Dell’s reputation in the PC market continues to fade. It only shipped 9.7 million units, a 19% decline on 2011. Its direct business model is expensive and unsuitable for driving growth in new markets. A turnaround in fortunes is likely to take years. Should the planned buyout go through it will give the company time to rethink its strategy and refocus, away from the demands of Wall Street and shareholders. Microsoft’s involvement in the Dell buyout raises eyebrows in the light of its recent aspirations to become a hardware vendor. But it is not likely to solve Dell’s problems as even Microsoft struggles with pads – only 3% of pads shipped in Q4 2012 used a Microsoft operating system. The software giant’s entry into the PC hardware market was something of a non-event. High pricing, poor channel strategy and a lack of clarity regarding its RT operating system led to shipments of just over 720,000 units. ‘The outlook for Windows RT appears bleak. Hardware OEMs are ignoring it due, in part, to a pricing strategy that does not align with the economics of the pad market,’ said Tim Coulling, Canalys Senior Analyst. ‘We expect Microsoft to rethink its pricing strategy for RT in the coming weeks. Dropping the price by 60% should get OEMs back onside’. OEM support and a strategy to educate consumers as well as attract developers should give Microsoft a better chance to turn the fortunes of Windows RT around.

Apple’s growth in the pad segment was driven by strong demand for the iPad mini. Its overall shipments, however, were hampered by supply issues. Canalys estimates that the mini made up over half of Apple’s total pad shipments, with its attractive price point and compact design leading to significant cannibalization in the iPad range and wider PC market. Despite record shipments, Q4 saw Apple’s pad share dip to 49%, becoming the first quarter it has not controlled over half the market. ‘Apple timed the launch of the iPad mini well,’ said Pin-Chen Tang, Canalys Research Analyst. ‘Its success proves there is a clear demand for pads with smaller screens at a more affordable price. Without the launch, Apple would surely have lost more ground to its competitors.’

Canalys.com Ltd.