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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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Simple explanation
By Solandri on 11/28/2012 2:13:49 PM , Rating: 2
Windows 7 release date - July 22, 2009
Windows 8 release date - October 26, 2012

So Windows 7's initial sales were in 3Q2009. A traditionally slow quarter for sales.

Windows 8's initial sales were in 4Q2012. The hottest quarter for sales. So hot that some retailers pull in half their annual revenue in the single month between Thanksgiving and Christmas.

Try comparing again after a half year of sales. 3Q + 4Q for Windows 7, 4Q + 1Q for Windows 8.




RE: Simple explanation
By Timothy003 on 11/28/2012 3:35:12 PM , Rating: 3
That's not true. Windows 7's release date was October 22.


RE: Simple explanation
By Cheesew1z69 on 11/28/2012 3:39:32 PM , Rating: 1
Developer
Microsoft Corporation
Website windows.microsoft.com/windows-7
Releases
Initial release July 22, 2009; 3 years ago [info]
Stable release 6.1[1] (Build 7601: Service Pack 1)[2] (February 22, 2011; 20 months ago) [info]
Source model Closed source / Shared source
License Proprietary commercial software
Kernel type Hybrid
Update method Windows Update
Platform support IA-32 and x86-64
Preceded by Windows Vista[3]
Succeeded by Windows 8


RE: Simple explanation
By Helbore on 11/28/2012 5:03:45 PM , Rating: 3
You are confusing RTM and GA. Both Windows 7 and 8 entered RTM in July and both went to general availability in October.


RE: Simple explanation
By Solandri on 11/28/2012 7:55:40 PM , Rating: 2
Hmm, you are correct sir. Thanks for the info.


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