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2/14/2014
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Microsoft Sells 200M Win 8 Licenses: Yawn

Microsoft touts sales of more than 200 million Win 8 licenses. Here are 5 reasons not to be impressed.

7 Mistakes Microsoft Made In 2013
7 Mistakes Microsoft Made In 2013
(Click image for larger view and slideshow.)

Microsoft sold more than 200 million Windows 8 and 8.1 licenses during the controversial OS's first 15 months, Tami Reller, the company's executive VP of marketing, revealed Thursday at a Goldman Sachs technology conference.

Sounds impressive, right? Not exactly.

Sure, 200 million is a big number -- that's about one license for every 35 people on the planet, a level of ubiquity most companies would kill for. But Microsoft isn't most companies. Put into historical or aspirational context, Windows 8 and 8.1 have underwhelmed.

Not convinced? Here are five reasons not to be impressed.

1. Windows 8 sales can't keep pace with Windows 7's precedent.
In January 2013, Reller, then CFO of the Windows division, said Windows 8 had sold more than 60 million licenses since launching the previous October. She said the pace roughly matched Windows 7's progress through the same period. In May, when Windows 8's license sales passed 100 million, Microsoft again said its new OS was performing comparably to Windows 7.

Microsoft's Windows 8 boasts have always been a bit suspect, but the company can no longer argue that Win 8 is selling as well as the previous version. Windows 7 license sales topped 240 million in the OS's first year of availability. In three more months, Windows 8 had moved only a little more than 80% as many licenses.

[Are Android apps coming to Windows? Read Microsoft's Windows Strategy Gets Muddy.]

2. Microsoft defines "sell" differently than most of us.
Microsoft's Windows figures refer to "sell-in" numbers, not "sell-through" numbers. Those 200 million Windows 8 and 8.1 licenses, in other words, derive from the volume sold to OEMs and retailers, not the number sold to actual end-users. The number of Windows 8 machines actually active in the wild is lower.

Microsoft's tally does not include volume licenses, such as those sold to enterprises. But analysts say volume deals have been sluggish, too.

Corporate Windows 8.1 uptake hasn't increased outside of isolated tablet projects, and even within mobility deployments, Windows 8 slates are activated less often than iPads, Forrester analyst David Johnson told InformationWeek last month. "Windows 8 and the enterprise aren't things you usually hear in the same sentence," said IDC analyst Al Gillen in a separate interview.

Microsoft's Windows 8 sales boast isn't as impressive as it might seem.
Microsoft's Windows 8 sales boast isn't as impressive as it might seem.

3. Some Windows 8 licenses are more valuable than others.
Windows 8 Pro launched at a promotional price of $39.99, but some Windows 7 users could purchase it for as little as $14.99. In February 2013, though, the Pro version jumped to $199.99, with the standard version coming in at only $80 less. Though Windows 8.1 was released last fall as a free upgrade to existing Windows 8 users, the $199.99 and $119.99 prices still stand for everyone else.

What's the takeaway? A lot of Windows 8 licenses were sold at a discount. In theory, this tactic shouldn't have hurt Microsoft's bottom line -- by sacrificing licensing revenue, the company hoped to encourage Windows 8 adoption and thus revenue for its new Modern UI app ecosystem. In practice, however, this hasn't worked out.

Here's part of the problem: Many early Windows 8 adopters installed the OS on older PCs that didn't have touchscreens and were ill-equipped for Win 8's touch-oriented Live Tiles. Win 8 also shackled the desktop with knuckleheaded UI changes such as the missing Start menu, which only exacerbated the issue.

Windows 8.1 was an attempt to assuage the user discontent that resulted from these problems, but the OS has mostly continued to flounder. Evidently aware that 8.1 wasn't enough, Microsoft is reportedly planning another Windows update to make its new UI friendlier to mouse-and-keyboard users.

4. Windows licenses don't drive device sales as they used to.
Reports last year claimed Microsoft offered OEMs cheaper Windows and Office licenses in exchange for ramped-up production of smaller Windows tablets. While such reports have never been verified, manufacturers have released a rash of Win 8.1 mini-slates in recent months, most of which come pre-loaded with Office. This suggests that just as Microsoft took an early hit with discounted Windows 8 licenses, the company might also have sacrificed upfront revenue to gain some of its more recent sales.

Regardless of behind-the-scenes negotiations between Microsoft and OEMs, many Windows 8 and 8.1 devices have sold well only following hefty price cuts. Microsoft presumably hopes these low-margin devices will eventually stimulate growth in more lucrative areas such as the Windows Store or Office 365 and other of the company's cloud-based services. But so far, much of Windows 8's modest momentum appears to have come at the cost of profit margins.

5. Windows 8 isn't popular on any form factor.
Microsoft apologists sometimes point out that Windows 8 was predestined to post lower sales numbers than Windows 7 because the latter had the benefit of following Windows Vista, whose infamous flop drove demand for a modern desktop OS. Some have also suggested Windows 8 adoption has been stunted by the slumping PC market. With more people using tablets, some older PCs aren't being replaced, and others are being pushed into longer lifecycles. Both trends, or so the arguments go, decrease demand for a new version of Windows.

While these arguments aren't completely invalid, they ignore an important point: Windows 8 was designed as both a tablet and desktop platform. If the OS had been more appealing, that should have insulated it from fluctuations in the traditional PC market.

Unfortunately for Microsoft, Windows 8.1 tablets are still living off Apple and Google's table scraps. A barrage of holiday sales might have helped Windows tablet makers move a few more units -- but they couldn't stop record iPad sales or the continuing proliferation of low-cost Android slates.

Even if the PC slump isn't Windows 8's fault, the OS clearly hasn't helped. In January, Windows 8 and 8.1 accounted for a measly 11.7% of all desktop users, according to Net Applications. Windows 7 runs on almost half of all desktops, and even Windows XP, which will lose support in less than 60 days, more than doubles Win 8/8.1's market share. More than 60% of Win 8/8.1 users are still running the earlier version, indicating that 8.1 hasn't done enough to motivate the market. To add insult to injury, HP has started selling Windows 7 PCs in a "back by popular demand" promo.

Put simply, Windows 8's failure is twofold: It isn't popular among Microsoft's legacy customers, and it isn't popular among the mobile-minded new generation of users.

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Michael Endler joined InformationWeek as an associate editor in 2012. He previously worked in talent representation in the entertainment industry, as a freelance copywriter and photojournalist, and as a teacher. Michael earned a BA in English from Stanford University in 2005 ... View Full Bio

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Rob Peterson
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Rob Peterson,
User Rank: Apprentice
2/17/2014 | 11:56:36 AM
200Million Licenses ??
Do you think that the number of Win8.1 downloads is more representative of the actual total number of Windows 8 users ?

After all it was a free download so I guess most would have downloaded it.

If this is so then there must be an awful lot of licenses still with the OEM/Manufacturer ie sold by Microsoft but not yet bought by the end customer.

Makes you think!
DDURBIN1
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DDURBIN1,
User Rank: Ninja
2/17/2014 | 10:55:23 AM
Re: 100 million since may 2013
You still can't get Win7 on comsumer grade PCs, just business grade.  Because of this Win8 is actually simulating Win7 sales.  I know people that bought a Win8 machine only to buy Win7 to down grade it.  Dell is now selling machines with Win7 with a free upgrade to Win8 just like they once did for XP verse Vista but nobody upgraded to Vista back then.
DDURBIN1
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DDURBIN1,
User Rank: Ninja
2/17/2014 | 10:41:04 AM
Re: Unbelievable
@petey, its a Microsoft number and you believe it?  When Dell buys OEM licenses from Microsoft it buys in LARGE volume maybe two to three years worth to cover sales.  Yeah, Microsoft pockets the money but that doesn't mean the licenses are actually being used.  In the case of Vista, Microsoft allowed unsold OEM licenses to be converted to Win7 so Dell's investment is protected and then Microsoft counted them again as Win7 sales.  In addition Dell is now selling Win7 PCs with a free upgrade to Win8 however Microsoft counts them as Win8 sales.  Add these two tactics up for all the numerous PC manufacturers and you have an Unbelievable license count.
kgreenhow530
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kgreenhow530,
User Rank: Strategist
2/17/2014 | 9:57:27 AM
Really...this again?
I can't help but feel like all the snarky writers who are jumping on the "Microsoft is dying band wagon" are missing/ignoring some important details. First of all, in an age, where Google is drawing millions of people to Android at an impressive rate, one must ask them self, "do you know how many billion dollars 200 million licenses amounts to?" Compare that to Apple selling 28 million Mountain Lion licenses as of last summer. Microsoft may not be dominating the way some would expect, in fact maybe Windows 8 is not as good as people were hoping, but there is a bigger picture. One must considering how resistant the majority of people are to change as well as a understanding of why Windows was made the way it was. And maybe many us XP techies are not noticing the inevitable and unilateral move to mobile devices. Seems like we need some new writers that aren't stuck in the old XP way of doing things. Microsoft is big enough that they will dictate the future of computing and no amount of banter or whining will change that.
rradina
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rradina,
User Rank: Ninja
2/17/2014 | 8:40:04 AM
Re: 100 million since may 2013
Want a cheap solution?  Buy Start8 for $5 to get your start menu back.  Hate Metro?  Buy ModernMix from the same folks for another $5 so you can run modern apps in resizable desktop windows.  $10 sounds a lot better than $290 for Windows 7.
proberts551
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proberts551,
User Rank: Strategist
2/17/2014 | 8:38:51 AM
Only a few Tablets so far
I am a technician working for the department, not I.T. of a large corporation.  The managers are starting to install Windowws 8 tablets, and I am having to set them up for the Domain.  The regular I.T. department does not support Windows 8, and has no plans to at this time.  The Windows 8 tablet seems very good Quality, however for password authentication with the touch pad does not always work.  I have verified that all the case letters are correct.  If I plug in a regular USB Keyboard, then login is not a problem.  Staff have been warned.

It could be that the Windows 8 sales figures reported include tablets, so any tablet sold with the OS would be reproted and makeup for some desktop / laptop shortfall.  I think the sales for home users with desktops, and corporate desktop sales are low.  I think this is because of the difficult and illogical way the GUI is set up. 
rradina
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rradina,
User Rank: Ninja
2/17/2014 | 8:27:11 AM
Re: 100 million since may 2013
Forced upon customers?  If you mean made available at the best price that persuaded a customer to purchase, I'd agree.  With Mac, Linux, Chromebooks, Android tablets and iOS tablets, is anyone being forced to purchase Windows?
Johnnythegeek
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Johnnythegeek,
User Rank: Strategist
2/17/2014 | 5:30:52 AM
Windows 8 is a dud
Well its not like Microsoft has never had a Windows dud before. We had Windows ME, and Windows Vista. Both of which never inspired any real improvements or simply annoyed users to a point that any improvements were a mute point. I do not see Windows 8 being any different. The minor improvements is 8.1 is meant to acknollege mistakes but don't go far enough to really address them. In all honesty Windows 8.1 is usable but compared to Windows 7 its like asking do you want to pay again to drive a Chevy when your already driving a Benz? To get anyone to upgrade or buy a new product that product must appear and show to the buyer that its better then what they have. I don't believe Microsoft has proven to anyone Windows 8 is better only different. That in itself does not sell anyone but the curious and techy geeks who generally embrace anything new.  Apple has already proven that a new version does not guarantee interest in a operating system. Its most likely why Apple's latest OS X was given away because Apple indeed wanted as many users on the same version but knew that many would not feel compelled to buy it. I don't expect Microsoft to begin handing out Windows 8 upgrades for free, but I do think they need to rethink how frequently users are willing to shell out $120 to do so. Also, how many are will to pay that $120 to accept a totally new concept with a learning curve. 
petey
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petey,
User Rank: Strategist
2/16/2014 | 1:48:39 PM
Unbelievable
It continues to amaze me when I read some type of business analysis by a techie blogger. This case involves analyzing ms sales. I've seen same types of articles from other writers concerning google or apple. In this case your analysis is simply unbelievable. 200m is 200m. Think about that number for a nanosecond. Trying to portray it as anything other than remarkable is insane. What business would not want that number in today's economy?
moonwatcher
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moonwatcher,
User Rank: Strategist
2/15/2014 | 6:31:34 PM
Re: 100 million since may 2013
awebb199, I did a search and yeah it can be done (downgrading to Windows 7 Pro), but it isn't cheap...too expensive...$290...from Dell...and you have to have the media installation discs. They won't sell them to you...Guess I'm stuck with Win 8.1 and whatever upgrades they do until Windows 9 comes out. Hopefully they'll cut people a deal if they upgrade to Windows 9 maybe for the same $39 they offered for Win 8. I hope so...

I had thought about upgrading a couple older Dell Windows XP PCs to Windows 7...but am now leaning toward putting Ubuntu on them and being done with it...I do wonder how vulnerable Windows XP will be after April 8th if I only used it for iTunes, maybe streaming MOG audio, and use Ubuntu for other web browsing in a dual boot mode...

The reason I want to keep using my old XP boxes is that much of the software (Roxio and Nero, and utilities I've come to know and love) won't run on the Win 8.1 box and I'm not crazy about buying upgrades at this point that are not *value added*.

Many consumers are in the same boat. Funny thing I've noticed is that the cost of Windows 7 Home Premium keeps going up the closer the date of Windows XP's demise gets....Was $89, now up to $92.

Thanks.

 
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