The New Normal (Premium)

OK, it was modest, but PC sales still grew in 2019. Here’s a look at what happened and at how things will change in the future.

First, it’s helpful to remember that while PC sales did, in fact, fall for seven years straight until 2019, the market has really been pretty flat since 2016. That was the last year in which we say a large, double-digit drop in year-over-year unit sales. And, perhaps more interesting, it was a year in which the industry sold 265 million units, a volume that is almost identical to this past year’s 264 million units. I would describe this period of time as “flat,” and it appears that the PC industry has at least temporarily plateaued after some bad years of freefall.

Here’s how those flat years break down:

2016: 265 million units

2017: 261 million units, -1.5 percent

2018: 259 million units, -.77 percent

2019: 264 million units, +1.9 percent

What we’re seeing in this time frame, I think, is the impact of the Windows 7 end-of-life (EOL). Windows 7 was the most popular version of Windows of all time, but it also wasn’t available on new PCs during this time frame. So when people or businesses retired their Windows 7 PCs, Windows 10 was their only choice. (Many businesses did take advantage of Microsoft’s volume licensing program to install Windows 7 on PCs that came with Windows 10, of course.) Remember that Windows 8.0 and 8.1 were made available between Windows 7 and Windows 10.

I’ve always been interested in the impact that Windows 7’s retirement might have on PC sales, and I think we’re seeing it in the 2019 figure: It was, as predicted, only a very small bump. That suggests that this tiny upswing in PC sales is temporary, though it is possible, maybe even likely, that we’ll see another small bump in 2020 as more Windows 7 PCs are retired and replaced. (Many will not be replaced.)

Further interesting is how this bump compares to the retirement of Windows XP, which happens in 2014. I had previously made the following image to depict that:

At first glance, it appears that all XP was able to do was temporarily minimize the PC sales freefall that had happened the previous year. That is, PC sales still fell that year, but much less than in the previous year. But I think XP’s impact was more dramatic than that, and was, in fact, more dramatic than what we’re seeing now with Windows 7. (This is doubly impressive because Windows XP’s life cycle was artificially extended by a few years, making it an even older platform than is Windows 7 today.)

Let me explain.

In 2013, the year before Windows XP was retired, PC sales fell 9.9 percent to 316.5 million units. In 2015, the year after Windows XP was retired, PC sales again fell dramatically, this time by 9.2 percent, to 288.7 million units. Had XP’s retirement not happened, one might have expected PC sales in 2014 to hit somewhere in the middle of those two figures—about 303 million units. But PC makers sold almost 314 million units instead, a gain of 11 million units.

In 2019, Windows 7’s retirement resulted only in a gain of 5 million units during a time in which PC sales had been flat for the three previous years. The impact it had on today’s market was in some ways thus less than the impact XP had six years ago.

This isn’t because Windows 7 is any less popular than XP, of course. In fact, it is currently in use on up to 500 million PCs worldwide. It’s more likely because the PC market has naturally contracted in the intervening years thanks to the rise of mobile, especially smartphones for personal computing. And that trend will, of course, continue: PCs today are used almost exclusively for productivity, and those old-timers who still use PCs for other types of tasks—entertainment, social media, whatever—will simply pass on. This is inevitable.

I am curious how Microsoft’s Windows 10 strategy will impact things going forward. We won’t have a bump, big or otherwise, in the future because there’s no Windows 11 or 12 coming. Instead, we will continue to get new versions of Windows 10, none of which are particularly differentiated from each other. PC makers will still sell 250-ish million Windows 10 PCs each year, and newer versions of Windows 10 will support new hardware, as ever. But there will be no more big PC upgrade pushes.

I don’t believe this is Microsoft’s “fault.” Instead, I think Microsoft’s strategy to just keep using Windows 10 was an acknowledgment that the age of big PC upgrade waves has ended. And nothing says that better than the retirement of Windows 7: Here’s the most popular version of Windows of all time heading into retirement and all it could manage was a 1.9 percent bump in PC sales that year.

That said, Windows upgrades used to be big. Many of them positively impacted PC sales. More recently they did not. Consider the following:

Windows Vista. Released in late 2006, early 2007. PC sales jumped 12.2 percent

Windows 7. Released in 2009. PC sales jumped 12.14 percent

Windows 8. Released in 2012. PC sales fell 3.9 percent (more in subsequent years)

Windows 10. Released in 2015. PC sales fell 8 percent (and then plateaued below that subsequently)

So we’ll see what 2020 brings.

But I think we’re looking at the new normal in the PC market for the foreseeable future: Flat sales or a small bump up in 2020 followed by small declines after that.

But we’ll see, of course.