REDMOND, Wash., April 24 (UPI) -- A consumer shift to small computers that is hurting U.S. software giant Microsoft Corp. is not restricted to the recession, an industry analyst said.
"The cautious spending and preference for lower-priced PCs are fundamental shifts … that will not dissipate once the economy improves," wrote Allan Krans, at Technology Business Research, BusinessWeek reported Friday.
"Microsoft was running Windows under the 'bigger is better' strategy, and the current recession is driving customer behavior in the opposite direction," Krans wrote.
In its fiscal third-quarter report released this week, Microsoft said 10 percent of computer sales in the first quarter were for small laptop computers called netbooks, which require minimal operating systems compared to larger desktop computers.
Microsoft, which reported a 6 percent year-over-year revenue decline at the end of the quarter, is preparing to launch a new version of Microsoft Office next year and revamp its Internet search service, which continues to lose ground to Google.
In the third quarter, Microsoft's Internet division lost $575 compared to a loss of $226 million in the quarter a year ago.
"We remain more cautious than most," Microsoft Chief Financial Officer Chris Liddell said this week.
"Unfortunately," he said, "we think (the recovery) it will be slow and difficult."