Microsoft will probably report better than expected Windows revenue when it issues its third-quarter earnings numbers on Oct. 24, according to estimates of PC shipments this week by research firm IDC.
By IDC's estimate, personal computer makers shipped about 81.6 million systems in the quarter that ended Sept. 30, or about 7.6% fewer than in the same period the year before. That number was slightly less than an earlier forecast by the Framingham, Mass. research company, which had changed its projections several times but finally settled on a 9.5% contraction for the quarter.
IDC credited some of the unanticipated uptick to increased purchases of new systems by businesses hustling to eradicate Windows XP before the support plug's pulled next April, with the remainder accounted for by OEMs filling their supply pipelines with machines for the holiday sales season.
The "XP-Effect" was "nothing crazy, nothing great," acknowledged Rajani Singh, an IDC analyst, in an interview Thursday. But it helped. "XP is bringing some volume," she asserted. "It moved the numbers upward a little bit."
While IDC doesn't have direct evidence of the extent of XP's contribution, it again used clues to reach that conclusion, including increases in shipments by companies historically much better at selling to enterprises than consumers, like Lenovo, HP and Dell. Lenovo posted a year-over-year increase of 2.2%, while HP and Dell were essentially flat, with gains of just 0.4% and 0.3%, respectively.
Consumer-oriented OEMs, on the other hand, including Acer and Asus, saw their numbers tank: Shipments at the two Taiwan-based OEMs dropped by more than a third compared to last year.
But the better-than-forecast results -- even though still dismal, as they made for the sixth straight quarter of falling shipments, a contraction of historic proportions -- should produce a small smile at Microsoft.
"September was very strong for Microsoft," said Singh, talking about Windows PC shipments.
In July, when Microsoft last reported earnings, CFO Amy Hood warned Wall Street analysts that the company expected PC shipments to fall by approximately 15% in the third quarter, and cause a 2% decline in Windows revenue.
Hood's forecast meant that Microsoft figured PC shipments would drop to about 75 million in the third quarter; IDC's estimate of 81.6 million was nearly 7 million above Hood's bet. (Research rival Gartner's estimate for the third quarter was almost the same at 80.3 million, although its projection of an 8.6% downturn was slightly worse.)
Because the bulk of the Windows division revenue has been from sales of licenses to OEMs for their new PCs, the higher shipment number could erase the expected 2% decline in revenue.
Microsoft has also lumped Surface sales revenue into the Windows division, and while the steep discounts for the Surface RT, and the smaller price cuts for the Surface Pro during the quarter may have produced higher revenue for the tablets, it's a black hole at the moment: Microsoft has said nothing about Surface sales or revenue since July.
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