Windows XP's retirement driving PC demand in US, says Citi

Businesses are finally getting around to upgrading the decade-plus-old XP operating system. This is boosting PC demand in the US and other mature markets, says Citi.

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The end is near for Windows XP support, which has triggered an uptick in PC demand, according to Citi Research.

In case you've been living under a rock, support for Windows XP is ending on April 8. Corporate America is probably aware of this more than any single entity, pushing up demand in an otherwise shrinking PC market.

"Corporate PC demand within mature markets (US, W. Europe, Japan) improved materially in [the fourth quarter], growing +10% y/y versus a +5% y/y growth in the previous quarter," Citi said in a research note released Thursday night.

The note continued. "This was partly attributed to corporate customers upgrading their hardware (along with an OS upgrade) ahead of the Win XP expiration in April this year. PC OEMs are generally optimistic that such upgrades will continue into 1Q14."

But XP-related growth appears to be an anomaly. Though less severe than last year, PC growth overall will drop in 2014 by 4 percent. And Windows tablets won't take up enough of the slack in demand.

"With much of the tablet growth expected to come from emerging markets, we see the benefits of [Intel's] Bay Trail [processor] and Windows 8.1 to be insufficient to spur growth for overall PCs near-term," Citi said.

And speaking of tablets. Citi is revising its tablet forecast down again by 12 percent to 260 million in 2014.

"The tablet market is maturing quickly...not just in the US but in emerging markets. Moreover, we believe some of the slowdown is caused by the rapid adoption of phablets," Citi said.

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