Microsoft reveals more on plight of Netbook sales

Software giant sheds more light on the fate of the Netbook as sales of Apple's iPad continue to surge.

Microsoft revealed more about the plight of Netbook sales in the age of the iPad during the company's third-quarter earnings conference call today. This follows statements by Intel's chief financial officer earlier in the month.

A Toshiba Netbook.
A Toshiba Netbook. Toshiba

The Redmond, Wash., software giant said today that the consumer PC market declined 8 percent in the most recent quarter and part of that was due to "a 40 percent decline in Netbooks," according to a statement by Bill Koefoed, general manager of investor relations, during the earnings conference call.

"In total, we estimate the PC market declined 1 percent to 3 percent in the third quarter," he said.

At Intel, the story--or at least the emphasis--was different, with the chipmaker reporting strong PC client growth of 17 percent on April 19.

In a CNET interview on April 19, Stacy Smith, Intel's chief financial officer, said this about Netbook sales: "The Atom [processor] volume going into Netbooks is pretty flat quarter on quarter. Pretty flat year on year. If there's an impact with tablet cannibalization, it certainly is happening there. But even there it's still a $400 million business for us."

Today, Microsoft provided more clarity on why it is seeing a steeper drop in Netbook sales than Intel. Responding to a question from an analyst, Chief Financial Officer Peter Klein said "there are some unique things going on with Intel's results...There's a few other things in terms of an extra week in the quarter," he said. "They've also excluded netbooks from the PC MPU (microprocessor unit) numbers. And I think there was some appropriate inventory buildup so if you look at our numbers, it ties pretty closely from a unit perspective to what they're seeing. And obviously, we're in line with the big third party analysts as well."

The last statement from Microsoft is important. Intel was questioned during its earnings conference call about why it had such robust earnings despite less upbeat analyst numbers for PC shipments.

Whatever the case, Apple's iPad is undoubtedly having an effect on Netbook sales, as numerous reports have shown. And Intel may ultimately abet this trend as it points its Atom processor increasingly in the direction of tablets.

Via Business Insider.

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