Best Buy Survey Reveals The Reason Behind Sluggish Windows 8 Sales

Mar.10.13 | About: Microsoft Corporation (MSFT)

There is no doubt among investors following Microsoft (NASDAQ:MSFT) that Windows 8 is experiencing a slow adoption rate. However, while even well-respected SA contributors see this as a clear sign that Windows 8 is the new Vista, I believe that most investors are simply missing the big picture.

Windows 8's "Touchy" Nature

With Windows 8, Microsoft has made a huge leap embracing the inevitable touch-based future of the PC. However, Microsoft doesn't make its own hardware like Apple (NASDAQ:AAPL) does, and it depends on its OEM partners to fill this need.

Unfortunately, OEMs have stayed behind and the majority of Windows 8 devices offered are either non-touch-enabled, expensive or not well-balanced to customers' needs. And this is a major problem because Windows 8 customer experience is completely different between a touch and a non-touch PC.

This has become crystal clear to big retailers like Best Buy (NYSE:BBY) who have started price promotions for Windows 8 touch-enabled PCs. Below, is an excerpt from a Wall Street Journal blog post about Best Buy's recent move (emphasis added):

But touchscreen PCs have not exactly been flying off the shelves since Windows 8′s release in late October. One reason is that the cost of their displays adds to the price of computers; touchscreen laptops typically start at roughly $700, versus $500-and-up for those that aren't equipped for touch.

[...] recent surveys the company conducted showed that consumers who bought touchscreen Windows 8 devices were significantly happier than those who bought PCs with a typical screen.

"Touch is a critical component to Windows 8 from a customer satisfaction perspective," Jason Bonfig, Best Buy's vice president for computing, said in an interview.

When Best Buy asked recent buyers of Windows 8 PCs how they felt about the operating system, 74% of people who had bought a touchscreen device said they liked Windows 8 "somewhat" or "very much." About 53% of respondents who bought a conventional Windows 8 PC said they liked the operating system, according to the Best Buy research.

Due to the fact that Windows 7 is a great OS, PC users don't have any reason to upgrade unless they buy a new computer/laptop. That is because they can have the complete Windows 8 experience only on a touch-enabled PC.

When hybrid or touch-enabled laptops are available around $500 and All-in-One PCs with touch can accommodate consumers looking for a $400-$600 desktop then investors will see Windows 8 sales going through the roof.

By then however Microsoft's stock will be well above its current undervalued levels and those that are waiting-to-see before they invest will have missed a wonderful rally.

Disclosure: I am long MSFT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.