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The personal computer business is having a glitchy year to say the least. Due to increased competition and a move towards mobile devices, PC demand is on the decline. The industry has been waiting on Microsoft’s (NASDAQ:MSFT) new Windows 8 operating system to reboot sales later this year, but one executive is warning that it is being released before it is completely ready.
Intel (NASDAQ:INTC) Chief Executive Officer Paul Otellini reportedly told employees in Taiwan that Microsoft is releasing its new operating system with known problems. Bloomberg reports, “Improvements still need to be made to the software, Otellini told employees at a company meeting in Taipei yesterday.” The source that informed Bloomberg of this asked not to be identified, because it was during a private meeting. Intel is the industry leading semiconductor maker and Microsoft’s closest partner.
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The news is not what major PC makers want to hear. Dell (NASDAQ:DELL) and Hewlett-Packard (NYSE:HPQ) have struggled this year as tablets such as Apple’s (NASDAQ:AAPL) iPad become more popular among consumers and employers. Evercore Partners analyst Rob Cihra recently downgraded his PC unit forecast to negative 4 percent in 2012 and zero growth in 2013. Previously, he had predicted zero growth this year and 4 percent next year.
In a research note to clients, he explains, “Tablet cannibalization, weak macro, disappointing Ultrabooks, and inventory burn into Win8 now make 2012 look on pace for the PC’s biggest decline in 20 years, with limited reasons to expect next year recovers beyond just flat. PC weakness is likely news to no investor at this stage, but looks brutal nonetheless, as we estimate Q3 units fall year-over-year across every major market.”
Despite Otellini making the worrisome comments, he goes on to explain that releasing Windows 8 before its fully ready is the right move, and that Microsoft can make improvements after it hits store shelves. With the holiday season quickly approaching, it is vital that Microsoft refreshes its operating system to attract consumers. Furthermore, the early reviews of Windows 8 have been mostly positive. CNET awarded the operating system 4 out of 5 stars, saying, “Microsoft makes an aggressive, forward-thinking, and bold statement for the future of PCs with Windows 8.” Meanwhile, Tech Radar gave it 4.5 out of 5 stars.
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