Staples President of U.S. Stores says Windows 8 and Microsoft's Surface Pro tablet have fallen short of initial expectations, but the retailer remains excited about the operating system.
Staples (NASDAQ: SPLS) remains "excited" about Windows 8, but the U.S. retailer says the Microsoft (NASDAQ: MSFT) operating system and even the new Surface Pro tablet are falling short of Staples' original expectations. Demos Parneros (pictured), president of U.S. Stores, shared Staples' views of Windows 8 and Surface Pro sales during an earnings call today. And the view, at least right now, isn't all that positive.
During a Q&A session, a BB&T Capital Markets analyst asked Staples if it is "fair to say that Windows 8 has been disappointing for you guys? And do you expect Windows 8 to catch on at all in fiscal year '13? Or is it just more the secular shift away from PCs and towards tablets?"
In response Staples' Parneros offered these insights:
" There was a lot of anticipation and build for Windows 8, as you mentioned, and that really slowed sales down [in Q4], that in combination with people moving to tablets. And then the Windows 8 release, honestly, was below what we expected. One of the products was introduced [an apparent reference to Surface RT]. The [Surface] pro [tablet] model was introduced just recently to reasonably good reviews and decent sales but definitely below expectations. I would also say that touch product, which really makes Windows 8 a better experience, was scarce in the quarter. And also mobile phones, which integrate the tablet, the PC and phone experience together into really a new platform and a new ecosystem were also slow to be introduced. So we believe in Windows 8, we're excited about it. I like the recent things that we've seen. But it's got to build a little faster."
Limited Supply... or Limited Demand?
Clearly, Staples blames some of the Windows 8 challenges on a lack of hardware to sell. But each time The VAR Guy re-reads Parneros's statement, it seems clear that he confirmed Microsoft's worst fears: The operating system simply isn't living up to expectations.
Questions about Windows 8's true market momentum have been growing in recent weeks. Microsoft recently said the operating system has sold 60 million licenses -- an impressive figure in some respects, but it's difficult to say how many of those licenses involve actual consumer sales rather than product shipments to distributors, resellers and retailers.
- Best Buy has been discounting touch-enabled Windows 8 PCs;
- Samsung signaled more concerns about Windows RT tablet sales;
- Microsoft apparently is offering PC makers Windows 8 discounts if the licenses are used on small-screen laptops; and
- NetworkWorld has declared that Windows 8 is now at a standstill in the market, based on Web traffic statistics culled from Net Applications.
Still, The VAR Guy keeps reminding readers that it's very early in the Windows 8 and Surface games. The question: Is The VAR Guy right, or is our resident blogger ignoring a mounting pile of evidence that suggests Windows 8 is struggling.