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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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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.

"Vista runs on Atom ... It's just no one uses it". -- Intel CEO Paul Otellini

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