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How the PC market has badly hurt Microsoft’s revenue from Windows

How the PC market has badly hurt Microsoft’s revenue from Windows

The worldwide PC market has not had a good 2022 and suffered almost everywhere. According to Gartner, worldwide PC shipments totaled 65.3 million units in the fourth quarter of 2022. This was a 28.5% decrease from the fourth quarter of 2021. This marks the largest quarterly shipment decline since Gartner began tracking the PC market in the mid-1990s , says Gartner. PC shipments reached 286.2 million units in 2022, a 16.2% decrease from 2021.
IDC shared similar numbers. According to IDC, global shipments for traditional PCs fell “below expectations” in the fourth quarter of 2022 (4Q22) as 67.2 million PCs were shipped, down 28.1% compared to 2021.
Microsoft announced its quarterly results and the impact of the PC market can clearly be seen in the revenue the company generated from Windows. During its quarterly earnings call. Microsoft revealed that its reverie from Windows OEM was massively down by 39% in Q2. This is the revenue which Microsoft earns when PC manufacturers put Windows on their devices.
CEO of Microsoft Satya Nadella said that the numbers had returned to pre-pandemic levels. “While the number of PCs shipped declined during the quarter, returning to pre-pandemic levels, usage intensity of Windows continues to be higher than pre-pandemic, with time spent per PC up nearly 10 per cent,” Nadella said during the earnings call. He also said that monthly active Windows devices also reached an all-time high this quarter.

Not many customers are looking to upgrade

Mikako Kitagawa, Director Analyst at Gartner said that “Since many consumers already have relatively new PCs that were purchased during the pandemic, a lack of affordability is superseding any motivation to buy, causing consumer PC demand to drop to its lowest level in years.” Kitagawa added.
The demand for PC was down in almost every part of the world. The EMEA region saw a 37.2% decline, according to Gartner, because of the intersection of political unrest, inflationary pressures, interest rate increases and a pending recession. “A decline of this magnitude only happens when market demand effectively comes to a halt,” said Kitagawa. “Business and consumer confidence across EMEA has collapsed, leading to a huge drop in PC demand. A massive increase in inventory has also severely limited sell-in opportunities as sellers focus on moving old stock,” he added.

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