HP: High Windows 8 inventory needs to be flushed out

New HP Enterprise boss claims Windows 10 will not take off until Windows 8 machines are gone

Windows 10 will not really take hold in the industry until the "fairly high" levels of Windows 8 channel inventory "flush", according to the soon-to-be CEO of HP Inc, Dion Weisler.

He made the comments on a HP Q3 earnings call last night.

Weisler, who will take over the PC and printer arm of HP once it splits in November, said HP was geared up for a "challenging" Windows 10 launch during the quarter because of two factors.

"One was a free upgrade that was, of course, offered," he said. "And the second was the very short transition time, which is normally about three months, which was compressed to under one month."

These factors, he added, saw Windows 8 inventory pile up in the channel.

"That drove fairly high Windows 8 channel inventory levels, and that will take a little bit of time to flush," he said. "I guess the good news is that the Windows 10 feedback is pretty good, and a great operating system is important for the ecosystem in the industry. So once Windows 8 flushes, which may take a little time here in the industry, we should see some stimulation from Windows 10."

HP chief executive Meg Whitman interjected and clarified that it is not specifically HP's inventory which has to flush. "We're running nice inventories on Windows 8," she said, before Weisler clarified that his previous comments related to the market in general.

"I think in general that's an industry statement," he said. "If you were to look across, by all reports, Windows 8 channel inventory levels are higher, and they're on the higher side for us as well. But we are as an industry looking at having to flush through Windows 8 before Windows 10 really takes hold."

During its third quarter, HP saw net profit fall 13 per cent annually to $900m (£573m) on net sales which were down eight per cent over the same period to $25.3bn. In constant currency, sales were down just two per cent, the firm claims.

All divisions at HP saw sales slump annually except its Enterprise Group, where revenue rose two per cent annually.

Within the division, Industry Standard Server sales grew eight per cent year on year, storage sales slumped two per cent and its Business Critical Systems revenue nosedived 21 per cent – both over the same period. Networking and Technology Services revenue grew 22 per cent year on year and shrank nine per cent annually, respectively.

Whitman said the Enterprise Group was the jewel in the crown in Q3.

"HP delivered results in the third quarter that reflect very strong performance in our Enterprise Group and substantial progress in turning around Enterprise Services," she said.

"I am very pleased that we have continued to deliver the results we said we would, while remaining on track to execute one of the largest and most complex separations ever undertaken."