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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 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).

"Nowadays you can buy a CPU cheaper than the CPU fan." -- Unnamed AMD executive

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