Jan 26, 2022 - Technology

Exclusive: Microsoft's product chief sees PC revival as durable

Photo illustration of Microsoft's Panos Panay with a Surface device.

Photo illustration: Shoshana Gordon/Axios. Photos: Neil Godwin/Future Publishing, Mark Kauzlarich/Bloomberg via Getty Images

After years of stagnation, the PC industry has seen its best growth in a decade as people buy new laptops and desktops. But while some pandemic-fueled changes may prove temporary, Microsoft product chief Panos Panay sees the industry's return to growth as durable.

  • "This pandemic has been a forcing function," Panay said in an exclusive interview on Tuesday, following the release of Microsoft's quarterly earnings report.

Why it matters: The PC market got a boost as life moved online, but the question for the industry now is whether and how it can keep the momentum going.

The big picture: Before the pandemic, many households focused their tech spending on buying bigger TVs and upgrading their cell phones every couple of years, while trying to keep their PCs as long as possible.

  • During COVID-19, the PC has taken on new life as a tool for remote work, distance learning and staying in touch with friends and family in a world where travel has been greatly curtailed.
  • That drove the global shipments of laptops and desktops for the last quarter to surpass 90 million for the second year in a row, and sales for the year reached a level not seen since 2012.
  • Microsoft reported 25% growth in the revenue it gets from having Windows installed on new PCs.

Yes, but: Panay said Windows' gains went beyond just riding the coattails of a rebounding PC market. The company said that Microsoft took market share last quarter, though it didn't provide specifics.

  • People are using their PCs more as well, he says, especially those running the latest version, Windows 11, which came out in October. Microsoft says people are spending 40% more time on their Windows 11 PC compared to machines running Windows 10.
  • Gaming is a big piece of that, and Panay said he is excited about Microsoft's plan to buy Activision Blizzard. "Gaming is so core to Windows," he said.
  • Microsoft says it is getting its highest-ever customer satisfaction ratings with Windows 11, prompting the company to accelerate the pace at which it is upgrading existing machines. (Windows 11 is a free update, but Microsoft has had a phased effort to prompt users to adopt the new software.)

Between the lines: As for how to keep the growth going, Panay said a big focus this year will be getting businesses to upgrade to Windows 11 as well as pushing developers to take advantage of its new features, like revamped widgets.

  • Longer term, Microsoft and Panay see the PC serving as "the gateway to the metaverse," adopting the industry's most popular buzzword.

What's next: An update next month will allow Windows 11 users to install Android apps via partnerships with Intel and Amazon, along with a handful of other features. Asked if that was it as far as feature updates this year, Panay shook his head, saying "no."

  • "We've got a lot in store," Panay said.
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