NPD published their report for US consumer retail PC sales during the 10 week back-to-school period yesterday.
U.S. consumer retail PC sales grew almost 3 percent during the 10 week Back-to-School period (week of July 4th through Labor Day week) after declining by 2.5 percent in the previous year.
So it seems like PC sales aren’t falling too badly and have actually risen a bit. Mac sales are continuing to be quite strong. Chrome OS has made some gains but not nearly as impressive as compared to 2012-13.
As I have repeatedly said in this blog, what I find interesting is how Microsoft is retaliating to Chromebooks.
Chromebook sales were up 32 percent in 2014 and accounted for more than 5 percent of notebook sales, and 18 percent of all sales of notebooks under $300. Windows notebook ASPs fell over the last three weeks to just $441, which was 8 percent lower than last year, but the price cuts lifted units by 4 percent. Entry-level Windows Notebooks priced under $300 increased by 37 percent as prices dropped from $271 to $242. 2-in-One Windows devices accounted for 13 percent of Windows sales as volume increased 6x over 2013.
What we see is that low-cost Windows notebooks that are price-competitive with Chromebooks are increasing sales in line with the rise in Chromebook sales (37 percent vs. 32 percent). Hence it appears that although Chromebooks sales are up 32 percent, the market share of Chromebooks within the notebooks-under-$300 segment is not increasing. What is happening is that the notebooks-under-$300 segment expanded 30%, and both Chrome OS and Windows machines increased their sales at the same rate within this segment.
Simply put, Chromebooks are not gaining market share relative to Windows notebooks in the sub-$300 segment. What’s happening is that the sub-$300 segment is rising 30%.
Within this segment, Chromebooks have 18% market share whereas Windows has the remainder. To eventually win over Windows, Chromebooks has to be growing much more rapidly. The possibility that Chromebook share is not rising at all in this segment is a huge red flag.
Looking at the big picture, Microsoft has simply made the typical response that an incumbent would make when faced with low-end disruption. Microsoft’s software business is very much fixed-cost, and hence they tend to fiercely guard market share at the expense of margins. They have also made similar responses in the past.
Nothing new here, but still interesting to see this play out according to theory.
Naofumi Kagami 