Falling PC Sales Cut Microsoft's Profit Margin

By Ashok Bindra January 17, 2012

With the rise of tablets, sales of desktop and notebook PCs have been declining. And software giant Microsoft Corp. is obviously feeling the heat of falling sales. As the company tackles slow PC sales, which is impacting the Windows business, it is also struggling to make a dent into the faster-growing mobile phone and tablet markets.

According to Reuters, the value of Microsoft shares are not expected to change much on Thursday when the software giant presents its financial results.

However, the report quoted Barclays Capital analyst Raimo Lenschow as saying, “It is clear that investors will continue to need to be patient. There could be positive short-term momentum ... but we first need to see proper evidence of mobile/tablet success rather than just signs of hope.”

Meanwhile, last week at the Consumer Electronics Show in Las Vegas, Microsoft gave an indication of tough times ahead. Speaking to analysts on Tuesday, Microsoft’s marketing executive for the Windows unit Tami Reller highlighted the most recent decline in PC sales and warned that the floods in Thailand are slowing the shipments of disk-drives, which s further adding to the problem, wrote Reuters reporter Bill Rigby.

Focusing on the impact of shortages, the report quoted Reller, as saying, “I just think it's going to take a couple of quarters to work itself out.”

“It would be naive to believe otherwise. The level in each of the quarters, I think that's hard to exactly predict,” noted Reller.

Microsoft’s cautious outlook for PC sales was supported by Gartner’s report, which shows a 1.4 percent decline in global PC sales for the fourth quarter, wrote Rigby. According to Gartner’s study, Rigby wrote, the effect of disk-drive shortages will be felt in the first half of this year.

In reality, “the market watcher thinks that continuous low consumer PC demand is bad news for Microsoft, whose financial success is still closely bound to computer sales, despite its forays into gaming, servers, Internet search and phones,” wrote Rigby.

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO East 2012, taking place Jan. 31-Feb. 3 2012, in Miami, FL. ITEXPO offers an educational program to help corporate decision makers select the right IP-based voice, video, fax and unified communications solutions to improve their operations. It's also where service providers learn how to profitably roll out the services their subscribers are clamoring for – and where resellers can learn about new growth opportunities. For more information on registering for ITEXPO registration, click here.

Stay in touch with everything happening at ITEXPO. Follow us on Twitter.


Ashok Bindra is a veteran writer and editor with more than 25 years of editorial experience covering RF/wireless technologies, semiconductors and power electronics. To read more of his articles, please visit his columnist page.

Edited by Jennifer Russell

TechZone360 Contributor

SHARE THIS ARTICLE
Related Articles

Will Disney Make Twitter the Happiest Social Media on Earth?

By: Alicia Young    9/26/2016

To get back on their feet, Twitter is reportedly seeking an acquisition deal that would value them at $30 billion. There are a few contenders already,…

Read More

500M Yahoo! Users Impacted by Hack; What It Says About Password Protection

By: Paula Bernier    9/23/2016

Yahoo! is facing a lot of challenges lately. Add to the heap the breach - which the company confirmed today - that has affected 500 million Yahoo! acc…

Read More

From Robotic Friends to Flying Cars: Looking Ahead to 2025

By: Rob Enderle    9/22/2016

I'm at the IBMEdge conference this week, and one of the topics that came up at lunch today was how robotics are going to dramatically change how and w…

Read More

Windows 10: Is it Worth the Update?

By: Alicia Young    9/22/2016

Last summer, Microsoft shook up their Windows design with the release of Windows 10. They offered the update to users for free for a year, giving ever…

Read More

Apple Making Serious Push Into Car Industry

By: Andrew Bindelglass    9/22/2016

Over the past two years, Apple has been seriously looking into entering the connected car industry, attempting to build its own electric vehicle that …

Read More