SEATTLE – Microsoft Chief Executive Officer Steve Ballmer, who will be retiring within a year, said the company is still working to make sure that the personal computer remains relevant as “the device of choice”, the Bloomberg news agency reported.

PC shipments will decline 9.7 per cent this year to 315.4 million and will not return to the peak levels it reached in 2011, according to researcher IDC. The market will shrink until 2015, it said. The slumping popularity of the devices is coming as consumers increasingly turn to smartphones and tablets, two markets where Microsoft and the PC industry have lagged.

“We must do the work to ensure that the PC stays the device of choice when they’re trying to be productive in life,” Mr Ballmer said at a meeting for analysts and institutional shareholders on Thursday, the first in two years. Mr Ballmer said the company will have to work hard to keep the industry “north of 300 million” units.

He made his comment as Windows, which dominated computing for more than two decades, now makes up 25 per cent of revenue. The operating system slipped to become Microsoft’s third-largest business after Office, which generated 32 per cent of sales, and Server and Tools, which garnered 26 per cent for the latest fiscal year through June.

Windows accounted for 3.7 percent of smartphone operating-system shipments in the second quarter, according to IDC. In the tablet market, that figure was 4.5 per cent, IDC said. Microsoft’s first-ever computer hardware, the Surface tablet, sold so poorly the company had to write down US$900 million (S$1.1 billion) of unsold inventory.

Introduced in October, the handheld device was aimed at taking on Apple’s iPad, as well as touchscreen computers running Google’s Android software.

Mr Ballmer told analysts that the company will perform better in the future by having its business, consumer, software and device units work together.

“Hardware and software will kind of need to evolve together,” he said.

Microsoft will not be “religious” about having its services work only with Microsoft hardware, and will continue offering them on smartphones and tablets from Apple and Google, he said.

Microsoft will continue to challenge Google, which has secured pole position in Internet search and is one of the few companies with the breadth to take on Microsoft, Mr Ballmer said. Regulators should look at what he called Google’s “monopoly” in search, he said.

Microsoft said it is still seeking a new CEO, and did not offer any updates on the process.