Print 37 comment(s) - last by Myg.. on Nov 16 at 7:40 AM

Is packaged Windows going to go the way of the dinosaur with Microsoft's new direct download Windows? Not quite yet, but Microsoft is clearly aiming to transition to primarily online sales.

The Microsoft Store launched today and offers MS Windows, MS Office, MS hardware (such as mice and other peripherals), and more.  (Source: Microsoft)
Microsoft appears to be following in the footprint of Valve and others and transitioning its sales online

Many software developers have found great success moving their products online.  One shining success store is Valve's Steam engine, which has cranked up the company's profits and has been so successful that it now distributes games from other companies, like Take Two, for a fee.  Another example of the success of online software has been Apple's App Store, which game developers are flocking to

The bottom line is that online software distribution saves in packaging and disk production costs, as well as cutting out publisher and retailer cuts.

Now in what some are perhaps sensationally calling the beginning of the end for brick and mortar (B&M) software sales, Microsoft is becoming the latest company to move to offering its software online.

Microsoft quietly launched its Microsoft Store today, which offers directly digital copies of Microsoft Windows Vista, Microsoft Office, and more.  It also sells assorted Microsoft gadgets and accessories, which while significant, are overshadowed by the fact that Windows is directly available for sale and download for the first time.

The approach, with Microsoft and some others refer to as Electronic Software Distribution (ESD) has its perks too.  Microsoft mentions the faster reception over mail orders.  It describes, "The big difference is that after your payment is confirmed, you can immediately download the product to your computer and install it right away. There is no longer any need to pay for shipping costs and waiting for the big brown truck to drive across the country. You’ll be able to enjoy your software almost immediately – all it takes is the download time of the product, which will vary depending on the size of the digital download."

However, even more useful is a benefit hidden in the text of the announcement.  Until mainstream support for the product ends, you can redownload it to your computer whenever you need it.  Not having to search around for validation keys on the backs of CD cases or in product manuals certainly seems to make the online version of Windows a superior choice.

Some are already accusing Microsoft of shooting resellers and retailers in the back with the decision.  In alarmist fashion, they are saying that Microsoft's decision signals the death of packaged software.  These critics continue with gloom and doom predictions about the fate of OEMs and their ilk.

In reality, this probably isn't the case.  While Microsoft surely wants to slowly transition towards the more profitable purely online sales model, it will still continue to sell packaged versions of Windows for a long time.  While this transition will likely hurt retailers and resellers significantly, it won't be a fatal blow, and they will have time to seek other business strategies.  And in the meantime, the continued availability of packaged Windows at brick and mortar stores will help Microsoft reach some that do not have adequate internet connections to make such installations feasible.

Why did it take Microsoft, who usually set the software industry curve, so long to adopt direct online sales?  One likely explanation is the firestorm of criticism from retailers and the media that they knew would follow.  However, with more and more users headed online (currently 80 percent of Americans use the internet regularly); the choice was simply too tempting and financially rewarding for Microsoft to pass up.  And for the user it's a win-win situation, as it provides more options and some very handy benefits.

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We don't have the bandwidth in the USA for this!
By Bateluer on 11/14/2008 12:14:55 PM , Rating: 2
Or, so the ISPs would have up believe. With the software companies clamoring for online distribution, the consumers demanding more online distribution, etc, etc, how much longer will it be before congress calls BS on the Telcos?

RE: We don't have the bandwidth in the USA for this!
By chmilz on 11/14/2008 12:39:16 PM , Rating: 2
ISP's are like a b-tchy receptionist: They are the gatekeepers that keep people from getting what they want from a source that is willing to provide it, because of their own desire for power. Not good for anybody and only makes them look like apes.

By murphyslabrat on 11/14/2008 1:29:15 PM , Rating: 4
The receptionist isn't the one who has to build bigger elevator's. That's the employer's job.

The problem with ISP's is that they don't want to invest the capital into upgrading their infrastructure to the point where it can handle the amount of data-throughput that consumers are demanding. The easy solution to this is to just choke the people trying to get their money's worth.

By excelsium on 11/14/2008 1:32:09 PM , Rating: 2
Yep they'd rather rip the consumer off forever than spend a dime on upgrading, that's the mentality were up against.

By erikejw on 11/14/2008 7:48:41 PM , Rating: 2
It only took them 13 years after the initial IE launch.
They must have worked hard for this.

RE: We don't have the bandwidth in the USA for this!
By HrilL on 11/14/2008 3:09:26 PM , Rating: 2
I still think this bandwidth limits they claim to have are completely made up marketing bullsh!t. They haven't proved once that they are strapped on bandwidth. As the backbone providers still have thousands of miles of dark fiber that isn't being used because there isn't enough demand for it yet. This makes any network savvy person believe they are completely lying. Also the fact that in areas where these cable companies are forced to compete with Verizon's Fios service they were able to upgrade to 12Mb/1Mb without spending any money upgrading their networks. And the fact with docsis 3 only a node needs to be upgraded as the cable lines themselves are capable of handling the faster speeds as for the modem you have to pay for that so that is at no cost to them. And as for DSL providers you are on a dedicated line to your house from the CO and from their COs they have fiber that I doubt is even close to being maxed.

This all comes down to simple human greed for more profits and also the need for these companies to try to stop the cannibalization of the other services they offer. Most cable providers are about to start offering on demand movies. Thus sites like Hulu, YouTube, Netfix and Itunes they will have to compete with. But if you add a bandwidth limit then the consumer doesn’t want to pay overages so they probably use your service instead of the ones over their limited internet connection. The same goes for common television as well. As more and more sites start to offer TV shows for download or streaming you’ll no long feel the need to pay for television service thus your drop it and they lose a large cash cow. The same is happening with phone service. Most of the large communication companies offer all four of these services or plan to in a year or to. These so called limits are nothing more than to make profits and to stifle future competition.

By GaryJohnson on 11/14/2008 11:22:28 PM , Rating: 4
The node and the stuff between the nodes and the backbone is what they don't wanna pay to upgrade.

RE: We don't have the bandwidth in the USA for this!
By TomZ on 11/14/2008 1:41:29 PM , Rating: 2
They are the gatekeepers that keep people from getting what they want from a source that is willing to provide it, because of their own desire for power. Not good for anybody and only makes them look like apes.

That sounds exactly like most IT folks I've seen at past jobs.


RE: We don't have the bandwidth in the USA for this!
By bhieb on 11/14/2008 1:57:44 PM , Rating: 5
Hey now! I pride myself on convoluted jargon and BS to discourage any real technological change. It is a fine art to so thoroughly confuse and confound your customer to the point that they feel it is far more complicated and/or simply impossible to do such things (or better yet that whatever the problem it it is entirely their fault). How do you expect me to have time to post if all you want is work work work.

By Myg on 11/16/2008 7:40:41 AM , Rating: 2
The essence of IT...

Someone give this man a 6!

RE: We don't have the bandwidth in the USA for this!
By tential on 11/14/2008 2:44:04 PM , Rating: 2
Why is it that more and more content gets distributed online yet ISPs are trying to lesson the amount of data we can get? These bandwidth caps are getting annoying. At my school we have one of 4 gigs a week when it used to be unlimited. Yet in this same span of time they reduced the bandwidth we can use the amount of content online has expanded exponentially. AT&T and comcast also want to limit us but now we can stream movies using netflix(when that comes out) to our 360s, get tons of stuff on imdb, stream music using pandora, I mean the amount of data a household can use is ridiculous now yet isps want to limit us instead of giving us better service.

By StevoLincolnite on 11/14/2008 7:35:40 PM , Rating: 2
I agree, however it will probably get worst before it gets better in allot of places, I'm hoping that Netflix will be available in Australia, I used to use Bigpond movies but with a 25gb download limit at $80 a month running at 1.5mb speeds I changed ISP's and now enjoy 20gb on-peak and 40gb off-peak for the same price. - And when you have someone like Steve Ballmer tell Australia to "Get with the program" - you know something is wrong.

However with Download limits I find that downloading large files becomes something I need to schedule and allocate my download allowance which is a rather annoyance, but once I reach my download limit I'm throttle to 64k speeds, which surprisingly is fine for Xbox Live! Because my latencies don't seem to change provided I turn off voice chat.

However most ISP's here in Australia actually offer "free downloads" - Internode gives you completely unlimited Usenext and even gives you free access to the servers, Netspace has a bunch of free gaming servers, Westnet and iiNet have a "freezone" with a bunch of Linux ISO's and other handy free programs, games patches, game trailers etc'.

Recently ABC Australia had to change providers for it's streaming video because of the large bandwidth costs here in Australia also, but some ISP's also offer free-bandwidth at that website also.

Then you have Networks like Pipe here in Australia, which ISP's use for extremely cheap data between States and servers etc' allot of ISP's used to offer free bandwidth on this network, and if you were downloading something off a torrent with someone in the same state as you all bandwidth between those two people is completely 100% not counted, however the other peers data would be, unless they resided in the same state as yourself.

Unfortunately the people who download several hundred gigabytes a month are what is ruining it for everyone, ISP's gain significantly less profits from users who download excessively, by placing download limits this is curved and ISP's make large amounts of money because bandwidth doesn't come free for ISP's.

Lets hope it isn't a worldwide trend, and lets hope with the National Broadband Network being planned in Australia it provides at-least Symmetrical 10/10mb speeds and unlimited downloads, at a cheaper price. - for 9-10 Billion dollars you would want it to. (Tax payers are paying for half).

Better prices at newegg
RE: Better prices at newegg
By HrilL on 11/14/2008 1:19:05 PM , Rating: 2
Because people are dumb and will buy it without looking elsewhere. Also I believe the one on the Microsoft site is only a one computer license. So you get ripped off pretty damn hard. The only benefit is being able to download it again if you have to reformat. In my opinion though why not just buy it from newegg for the key that you can save somewhere else and if you lose your CD/DVD you can just download it elsewhere. I don’t really see the true advantage to their store.

RE: Better prices at newegg
By excelsium on 11/14/2008 1:36:22 PM , Rating: 3
The advantage is their own, no one else's.

RE: Better prices at newegg
By bhieb on 11/14/2008 1:47:18 PM , Rating: 2
They are only interested in MSRP sales, there will always be others that will take a hit to margin to squeeze out a few more sales.

RE: Better prices at newegg
By bhieb on 11/14/2008 1:50:07 PM , Rating: 3
Also if they go to an online only type distribution. It further answers the "why bother question". It costs them less and they have no competitors to undercut MSRP. No need to sell NewEgg all those copies for less than MSRP if you cannot get it any other way. In fact it is no longer Manufacture's Recommended Price, just Manufacture's Price.

RE: Better prices at newegg
By TomZ on 11/14/2008 5:04:10 PM , Rating: 2
They are only interested in MSRP sales, there will always be others that will take a hit to margin to squeeze out a few more sales.

Put another way, they don't want to compete with their resellers. By pricing at MSRP they allow resellers to continue to have most of their existing business since most resellers price slightly below MSRP.

Looks like I might be using Linux.
By JonnyDough on 11/14/2008 3:12:27 PM , Rating: 2
Now we just need more games for Linux! Open source FTW! Forget Microsoft and their overlordnessness. If they won't sell me an actual disc copy then I don't need their overpriced software. And yes, when a corporation is making billions, along with their investors...I guess I don't see why should I pay for all those rich people to get richer? I'll take FREE ware. I just want to surf the net and play some games and have some office productivity software. I'm not sure why it should cost so much.

By Ringold on 11/14/2008 4:45:27 PM , Rating: 2
Because labor isn't free?

RE: Looks like I might be using Linux.
By stmok on 11/14/2008 8:38:37 PM , Rating: 2
In Linux (and other open source software), free also means "liberty" in addition to $0.

But why are you talking about Linux in a Microsoft online shop article? There's no relation.

Did you ever think of.....
By clovell on 11/14/2008 4:56:48 PM , Rating: 2
How in the heck is a fresh install of an OS going to work?

RE: Did you ever think of.....
By nineball9 on 11/14/2008 10:12:47 PM , Rating: 2
That was what I also wondered about when I read "now you can download Windows"! One builds/buys a new computer without an operating system, now how does one download an operating system without using another computer?

RE: Did you ever think of.....
By jmurbank on 11/16/2008 4:04:59 AM , Rating: 2
Probably Microsoft is going to push something like CoreBoot or ASUS Express Gate. It might probably be like a false Windows Vista certified logo they put on motherboards and products.

So what's the URL?
By mattclary on 11/14/2008 12:42:23 PM , Rating: 2
I'm having a hard time finding the store. That sounds like a recipe for success.

RE: So what's the URL?
By mattclary on 11/14/2008 12:44:31 PM , Rating: 3
Swear I tried this... Anyway...

It's all about the Benjamin's
By Expunge on 11/14/2008 11:56:59 AM , Rating: 2
It costs less for them to distribute, and cuts down significantly in piracy. And while we may balk about it here in the states just imagine how China will react as over 95% of their microsoft software is pirated.

Sad to see the retail box go in some ways but it was only a matter of time.

RE: It's all about the Benjamin's
By bhieb on 11/14/2008 1:45:44 PM , Rating: 2
Agreed with the costs less to distribute but how does it cut down on piracy. You can still make copies of the download, but now you don't need to rip it off the disk first.

No love for Canada :(
By VaultDweller on 11/14/2008 12:02:27 PM , Rating: 2
Looks like it's only available to US, UK, Germany, and South Korea.

Why should I bother to go on living if this is being denied to me? How can I live without it (other than exactly the same as I lived before it)?

RE: No love for Canada :(
By arazok on 11/14/2008 1:23:59 PM , Rating: 2
Why should I bother to go on living if this is being denied to me?

Remember kids, it's down the road, not across the street.

OEM Version
By nafhan on 11/14/2008 1:39:16 PM , Rating: 2
I can't imagine they will ever sell the OEM version directly on the MS website. So, I'll keep purchasing that from Newegg, etc. for the forseeable future.

RE: OEM Version
By nafhan on 11/14/2008 1:42:08 PM , Rating: 2
Strangely, it also appears that they don't sell the 64 bit version of anything except Ultimate...

By Spivonious on 11/14/2008 12:37:25 PM , Rating: 3
You could always download Vista and Office. This new "store" website just puts all of the products in one place.

You've gotta be kidding...
By cjc1103 on 11/14/2008 3:15:06 PM , Rating: 1
Microsoft Vista Ultimate + Office Ultimate 2007 = 999.90
Who the blue blazes is going to pay those extortionist prices.. Vista doesn't give me a whole lot of reasons to justify upgrading, and Office 2007 is a step backward from Office 2003. Both of these require significantly more computer resources than their previous versions. Arrgghhhh, can I get off the computer upgrade treadmill please?

RE: You've gotta be kidding...
By Bateluer on 11/14/2008 3:50:36 PM , Rating: 2
Vista Ultimate 64 Bit SP1 Retail is about 270 at Newegg, cheaper than the MS Store. While I found Office 2007 far superior to Office 2003, Open Office is still a better program, given its price. MS Office has always been grossly overpriced.

By foolsgambit11 on 11/14/2008 8:29:12 PM , Rating: 2
Man, those BM stores must have sh*t a brick (and mortar) when Microsoft dropped this steaming pile of BM on them. Way to dump on them right in the middle of an economic crisis. They've already been working so hard, they're just pooped. Now this crap. Their business is just going to go down the toilet.


About time
By BruceLeet on 11/14/08, Rating: -1
"It seems as though my state-funded math degree has failed me. Let the lashings commence." -- DailyTech Editor-in-Chief Kristopher Kubicki

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