HP Inc blames Windows 10 for drop in PC sales

25 Feb, 2016

CEO says Windows 10 demand isn't high enough to help HP Inc

HP Inc has blamed Windows 10 for a 12 per cent drop in its latest financial revenues to $12.2 billion (£8.76 billion) year-over-year.

Dion Weisler, CEO of HP Inc since HP split into two divisions (the other being Hewlett-Packard Enterprise) last year, claimed a lack of demand for Windows 10 products has hit HP's hardware business.

“I still believe [Windows 10 is] a tremendous operating system,” Weisler told investors on conference call this week, transcribed by Seeking Alpha.

However, he added: “We have not yet seen the anticipated Windows 10 stimulation of demand that we would have hoped for, and we’re carefully monitoring any sort of price developments that could further weaken demand.”

HP Inc sells PCs and printers, both markets that are experiencing declines in demand as the adoption of smartphones and tablets has continued to rise.

And Wiesler's claims are supported by a Gartner report last month that found a lack of Windows 10 uptake at the end of 2015 contributed to a year-on-year drop of 8.3 per cent in the PC market.

Principal analyst Mikako Kitagawa said at the time: "On the business side, Windows 10 generally received positive reviews, but as expected, Windows 10 migration was minor in the fourth quarter as many organizations were just starting their testing period.”

However, Microsoft claims the operating system now runs on 200 million devices.

HP Inc reported a 13 per cent fall in its personal systems revenues – which encompass notebooks, desktops, workstations and other devices – taking $7.46 billion in all, compared to $8.56 billion in the same quarter last year.

It experienced a further 17 per cent fall in revenues from its printers – across supplies, commercial and consumer hardware – taking $4.64 billion in all, compared to $5.59 in the same quarter last year.

Weisler said the company had warned investors about the increasingly tough market conditions, saying: “We expected that. We outlined that at the security analyst meeting and we expect it for several quarters ahead.”

But that did not stop HP’s shares falling by 1.5 per cent to $10.66 on the New York Stock Exchange in the wake of its results.

HP Inc’s results for the three months ending 31 January 2016 is the company’s first financial report since Hewlett-Packard was split in two.

Analysts originally predicted that last year's launch of Windows 10 would counteract the steadily decline of PC sales.

But so far, it has not helped HP, which faced an equally stormy time during its late 2015 results, and continues to face challenges selling its products to enterprises and consumers.

Weisler referenced the HP Elite X3, a hybrid mobile product showcased at Mobile World Congress this week, as an example of how he believes the company is adapting to changes in the computing market.

“The PC lines are being redrawn at the moment,” said Weisler during the investor call. “We continue to take costs out of the system. We continue to drive innovation into the system, and we're not after share for share's sake.”

Following its disappointing first 2016 quarter results, Weisler said the company will be examining “productivity initiatives and accelerated restructuring” in the coming months.