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Gartner Inc (IT), Microsoft Corporation (MSFT): There’s a Silver Lining to the Latest PC Disaster

The new figures out from Gartner Inc (NYSE:IT) yesterday believe worldwide PC shipments declined by 10.9% year over year in the second quarter. This marks the fifth consecutive quarter of decline, setting a new record for the length of a decline in the history of the PC market. As usual, the tablet continues to dominate as the world’s primary consumption device, and is directly pressuring PC sales. Despite the negativity surrounding the headline story, there are a few bright spots worth highlighting.

Gartner Inc (NYSE:IT)

Mr. Softy’s off the hook
Mikako Kitagawa, principal analyst at Gartner Inc (NYSE:IT), believes that the release of Microsoft Corporation (NASDAQ:MSFT) Windows 8 alone does not explain the sustained decline of the PC market, nor does it explain why Apple Inc. (NASDAQ:AAPL)‘s U.S. shipments declined by 4.3%. She even goes on to say that blaming Windows 8 for the PC market’s troubles is “unfounded.” In other words, there are bigger forces at work than a piece of software getting in the way of PC adoption rates. It likely has something to do with the explosive rise of the inexpensive tablet, an area where Microsoft Corporation (NASDAQ:MSFT)’s competitiveness is lacking.

Microsoft Corporation (NASDAQ:MSFT) hopes this will change by the holiday season, when Intel Corporation (NASDAQ:INTC) Bay Trail devices begin making their way into the wild. At that time, it’s expected that Windows 8 devices powered by Bay Trail will start between $200 and $300, depending if a touch screen is involved. With that price point, Windows 8 may be able to regain some competitiveness against mobile computing leaders Google Inc (NASDAQ:GOOG) Android and Apple Inc. (NASDAQ:AAPL)iOS, thanks to the added productivity associated with running the a full-blown operating system as opposed to a mobile operating system.

The silver lining
Surprisingly, U.S. PC shipments found some strength during the quarter, having increased 8.5% sequentially, and declining 1.4% year over year. Gartner Inc (NYSE:IT) believes that the improvement was driven largely by “professional” enterprise demand. With Windows XP extended support ending in April of next year, enterprises are likely beginning to outfit their organizations with new PCs, which could continue to buoy U.S. PC sales in the coming quarters.

A glimmer of hope
Because it’s been well-publicized that Intel Corporation (NASDAQ:INTC)’s next-generation Haswell and Bay Trail processors promise to offer huge leaps in performance, it’s entirely possible that users currently in the market for a PC upgrade are prolonging their replacement until the coming wave of next-gen devices hit shelves later this year. Coupled with the fact that over 500 million PCs in the world are four years old or older, future PC demand could be massive.

The article There’s a Silver Lining to the Latest PC Disaster originally appeared on

Fool contributor Steve Heller owns shares of Apple, Google, and Intel. The Motley Fool recommends Apple, Gartner, Google, and Intel. The Motley Fool owns shares of Apple, Google, Intel, and Microsoft.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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