had once hoped.

Companies buying new PCs to avoid the end of support for Windows XP helped the computer industry dodge an even gloomier quarter, IDC said Thursday.

Although the research firm was unable to quantify the impact that migrations had on PC shipments in the quarter ending June 30, there's circumstantial evidence to support the idea that an "XP effect" was finally at work.

"There are things to look at," said Bob O'Donnell of IDC. "One is to look at the vendors who traditionally have more enterprise sales. There, Dell stands out. It gained about four points in share in the U.S. [last quarter] and about a point globally. Dell has been focused on commercial sales, so the implication is that [the increase in share] is due to Windows XP."

On Wednesday, both IDC and rival researcher Gartner released their PC shipment estimates for the second quarter; each detailed yet another contraction, with IDC saying shipments declined 11.4% while Gartner pegged the downturn at 10.9%.

Those numbers were slightly smaller than the declines in the first quarter, when IDC reported a year-over-year drop of 13.9%, a record, and Gartner said the business shrank by 11.2%.

Some of that small improvement between first and second quarters can be attributed to replacement PCs purchased by businesses trying to dump the 12-year-old Windows XP, which Microsoft will retire in April 2014.

"The U.S. market is beginning to reflect some of the Windows XP to Windows 7 transition we've been expecting in the commercial PC space, as evidenced by the strong growth in the enterprise-focused Dell PC business," O'Donnell said in a statement accompanying the second-quarter estimates.

Lenovo provided a similar clue, O'Donnell said in an interview Thursday. The Chinese PC maker's share of U.S. shipments rose about two percentage points and nearly that much worldwide. Like Dell, Lenovo does the majority of its PC sales with businesses.

Analysts have predicted an XP effect-based increase in PC sales for months, but optimism that it would salvage the industry and lead a turn-around disappeared this spring, when experts said it was impossible for corporate refreshes to make up for consumers' apathy about new PCs.

"We have been saying, 'It's got to come,' " O'Donnell acknowledged. "Why hadn't it shown up earlier? I don't know. Maybe companies are really waiting until the last minute."

Microsoft's warnings to customers that they ditch Windows XP have been growing insistent as the April 2014 deadline looms larger. That's not surprising, as Microsoft makes money only if users upgrade to a newer OS.

But even Microsoft seems disinterested in discounting OS upgrades enough to tempt customers into giving up XP: An April promotion that cut the price by 15% of Windows 8 and Office 2013 lapsed June 30.


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