Analyst says that Microsoft currently takes “the bulk of profits”

Apr 11, 2013 14:59 GMT  ·  By

Microsoft is under fire once again after research firm IDC revealed that Windows 8 did nothing to support the declining PC sales in the first quarter of this year, so the Redmond-based tech giant clearly needs to rethink its strategy on the short term.

One of the easiest ways to deal with Windows 8 criticism is the concept called “profit sharing,” a Gartner analyst told The Channel, especially because tech giants such as Microsoft use to take most of the profit, while manufacturers struggle to deal with ever-collapsing sales.

The idea is fairly simple, the analyst explained, as plenty of hardware companies currently on the market are affected by the declining PC sales, mostly due to the fact that many consumers are migrating to tablets and smartphones that are not necessarily running Windows software.

Given the fact that competition is fiercer in these two industry sectors, Microsoft could very well lend a hand to its partners by embracing the concept of profit sharing and thus support the PC market recovery in a more direct way.

“Microsoft and Intel continue to take the bulk of the profits out of the supply chain,” said Ranjit Atwal, Gartner's research director.

“That was fine when the market was growing but will become incredibly difficult to swallow when times are changing – the whole of the PC industry is creaking,” he added.

The problem isn’t necessarily the fact that Microsoft is trying to keep all profit just for itself, but the early performance of the Windows 8 operating system.

PC makers are blaming Windows 8 for its slow uptake in the first months on the market so, in case the new operating system isn’t selling so well, Microsoft would basically have only a small profit to share.

The Redmond-based software vendor is yet to provide us with some updated figures on Windows 8, but judging by its 3 percent market share, the new Windows contraption is clearly well below expectations.