Sinking PC sales pose a challenge to Microsoft's incoming CEO

With shipments of personal computers (PCs) going down by the year as people shift to hand-held devices, Microsoft's new chief executive Satya Nadella has his work cut out for him. The US-based IDC (International Data Corp) on Tuesday revised downward its expectations for PC shipments this year and into the future.

Its chart depicting growth of desktop and portable PCs in emerging and mature markets is a sea of negative values.

For 2014, IDC now expects a total decline in PC shipments worldwide of 6.1 per cent - shipments will drop below the 300 million mark to 295.9 million. By 2018, the decline would slow a bit to 0.2 per cent with shipments dropping to 291.7 million, according to the researchers.

IDC counts desktops and laptops of all sizes that include non-detachable keyboards.

The forecast comes even after 2013 worked out slightly better than IDC had expected. Shipments fell by 9.8 per cent during the year, a bit better than the 10.1 per cent decline the researches predicted. Still, the year marked the "most severe contraction on record," IDC said. The researchers say the slightly better results came from short-term factors like XP replacements.

IDC said that while emerging markets typically drive the PC market, the weak economic environment combined with shifts in technology buying priorities mean those areas are becoming increasingly weak. IBM was perhaps the first to catch the trend, selling its PC business to China's Lennovo some years back.

Presumably, the change in technology-buying priorities indicates that people in emerging economies are buying smartphones or tablets instead of PCs.

The report confirms the challenges ahead for Microsoft, whose MS Windows and MS Office cash cows rely on PC sales. Microsoft's bet on the radical redesign of Windows 8 hasn't stemmed the tide of movement away from PCs and toward tablets and phones that run competing operating systems.

The PC market's troubles are numerous: higher quality PCs mean that consumers aren't upgrading their machines as much as they used to; smartphones and tablets have provided lower-cost alternatives for many users who don't need powerful computing machines; and the polarizing nature of Windows 8 has meant that many PC users are more than happy to stick with their Windows 7 computers.

Even worse for many PC vendors, IDC says that PC sales in emerging markets aren't likely to pick up anytime soon, which could hurt companies such as Lenovo that successfully weathered the great PC sales collapse of 2013 with an aggressive strategy of selling in emerging markets.

''Emerging economies used to be a core driver of the PC market, as rising penetration among large populations boosted overall growth,'' IDC analyst Loren Loverde said. ''At the moment, however, we're seeing emerging regions more affected by a weak economic environment as well as significant shifts in technology-buying priorities.

''We do expect these regions to recover in the medium term and perform better than mature regions, but growth is expected to stabilize near zero per cent, rather than driving increasing volumes as we saw in the past'' – but this will not bring back PC sales to the levels of old.