A Best Buy boost falls flat

  • Article by: THOMAS LEE , Star Tribune
  • Updated: December 3, 2012 - 7:48 PM

The electronics retailer had hoped the new Windows 8 operating system would bump up sales of PCs, notebooks and tablets.

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A Best Buy Microsoft Windows 8 consultant, David Smith, left, works with a customer, Pete Levan, right, demonstrating the features of the new Windows operating system during a media availability at Best Buy Friday, Oct. 26, 2012 in Springfield, Ill. Friday was the first day of sales for the new Windows 8 operating system.

Photo: Seth Perlman, Associated Press - Ap

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Best Buy Co. had hoped the recent launch of Windows 8 would spark holiday sales. So far, though, Windows 8 sales have largely fizzled.

Since Microsoft Corp. debuted its latest operating system on Oct. 26, Windows device sales have fallen 21 percent compared to the same period a year ago, according to market research firm NPD Group.

Windows 8 has captured only 58 percent of total Windows unit device sales, far less than the 83 percent that Windows 7 posted right after its release. Windows 8 tablet sales have been "nonexistent," accounting for less than 1 percent of all Windows 8 device sales, NPD said.

"You would like to see some kind of acceleration," said NPD analyst Stephen Baker. "We didn't see any impact."

Windows 8 weakness might portend trouble for Best Buy. The consumer electronics retailer, the country's largest seller of PCs, typically gets a big lift in sales from the release of a next-generation Windows operating system. Best Buy, which has been struggling to grow sales at stores open for at least a year, especially hoped Windows 8 would give a sizable boost to the key holiday shopping period. At a recent investors conference in New York, top executives noted that the retailer carries 45 Windows products that are exclusive to Best Buy, including 28 touchscreen devices.

Best Buy spokeswoman Amy von Walter said Windows 8 is such a unique system that it will take time for consumers to digest it.

"We always knew that Windows 8 was going to be a long-term proposition," she said. "Unlike other new devices, Windows 8 is going to roll out over several months as consumers gradually adopt it."

But it seems like Windows 8 is unlikely to give Best Buy much of a lift this Christmas.

Critics say Windows 8 confuses traditional PC users. But Baker of NPD thinks there's nothing inherently wrong with the technology except that it has so far failed to reverse in any meaningful way the continuing decline in PCs and notebooks.

"Windows 8 is not the problem," Baker said. "Computers are the problem."

Though Best Buy has enjoyed strong growth in tablets, smartphones and e-readers, the company still generates most of its sales from computers, laptops and televisions, all weak categories.

Worldwide PC shipments in the July-September quarter fell 8.3 percent to 87.5 million units compared to the same period a year ago, according to market research firm Gartner Inc. Analysts at the time suspected that consumers were saving their dollars in anticipation of the Windows 8 roll-out in October.

But consumer demand for Windows 8 devices appears tepid, which suggests that not even a next-generation operating system from Microsoft can revive a moribund PC market.

Baker, however, notes that weak initial sales don't necessarily translate into a bad holiday season. For one thing, sales of more-expensive Windows 8 notebooks with touch screens have been strong, helping Microsoft to establish a foothold in the premium segment normally dominated by Apple.

"The most expensive [Windows 8] products did the best," Baker said.

In fact, Best Buy said sales of Lenovo's Yoga laptop have been strong, said company spokesman Jeff Haydock.

With its radically redesigned interface, Windows 8 may also offer Best Buy the chance to do what it normally does best: explain complex technology to consumers. Von Walter said the firm devoted 50,000 hours to training Blue Shirts on Windows 8.

"Overall, we're pleased with Windows 8, which has performed within our expectations since the launch," Haydock said. "We have also increased computing traffic to our stores and website."

Thomas Lee • 612-673-4113

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