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Windows 8 PC orders weak, says analyst

Gregg Keizer | Nov. 20, 2012
Computer sellers have scaled back their expectations of the sales pop they'll get from Windows 8 this year, an analyst said today.

Computer sellers have scaled back their expectations of the sales pop they'll get from Windows 8 this year, an analyst said today.

Brian White, of Topeka Capital Markets, said that his checks of Asian computer manufacturers -- the relatively unknown firms that build desktop and notebook PCs to specifications issued by the likes of Hewlett-Packard and Dell -- found that orders last month climbed by less than half the average of the last seven years.

"With all of the sales numbers out for our ODM Barometer, October sales rose by 2% month-over-month and below the average performance of up 5% over the past seven years," White said in a note to clients earlier this month. "This is weaker than our preliminary estimate of up 5% month-over-month in October and speaks to the continued challenges in the PC market."

White's ODM Barometer -- ODM for "original device manufacturer" -- is a metric of sales by the Asian companies that assemble PCs for brand-name computer sellers. It does not show sales of those PCs to buyers, but hints at the orders those computer sellers have placed for inventory.

The ODM Barometer for October was also down in a year-over-year comparison, repeating a less substantial slide in September, White said.

"The sales cycle has decelerated further into negative territory, dropping to down 13% year-over-year in October from down 9% in September," he wrote. "This weakness is unusual given that PCs with Windows 8 and new ultrabook products are ramping."

PC sellers had hoped that the release of Windows 8 would kick-start sales, which first flattened, then fell in the face of still-unsettled economies and fierce competition from smartphones and tablets for customers' dollars.

It seems that computer sellers expected more from Windows 8 earlier this year, but have since rethought, said White. "Sales [by ODMs] in October will clearly be helped by the ramp of Windows 8, [but they're] much lower than the PC makers originally expected a few months ago."

His conclusion: "The macro [economic] weakness is weighing in on PC demand and the plethora of new tablets is driving more conservatism on the part of the PC makers," he said in an email reply to follow-up questions.

The result: "The Windows 8 ramp is much lower than expected a few months ago, partly related to these issues and others," White said.

ODM sales -- again, a harbinger of orders placed by computer sellers for future PC deliveries -- this year were also weak when compared to the months leading up to Windows 7's launch in 2009.

"During October 2009, sales rose a similar 2% month-over-month," White added in his email. "However, the three prior months [then] were much stronger than July, August and September of this year."


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