Windows 8 unable to stimulate DRAM shipments in 4Q12, IHS says

Press release; Jessie Shen, DIGITIMES [Monday 29 October 2012]

Debuts of new PC OS from Microsoft always have generated double-digit percentage increases in quarterly DRAM shipments - until 2012, when the rollout of Windows 8 is not expected to generate a significant rise, IHS iSuppli believes.

Global DRAM bit shipments are forecast to increase by only 8% in the fourth quarter compared to the third, and this lower growth number includes not only DRAM for PCs, but also in smartphones and tablets, according to IHS. Windows 8 is not expected to generate the kind of bump in DRAM shipments seen in the past partly because of its lean hardware requirements. Even more importantly, the arrival of Windows 8 is not likely to deliver a significant increase in PC shipments in the fourth quarter of 2012 compared to the same period in 2011, said IHS.

"The release of a new Microsoft OS traditionally has been accompanied by more advanced system requirements, which then fuels growth in the DRAM market as more bits are shipped," said Clifford Leimbach, analyst for memory demand forecasting at IHS. "However, starting with Windows 7 and continuing with Windows 8, Microsoft has taken a leaner approach with its operating systems, maintaining the same DRAM requirements as before. Meanwhile, consumers are continuing to eschew new PC purchases in the fourth quarter, with Windows 8 not expected to change this situation."

The release of a new OS is traditionally accompanied by more advanced system requirements, which then fuel growth in the DRAM market as more DRAM bits are shipped out. At such times, DRAM shipments grow because of increased orders from PC original equipment manufacturers that need to put the additional memory into their products, as stipulated by the requirements of the new OS. Many consumers also decide that the release of a new OS represents a good time to purchase a new computer or to upgrade their memory, driving further DRAM sales.

For instance, the release of Windows 3.1 caused DRAM bit shipments to increase by 29% sequentially in the first quarter of 1992, compared to just a 12% climb in the earlier quarter, IHS observed. A similar heady expansion was seen with Windows 95 in light of a 23% advance during the fourth quarter of 1995. Prior to the surge, DRAM bit shipments had been growing on average by 11-14% in the previous four quarters, IHS noted.
An even bigger rise in DRAM bit shipments took place at the time of Windows 98. DRAM bit shipments rose 40% in the third quarter of 1998 at the time of the new OS, compared to bit shipment growth of 4-16% in the earlier four quarters, IHS indicated.

Two of the biggest upward movements in DRAM bit shipments occurred around the time that Windows 2000 and Windows XP were introduced, IHS pointed out. Compared to their previous-quarter levels, DRAM bit shipments jumped 49% in the first quarter of 2000 due to Windows 2000, while DRAM bit shipments swelled 41% in the third quarter of 2001 because of Windows XP, IHS said.

The exuberant expansion started to slow down, however, in the last two Windows OSs, IHS found. Only a 24% rise in DRAM bit shipments resulted with Windows Vista in the first quarter of 2007. Windows 7, which did not require more memory to operate than the previous member of the Windows line, saw a further attenuation in growth, to just 18% in the fourth quarter of 2009, IHS said. DRAM growth at the time also was slowing perceptibly, coinciding with the start of the economic recession.

Now with Windows 8, which was released on October 26, DRAM bit growth in the market has decelerated even more, according to IHS. Shipments of DRAM are expected to increase by 8% in the fourth quarter of 2012 —the lowest rate of growth among all Windows OSs dating to Windows 3.1, covering a span of more than 20 years, IHS said. Instead of additional DRAM for computers purely due to higher DRAM requirements, the increased uptake of the memory will be found in smartphones and tablets and refreshed PCs combined, accounting for the gain of DRAM bit shipments in the fourth quarter.

All told, PCs will not be as important to the overall DRAM market moving forward, IHS believes. PC share in the DRAM space dipped below 50% for the first time earlier in 2012, while alternative devices using DRAM—such as smartphones and media tablets—are raising their usage and DRAM market share.

As DRAM enters an era of diversified applications, the lack of a boost from a new OS will prove less significant, IHS said. And while the highs to be derived from increased DRAM bit shipments won't be as dramatic from quarter to quarter, the lows will also be more muted because of the extenuating effects of a disparate application base, IHS believes.