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Windows 8 is the next Windows ME? The sales numbers suggest that accusation is malarkey

Windows 8 was an incredibly bold redesign on the part on Microsoft Corp. (MSFT).  The move to a more touch-friendlygraphically rich operating system certainly seemed to mirror the general direction of the device market, but that did not shield Microsoft from loads of criticism. Many wondered whether it went too far with the graphical gloss, whether it was disrespecting developers with its shift to a walled-garden "Windows Store" app distribution model, and whether it was forsaking traditional desktop power users.

I. Windows 8 Upgrade Sales: Very Strong

But the proof is in the sales, and Microsoft announced today that for all the haters, Windows 8 appears to be doing great.

In its first month of sales Windows 8 has moved 40 million licenses, according to Microsoft.  The company announced the news in a blog post and at a conference presentation.  It also points out that buoyed by reduced upgrade fees, the Windows 8 upgrade rate is outpacing that of Windows 7, the previous sales record-holder.

Indeed, our own polling shows that the majority of users are upgrading to Windows 8, although there are certainly many holdouts bitter about the changes.

Windows 8 boxes
While some upgrades have been via disc, the new OS has largely been digitially distributed.
[Image Source: The Verge]

Windows 8 is the first Microsoft OS to transition to a primarily online distribution.  That shift has not seemed to adversely impact sales.  It appears Microsoft timed its transition to disc-less media correctly.

II. The Road Ahead

Microsoft's Brandon LeBlanc also brags that its Windows Store is thriving, writing:

There were more apps in the Windows Store at launch than any other app store at their launch and since then, the number of apps in the Windows Store has doubled. A number of apps in the Windows Store have crossed the $25,000 revenue mark and the developer keeps 80% of the revenue they make off downloads for the life of their app. A lot of great new apps have been added to the Windows Store since launch such as CBS, ABC News, ABC Family, Engadget, Flixster, OWN (Oprah Winfrey Network), Vimeo and my (current) personal favorite - Top Gear.

A strong app market is good news for Microsoft.  While it offers a more favorable revenue split than other players like Apple, Inc. (AAPL) or Google Inc. (GOOG) (with developers keeping 80 percent of the revenue), Microsoft still is closing the loop to include itself in Windows software sales profits.

In the past, Windows Certification processes offered up small cuts to Microsoft, but software publishers largely pocketed these profits.  Now Microsoft has cut out the middle man by playing super-publisher with Windows 8, the same move Google and Apple have made with their mobile and personal computer platforms (although Google does allow unofficial third party channels).

Ballmer Slate
Microsoft needed a bold reinvention in the mobile direction to keep up with market trends.
[Image Source: Bloomberg]

Looking ahead, Microsoft has a lot of unanswered questions -- most notably on the leadership front.  Windows 8 was the baby of departed Windows President Steven Sinofsky.  His shoes are currently being filled by former CFO and CMO Tami Reller on the business/marketing front and by Internet Explorer, Office and Windows interface veteran Julie Larson-Green on the software/hardware development front.

And the deep divisions between those who love Windows 8 and those who hate it, could hint that sales may dip to a slower pace than Windows 7 after the fans have completed their upgrades.

But, given the already modest success, and given the life-or-death need for Microsoft to have a cohesive, touch-friendly mobile platform, it appears overall Microsoft made the right choice.  Windows 8 isn't perfect, certainly and as they say, haters are going to hate.  And that is certainly true of Windows 8.  But it's better to be hated for innovation than panned for lack thereof.

Source: Microsoft



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Malarkey
By Zaranthos on 11/28/2012 12:41:56 PM , Rating: 5
Sales don't equal users. I've already had customers buy new computers and downgrade them from Windows 8 to Windows 7. The super low upgrade prices will also drive sales at a higher rate than Windows 7 and many of those sales will be people willing to buy it even if they don't use it.




RE: Malarkey
By Zuul on 11/28/2012 12:52:27 PM , Rating: 2
Very true. It also is not indicative of adoption either as downgrade rights exist.

However, sales does show something important: $$.


RE: Malarkey
By Cypherdude1 on 11/28/2012 1:36:06 PM , Rating: 3
quote:
Very true. It also is not indicative of adoption either as downgrade rights exist.
Downgrade rights? If you buy a laptop with Windows 8, can you downgrade to Windows 7 Home 64 for free?


RE: Malarkey
By dgingerich on 11/28/12, Rating: 0
RE: Malarkey
By elliottn on 11/28/2012 2:01:37 PM , Rating: 2
Windows 8 does come with downgrade rights.

http://www.computerworld.com/s/article/9230815/Mic...


RE: Malarkey
By dagamer34 on 11/28/2012 2:24:52 PM , Rating: 2
Only if the machine you buy came with a Professional/Pro version of Windows.


RE: Malarkey
By Zuul on 11/28/2012 2:18:55 PM , Rating: 2
You have to obtain the media yourself (if you go thru the OEM, they may charge you for the physical disc and shipping), however there is no cost for the license itself.

Certain Windows 8 licenses CAN be downgraded and the instructions are here:

quote:
OEM versions of Windows 8 eligible for downgrade
Windows 8 Pro includes downgrade rights to:

•Windows 7 Professional
•Windows Vista Business


http://www.microsoft.com/oem/en/licensing/sblicens...


RE: Malarkey
By jbwhite99 on 11/28/12, Rating: -1
RE: Malarkey
By tayb on 11/28/2012 4:47:35 PM , Rating: 2
Only the professional versions. Windows 8 Pro -> Windows 7 Pro/Windows Vista Business. Microsoft offered the same downgrade options with Windows 7 as well. XP is no longer a downgrade options... and it won't run Office 2013.


RE: Malarkey
By Nortel on 11/28/2012 1:38:53 PM , Rating: 5
I do believe if a company like Wallmart buys 10,000 licences to sell, Microsoft counts all of those as sales right away. MS should be releasing the number of activations of Windows 8.


RE: Malarkey
By Burticus on 11/28/2012 3:22:21 PM , Rating: 5
This is correct. It is called "stuffing the channel". They count it as sold even if it is sitting on a shelf at a store.

I suspect this, plus all the new laptops getting shipped with OEM versions, plus the $30 giveaway upgrade price.

As someone else mentioned, should be counting activations, not "sales".


RE: Malarkey
By Florinator on 11/28/2012 4:48:25 PM , Rating: 3
So what? Weren't the numbers for Windows 7 calculated the same way?


RE: Malarkey
By StanO360 on 11/28/2012 5:01:12 PM , Rating: 2
Probably


RE: Malarkey
By Alexvrb on 11/28/2012 8:35:38 PM , Rating: 2
If it happened more than a month ago, half of the population has forgotten about it. Anyone else remember the fustercluck that was XP's launch?


RE: Malarkey
By someguy123 on 11/28/2012 10:09:27 PM , Rating: 1
Exactly. People screaming death and doom, microsoft to finally implode with windows 8, and yet when the numbers come in they move the goalposts from units sold to activations, as though most companies don't list units shipped.

I wish doomsday would just come already so people would stop screaming doomsday over everything.


RE: Malarkey
By wordsworm on 11/28/12, Rating: 0
RE: Malarkey
By JKflipflop98 on 12/3/2012 9:11:55 AM , Rating: 2
I suspect if more people would actually use it for a while, we'd see more posts like this. There's nothing to be scared of.

That screen with all the tiles? That's the start menu. It's still there, it just goes full-screen now. If you click down in the corner where the Start button used to be, it opens the start menu, just like before.

People love to freak out over nothing.


RE: Malarkey
By Articuno on 11/28/2012 1:07:28 PM , Rating: 1
It's not hard to get sales when you give your OS away for less than the cost of a CD burner.


RE: Malarkey
By chmilz on 11/28/2012 2:21:58 PM , Rating: 4
Yeah. So cheap. Almost as cheap as OSX for $20. Or as cheap as Android or Linux for free.

MS sold 40M copies of MS. That's money in the bank. The competition has to give it away to get users like that, and then try to make the money back in apps. Apps are gravy for MS.


RE: Malarkey
By Argon18 on 11/28/12, Rating: 0
RE: Malarkey
By Florinator on 11/28/2012 4:49:55 PM , Rating: 2
Oh yeah? Linux has been free for 20 years and they still haven't put Microsoft out of business. Hmmm... makes one wonder...


RE: Malarkey
By Argon18 on 11/28/12, Rating: -1
RE: Malarkey
By dark matter on 11/28/2012 7:12:44 PM , Rating: 3
And yet Android is doing so well...

Enough to make MS sit up and notice....

Go figure.


RE: Malarkey
By wordsworm on 11/28/2012 11:11:07 PM , Rating: 3
You might have to point out that Android is the world's most popular Linux OS.


RE: Malarkey
By schmandel on 11/29/2012 10:51:53 AM , Rating: 3
Worldwide, Android outsold it's nearest competitor, IOS, at around a 2 to 1 ratio in third quarter 2012. Linux is doing just fine.

Metrics that reflect adaptation *choices* would be interesting. I suspect if you cut out the automatic corporate mass license upgrades the Windows 8 picture would not seem so rosy.

I personally can account for hundreds of corporate Windows licenses on machines that were immediately wiped and replaced with Linux, unfortunately that was the only way we could get the hardware at the time, we had to pay the "Windows Tax".

Microsoft's numbers seem mostly about maintaining appearances until they can dump Ballmer, repudiate their "STFU, we already know what's good for you" marketing approach, and maybe actually turn into a company worth dealing with. They will be far more desolated before that happens.


RE: Malarkey
By Cheesew1z69 on 11/28/2012 5:01:13 PM , Rating: 2
quote:
When they couldn't compete with Netscape on sales, Microsoft gave their product away free and put Netscape out of business. Friendly competition? Or anti-competitive monopoly? You decide.
Or, it was their OS to put what they want in? Yes, I believe that was it.


RE: Malarkey
By TakinYourPoints on 11/28/2012 6:22:27 PM , Rating: 1
Microsoft makes their money from software, none of the other companies you mentioned do. Google makes their money from advertising, Apple makes their money from hardware.

That said, Microsoft selling their OS for so little may have a surprisingly small impact on their bottom line. The number of people building their own machines and doing self-upgrades has been declining over the last ten years with the rise of the laptop. Giving it away for a fraction of what they used to to a very small part of their customers may be a calculated risk worth taking, and they still make what they're "supposed" to from OEMs.

It boosts the number of installations from the small DIY audience who otherwise would have stuck with Windows 7 and wouldn't have gotten it anyway. Cash is going to come in from OEMs no matter what since MS has a lock on that market.


RE: Malarkey
By 91TTZ on 11/28/2012 4:53:41 PM , Rating: 2
Neither Apple nor Google nor Linux make their money off software. Microsoft does.

Apple makes its money off hardware, not software. You pay $20 for the OS, but you probably paid $1200 for the laptop. Google makes it money off search. Linux is made by people in their free time. It's all open source.

I get my iOS updates for free, but then again I paid a lot more for my iPhone than I would for an Android phone.


RE: Malarkey
By StanO360 on 11/28/2012 5:05:05 PM , Rating: 2
But that's the point isn't it? Microsoft realizes that it needs a broader base of income. Computers last too long now and have long surpassed basic computing requirements. So growth will be slow. And some people replace their laptops with tablets (I never would but our computers are all used for Office apps).

So they must realize that people are happy with 7, so they need to price it accordingly.


RE: Malarkey
By foolsgambit11 on 11/28/2012 6:28:07 PM , Rating: 2
Microsoft still will make their money on software sales. But their new model will rely more heavily on long-term sales of first- and third-party software through the MS Store. It's sort of like turning the Windows business strategy into the Xbox business strategy - make most of your money off software to run on the platform.


RE: Malarkey
By TakinYourPoints on 11/28/12, Rating: 0
RE: Malarkey
By TakinYourPoints on 11/28/12, Rating: 0
RE: Malarkey
By tayb on 11/28/2012 9:02:18 PM , Rating: 2
Apple makes plenty of money selling software. They sell OS X upgrades and iOS upgrades, they sell apps on the app store, they manage the distribution of apps on the app store, and they sell OS X software (iLife suite and the like). They also bundle software with every device sold and it would be unfair to count a Macbook Pro or iPhone as 100% hardware revenue. The real magic lies in the software else no one would bother with it.


RE: Malarkey
By TakinYourPoints on 11/28/2012 10:23:29 PM , Rating: 1
Selling software serves as a way for Apple to keep customers in the Apple ecosystem, thus selling more hardware which is where their profit lies.

Selling software indirectly results in profit, but as a direct center for profit it is a very small fraction of what Apple makes selling hardware.

http://cdn.macrumors.com/article-new/2012/10/Scree...

Microsoft is in the opposite position where they sell very high margin software that is almost pure profit for them. Apple doesn't sell first-party high margin software in anything close to large numbers, and almost all of the profit from third party software in the App Store goes to publishers and developers, not Apple.


RE: Malarkey
By ericmarak on 11/28/2012 1:08:32 PM , Rating: 4
Precisely. I bought two copies just because it was available for the super low price of $13 when it was first launched. Otherwise at the normal price I might not have bought it. Not that I'm using both the copies. I only have it installed on my laptop just to see what it's like. Almost never go to the Modern UI and use the desktop exclusively. But I do like the fast boot-up and reduced resource usage.


RE: Malarkey
By tayb on 11/28/2012 1:55:02 PM , Rating: 4
All aboard the excuse train. Choo choo.

Sorry that Windows 8 isn't the epic failure that all the "techies" on here predicted it would be...


RE: Malarkey
By messele on 11/28/2012 2:48:35 PM , Rating: 2
What, you mean the self-proclaimed harbingers of tech-nirvana that ram their "my way or no way" attitudes down everybody's throats may not be as in touch as they think they are?

Nah, not possible.


RE: Malarkey
By Cheesew1z69 on 11/28/2012 3:35:51 PM , Rating: 2
Like you?


RE: Malarkey
By B3an on 11/28/2012 3:22:42 PM , Rating: 4
Agree.

And heres some counter points for that guys stupid excuses:

Yes Win 8 is cheaper, but Win 7 was a free upgrade to anyone who bought a PC within 3 months before Win 7 release. Theres no free upgrade offer for Win 8.

There was also literally millions of people waiting for Win 7 because they was still on XP and didn't want to go near Vista. It was inevitable that 7 was going to sell very well.

Yet Win 8 has sold more in the same amount of time. Could it just be that people actually like it and want it. I consider 8 a big improvement over 7 on my desktop PC which i heavily use for work.


RE: Malarkey
By 91TTZ on 11/28/2012 4:47:01 PM , Rating: 2
Actually, Windows 8 profits are way down compared to Windows 7.

A certain percentage of Windows 8 licenses are sold to OEMs like Dell to put on their desktops and laptops (which aren't selling well in case you haven't been keeping track of the news)

And the average selling price of Windows 8 is only a fraction of the cost of Windows 7. Windows 8 may even be a loss leader for Microsoft, we'll never know.


RE: Malarkey
By Florinator on 11/28/2012 4:51:55 PM , Rating: 2
quote:
Actually, Windows 8 profits are way down compared to Windows 7.


This statement is based on what data?


RE: Malarkey
By 91TTZ on 11/28/2012 5:05:31 PM , Rating: 2
Because they sold marginally more units than Windows 7 except at less than half the price. Also keep in mind that they released this right during the holiday season so it's expected that they're going to sell more. Everyone sells more stuff this time of year.


RE: Malarkey
By TakinYourPoints on 11/28/2012 6:24:55 PM , Rating: 1
The number of Windows 8 copies sold to DIYers is very small given that that particular segment of users has been getting smaller every year.

They didn't cut the cost for OEMs, at least as far as I know, and that's what really matters since that makes up the bulk of their income.


RE: Malarkey
By 91TTZ on 11/29/2012 10:48:24 AM , Rating: 1
But it's pointless to count OEM sales since that doesn't reflect how much consumers like the OS. Nearly all PCs are sold with a Microsoft OS on them, and that OS is going to be whatever they currently are selling. The number of licenses they move will then be proportional to the number of PCs sold in the industry. I think that Microsoft has something like a 90% market share, so you can just multiply the number of PCs sold by .9 and come up with how many licenses Microsoft has sold.

People universally hated Windows ME, yet Microsoft's sales of that were good while it was out. That's because any consumer PC that was sold at that time pretty much got Windows ME preloaded from the factory.


RE: Malarkey
By EricMartello on 11/28/12, Rating: -1
RE: Malarkey
By ImEmmittSmith on 11/28/2012 2:52:23 PM , Rating: 2
Exactly, our company is upgrading several hundred computers, but MS will not sell us Windows 7, we HAVE to buy windows 8 and downgrade to windows 7. I would think the Activations of Windows 8 would tell the true story. It is truly a numbers game and they don't always tell the whole story.


RE: Malarkey
By StraightCashHomey on 11/28/2012 3:24:53 PM , Rating: 2
If your "company" has several hundred devices and you're not enrolled in volume licensing, your department is incompetent. You can get Windows _ Enterprise in whatever flavor you want.


RE: Malarkey
By tayb on 11/28/2012 4:41:21 PM , Rating: 2
Rubbish. Microsoft is not denying access to Windows 7 much less for companies with volume licensing deals.


RE: Malarkey
By WinstonSmith on 11/29/2012 10:08:45 AM , Rating: 1
"Sales don't equal users."

Exactly. And I'll bet most of those sales are to OEMs for (unfortunate) use in their machines.

The local stores (Best Buy, Walmart, etc.) all pulled all of the Win7 laptops off the shelves the instant Win8 was released. Because of that, I was expecting huge numbers of Win7 laptops on Black Friday sales, but that didn't happen. Along with the unusually low $40 price of an "upgrade" (which is actually a downgrade), this looks like an unusual effort by Microsoft to force the adoption of Win8. I don't recall the same sort of thing happening during the transition from Vista to Win7.

Win8 offers nothing of added value to desktop users. Nothing. And every review I see or read is filled with the term "workarounds" when its use on the desktop is discussed. I don't see enterprise buyers transitioning to it until they're absolutely forced to.

This is nothing more than a strong arm attempt to force a smart phone/tablet OS onto the desktop to force a common UI while sacrificing former desktop UI features which can't be run or wouldn't be noticeable on a 4" smart phone. Fail.

Great analysis of this desktop t*rd:

Windows 8 — Disappointing Usability for Both Novice and Power Users

http://www.useit.com/alertbox/windows-8.html


RE: Malarkey
By safcman84 on 11/29/2012 11:54:16 AM , Rating: 2
HOw do you account for the amount of upgrades bought?

Sure, the 40 million includes new PCs but if more people have purchased the upgrade to Win8 from Win7 than they did from WinXP/Vista to Win7 then that is indicative of a strong uptake.


RE: Malarkey
By cyberguyz on 11/29/2012 1:36:23 PM , Rating: 2
True.

I got my copy at $40. To me $40 is not so bad a price to pay to evaluate software. If I don't like it I can dump the dvd and not really be butthurt over it.

I did try out Win8 for a month. You know what? I formatted my HD and put Windows 7 back on. Windows 8 has absolutely nothing to offer me over my Win7 ultimate (hell, it doesn't even have Media Center unless you wanna pay extra for it). Worse, the fact that they dumped the Aero theme in favor of that butt ugly window imagery simply turned me off of it altogether.

I have 5 other computers in the house. Sadly MS will not be getting any upgrade money from me for them.

Too bad Windows 8 for me is an epic fail.


RE: Malarkey
By max_payne on 11/29/2012 2:07:28 PM , Rating: 2
I agree with you on this one about the stunning un-explicable removal of Aero. Windows 7 is a gorgeous OS to look at and use. The W8 desktop look like early versions of Windows and even Linux, back to a 2D world ! I don't understand why people don't comment about this idiotic decision. Like the start button, third parties companies are at work reinstating it, for a fee I suppose. While you can also disable it on W7, it is a big part of why W8 "feel" faster.

Windows 7 is my workhorse for a long time.


RE: Malarkey
By SlyNine on 12/2/2012 2:13:36 AM , Rating: 2
Thats the thing that bugs me most. Why did they gimp windows explorer. They could have Aero and windows alone and given user the option to use both (as in boot to the one they perfer).

Metro provides NOTHING to improve over windows. So why force it.


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