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Globalization Effecting Apples

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Microsoft needed a great Christmas season. After years of product stagnation, and a big market shift toward mobile devices from PCs, Microsoft’s future relied on the company seeing customers demonstrate they were ready to jump in heavily for Windows8 products – including the new Surface tablet.

But that did not happen.

With the data now coming it, it is clear the market movement away from Microsoft products, toward Apple and Android products, has not changed. On Christmas eve, as people turned on their new devices and launched their first tweet, Surface came in dead last – a mere 2% compared to the number of people tweeting from iPads. (Kindle was second, Android third.) Looking at more traditional units shipped information, UBS analysts reported Surface sales were 5% of iPads shipped. And usability reviews continue to run highly negative for Surface and Win8. Including CNNMoney’s well thought out article about why transitional products like Surface have an inherent, likely insurmountable design failure.

PC sales declining

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This inability to make a big splash, and mount a serious attack on Apple/Android domination, is bad news for Microsoft especially because we now know that traditional PC sales are well into decline. Despite the big Win8 launch and promotion, holiday PC sales declined over 3% compared to 2011 as journalists reported customers found “no compelling reason to upgrade.” Ouch.

Looking deeper, for the 4th quarter PC sales declined by almost 5% according to Gartner research, and by almost 6.5% according to IDC. Both groups no longer expect a rebound in PC shipments, as they believe homes will no longer have more than 1 PC due to mobile device penetration, a market where Surface and Win8 phones have failed to make a significant impact or move beyond a tiny market share. Users increasingly see the complexity of shifting to Win8 as not worth the effort; and if a switch is to be made, consumer and businesses now favor iOS and Android.

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