Boutique PC seller laughs all the way to the bank on the back of Windows 7

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A boutique system builder has bucked the industry trend of slumping PC sales by continuing to focus on selling Windows 7 machines.

Auburn, Wash.-based Puget Systems grew sales 20% in 2012, said Jon Bach, president of the independent PC seller, by specializing in high-performance, buit-to-order PCs—primarily desktops.

Puget’s performance is in stark contrast to the global PC market, which contracted 6% in the fourth quarter of last year, and plummeted 14% in the first quarter of 2013, according to research firm IDC.

Puget also went against the grain by selling significantly more Windows 7 PCs than ones equipped with the new Windows 8. That was not a strategy of its own choosing, however, as customers select the operating system for their custom-built machines.

Major OEMs (original equipment manufacturers) like Hewlett-Packard, Lenovo and Dell took a different tack, going almost exclusively with Windows 8 on new consumer PCs starting last October. The current retail channel remains predominantly Windows 8 territory. (The same OEMs continue to sell Windows 7 systems to business customers, however.)

How Windows 7 sales stack up at Puget

“For the first few months, demand [for Windows 8] slowly picked up, from virtually zero to about 30% of sales,” said Bach of the post-October 2012 launch. “But then it settled at about 20% of sales and has stayed around there since March.” Virtually all of the remainder—around 80% and holding steady—that Puget sells are powered by Windows 7.

The continued lure of Windows 7 didn’t surprise Bach, who, like most critics, said that the problems with Windows 8 made its 2009 predecessor seem all the more attractive.

“After having spent extended time with [Windows 8], I can understand many of our customer frustrations,” said Bach. “There isn’t anything that is a show-stopper in the UI [user interface], but it gets in its own way a lot of the time. I find myself thinking about the UI and how to use it to make it do what I want, which I think is the sign of a bad UI.”

Not surprisingly, given the sales share of Windows 8, few Puget customers have equipped their new PCs with touch-enabled displays, even those asking for Windows 8. Microsoft built Windows 8 with touch in mind—its tile-style “Modern” UI is tough to use without touch capabilities—and it and independent analysts have put some of the blame for slow sales on a lack of affordable touch PCs.

“We are not seeing a pickup in touch display interest,” said Bach. “I would expect touch to be of more interest with laptops and tablets. [But] our laptops are not touch-enabled, and yet our laptop sales were up 50% last month. Go figure.”

Bach realized his company’s performance was not representative of the computer industry as a whole. “It really should be no surprise that we aren’t following the volume PC industry,” Bach said. “We are a niche builder, with ASPs [average selling prices] probably 5-10x the industry average. High-performance computers are just a completely different animal.”

How long can Win 7 PCs be sold?

It’s still not clear how long system builders like Puget will be able to sell Windows 7 PCs. Although Microsoft has a policy that allows OEMs to pre-install the previous Windows edition on PCs for up to two years after a new version launches, Microsoft’s website, last updated in January 2012, doesn’t yet specify an “end-of-sale” date for Windows 7.

It’s possible—although Microsoft has not signaled such a move—that the Redmond, Wash. developer will extend that two-year sales period if Windows 8 continued to languish.

Bach plans to sell Windows 7 as long as possible.

“I haven’t heard a peep about an end-of-sales schedule for Windows 7,” Bach said when asked whether he’d received word about a cutoff from either Microsoft or his distributors. “But I also think that Windows 7 is going to be the next Windows XP. We’re going to find ourselves finding some odd way to install it on special request eight years from now.

“After all, we still get requests for Windows XP,” he said.

This story, "Boutique PC seller laughs all the way to the bank on the back of Windows 7" was originally published by Computerworld.

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