The Demise Of The PC Could Be Slightly Exaggerated

by Thom Forbes, Apr 20, 2012, 7:48 AM

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In a call to non-action that no doubt froze the screens of people who market personal computers everywhere, the Wall Street Journal’s influential tech columnist Walt Mossberg yesterday granted the everyday, average consumer “permission to procrastinate” on buying a new laptop unless their current machines are sputtering on their last boot-ups.

“People always worry that buying tech products today carries a risk of obsolescence,” Mossberg writes. “Most of the time, that fear is overblown. But this spring really is a bad time to buy a new laptop, because genuinely big changes are due in the coming months.”

Although Mossberg’s advice also applies to Mac users, one big reason to resist a purchase is the forthcoming release of Windows 8 that’s slated for the fall -– advice that even Microsoft CEO Steve Ballmer might seem to be advancing.

“With the upcoming release of new Windows 8 PCs and tablets, the next version of Office, and a wide array of products and services for the enterprise and consumers, we will be delivering exceptional value to all our customers in the year ahead,” says Microsoft CEO Steve Ballmer. 

Therein lies the silicon lining to this passing cloud. And, in fact, Microsoft did a little rainmaking with its quarterly results, which proved to be a pleasant surprise to most analysts yesterday. An AP story running “Ahead of the Bell” in Bloomberg Businessweek predicted “Microsoft Corp. is expected to report another quarter of lackluster growth as the software maker prepares to release a much-anticipated overhaul of its Windows operating system.” But, bolstered by robust Windows sales, revenues actually rose 6% to $17.41 billion for the quarter ended March 30 and profits beat analysts' average forecast of 57 cents per share, according to Thomson Reuters I/B/E/S.

“The news eased some of the concerns that have gathered around the PC industry this year, with shortages of hard drives caused by flooding in Thailand, the growing competitive threat from tablet computers and a pause ahead of the next version of Windows all contributing to the unease,” Richard Waters writes in Financial Times.

“Perhaps the demise of the PC is not as great as everyone is anticipating here,” Edward Jones analyst Josh Olson tells Reuters. “It looks like the PC is showing a little resilient,” although he points out that Microsoft’s results represent just “one datapoint.”

Indeed, Nomura Securities analyst Rick Sherlund tells the New York Times’ Nick Wingfield that the Windows results are “nothing to get superexcited about, but relative to what we were experiencing, it’s better than a poke in the eye.” 

Of course, the overriding message of Mossberg’s column isn’t “don’t buy” but, rather, “there’s good stuff coming right around the corner.” While Microsoft says that laptops purchased now will be upgradable to Windows 8, they may not be optimized to work with the new touch-screen-enabling software, he points out. Apple is also bringing out a new OS this summer, and is overdue on an overhaul of its laptops, particularly the high-end MacBook Pro line.

One big negative to the Microsoft results were in its Entertainment & Devices Division sales, which were off 16% to $1.62 billion because of a “soft gaming-console market,” according to the Microsoft statement. But it points out that Xbox has been the top-selling console in the U.S. for 15 consecutive months.

Overall, the better-than-expected performance, which was announced after the markets closed, could trigger a tech rally today, reports CNBC’s Lee Brodie. 

“I agree that all this talk about the PC market dying is way overblown, BGC Financial’s Colin Gillis says on CNBC’s “Fast Money.” "This is the seventh consecutive quarter in a row that Microsoft has put up north of $5 billion in net income.”

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