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2/14/2014
01:15 PM
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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.

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.

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petey
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petey,
User Rank: Strategist
2/17/2014 | 9:08:52 PM
Re: Unbelievable
Micheal I don't understand your point of highlighting the 200 number and then proceed to explain that's it's not 200? Is your point; 1) they are lying never to be trusted? 2) windows 8 is a bad product, they are losing Os sales to some phantom platform? 3) Microsoft is a dying company and win 8 sales prove it? 4) you are really smart and analytical with a lot of free time to analyze useless facts that mean virtually nothing to anyone but yourself. Option 4 is not unique to you, no disrespect, most tech writers suffer the same affliction. Break out of the mold, away from the pack and take a chance.... If the world ends tomorrow, don't let your legacy be 200m is not really 200m
Michael Endler
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Michael Endler,
User Rank: Author
2/17/2014 | 8:23:33 PM
Re: 100 million since may 2013
"#3 neglects to account for the 100 million well after the promotional period.   You can't denigrate the 100 million by claiming that they were discounted when the discount period had expired already."

I don't think so. As the article states in point #4, there's evidence that Microsoft slashed license costs to OEMs-- which would mean some of the licenses after the initial discount period were also beneath historical margins. Not a sure thing, but another point to consider.

And as point #1 details, it's undeniable that Windows 8/8.1 licenses have sold substantially slower than Windows 7 licenses did-- a point that is true of both the discount period, and the time since.

Also, to be clear, this article's premise wasn't that Windows 8 was a disaster; rather, the premise was that Windows 8 is not particularly popular in any meaningful context, and that Microsoft's 200 million license sales aren't impressive. There's a big difference between "disaster" and "not impressive"/"underwhelming." As I indicated in some of the other comments, I think Microsoft could still shake things up. April's Build conference could bring anything from a Windows 8.1 update that makes the OS friendlier to mouse-and-keyboard users, to a version of Office for the iPad, to a converged Windows Phone-Windows RT platform, to a million other potentially helpful things. Microsoft is by no means doomed. But should it be celebrating its Windows 8/8.1 accomplishments to date? Definitely not.
Michael Endler
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Michael Endler,
User Rank: Author
2/17/2014 | 8:03:35 PM
Re: 100 million since may 2013
It sounds better to me, too. I'm surprised some of the workarounds haven't appeased more users. I know people increasingly expect things to "just work" out-of-box, but it's curious that some of the current solutions haven't caught on. It doesn't take a lot of time or expense to adjust the necessary settings and install the necessary apps. Makes you wonder about the alleged plans for Windows 9, since it will reportedly integrate some of the UI features the aforementioned apps already enable.
Michael Endler
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Michael Endler,
User Rank: Author
2/17/2014 | 7:58:44 PM
Re: Really...this again?
Thanks for the thoughts, kgreenhow530.

I think it would be more accurate to say "Microsoft is big enough to influence the future of computing." But is it inevitable that Microsoft will "dictate" the future? I don't think so. Given the Windows weaknesses I discussed in this article (and further elaborated in some of the comments), I think Apple and Google have much more influence in terms of mobile computing, and might (among others) have as much or more industry influence overall. Microsoft is a strong company. Outside of Windows 8, a lot of things are going well. But its clout (and thus its ability to dictate) isn't as strong as it used to be. The company is powerful, but no longer a monopoly. The current state of Windows has played a big role in that distinction. It's ridiculous to say that Microsoft is dead or dying. But in terms of resources and existing assets, it's lost important ground.

As for comparing Windows 8 to OS X in terms of profitability, I think the battle is probably closer than you think. As I mentioned in this article, Microsoft is making less upfront money than it used to on many Windows licenses. Microsoft partners, meanwhile, are dealing not only with lower sales, but also lower margins. And though legacy Windows software remains indispensable, Windows 8/8.1 haven't yet generated tons of new revenue via apps or accessories. Apple, meanwhile, gets to keep 100% of the profits from hardware, and its machines boast an average selling price around $1300. Among computers over $1000, Apple machines have regularly outsold PCs for years. Many PC brands lose money or subsist on slim margins. Macs are not only profitable-- they're very profitable. Apple doesn't have a ton of PC market share, but when it comes to the most desirable customers, Apple cleans up. I'm not trying to say that OS X is somehow vastly more valuable than Windows. But OS X is much more valuable than its market share might suggest.
Michael Endler
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Michael Endler,
User Rank: Author
2/17/2014 | 7:43:30 PM
Re: 200Million Licenses ??
That figure comes from the most recent Net Applications numbers: http://www.informationweek.com/software/operating-systems/windows-81-still-resisted-by-desktop-users/d/d-id/1113682


These figures aren't official, but they come from a pretty large sample (as the linked article elaborates). If I recall, Microsoft has referred to Net Applications figures before, at least for marketing purposes. Net Applications only tracks desktop traffic and users in this report, soit wouldn't include all activity from all new Windows devices.

Net Applications does provide insight into a very specific group, however: desktop users. These users were ostensibly the ones who took the most umbrage with Windows 8's UI departures. One would think these disenchanted users would have downloaded 8.1 the second it became available. But Windows 8.1 only accounts for 3.95% of desktops overall, or 37.3% of combined Windows 8/8.1 share. That seems strangely low, given people were unenthusiastic about Windows 8, and that Windows 8.1 addressed many of the problems. It could be that people just relegated their Windows machines to niche use, as I suggested in another comment, or that Windows 8.1's changes simply don't go far enough (e.g. why isn't boot-to-desktop enable by default on non-touch devices, and where is the start menu? etc).

For reference, OS X Mavericks, which is free to most Mac users, is running on over 40% of Apple computers. Mavericks and Windows 8/8.1 aren't perfect comparisons-- but users of previous Mac versions weren't vocally voicing discontent, or declining to update, like Windows users were. It seems reasonable to infer that Mac users had less urgency than Win 8 users to upgrade. Nonetheless, Mac users have done so at a faster clip.


Incidentally, while looking up the link for the Net Applications story, I found a slight inaccuracy in this article. Windows 8 and 8.1 accounted for 11.7% of Windows desktop systems in January, not 11.7% of desktops overall. Windows 8 and 8.1 were 10.58% overall. Not a significant difference in the context of the point I was making, but better to correct the mistake.
Michael Endler
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Michael Endler,
User Rank: Author
2/17/2014 | 7:10:57 PM
Re: Unbelievable
petey,

200 million is a big number; as I said at the beginning of the article, 200 million equates to roughly one license for every 35 people on Earth. As your comments suggest, very few products are so widely spread. But it's not "insane" to call Windows 8's sales disappointing.

As the article elaborates, when Microsoft says "200 million," that doesn't mean 200 million customers have actually decided to upgrade to Windows 8 or 8.1. So in that sense, 200 million is not 200 million.

Moreover, if we look at the OEM numbers that enable Microsoft to claim 200 million, we find additional concerns. As the linked article is this story elaborates, reputable publications such as The Wall Street Journal have reported that Microsoft might have substantially slashed Windows and Office licenses fees in order to stimulate OEM production of ~8-inch Windows tablets. Admittedly, we don't know if this is true, but manufacturers produced a lot of smaller Windows tablets last fall, and most of them came with Office-- so that's at least circumstantial evidence than some behind-the-scenes dealing occurred. Certainly, key executives at many Windows OEMs were publicly criticizing Windows 8 throughout last spring and summer.  The trash talk from Microsoft's alleged friends doesn't suggest many of them were eager to invest more in Windows 8 without some motivation. If we assume, for the sake of argument, that Microsoft did indeed reduce license costs, then the company is clearly earning less money on each Windows 8 license than it did on licenses for previous versions of Windows. If this tactic eventually stimulates Windows Store revenue, then perhaps Microsoft's gamble will end up paying off. But for the present, the Windows app ecosystem is problematic. All of this reinforces that 200 million Windows 8 sales are less valuable than 200 million sales of previous versions.

The preceding point is somewhat speculative, but turning back to verifiable facts, we know many early Windows 8 licenses were delivered at a discount. So again, some of the Windows 8/8.1 licenses are more valuable than others. This point doesn't rely on the OEM reports; if those reports are true, they'd simply exacerbate an objectively problematic situation. As I indicated above, it would be moot to talk about the relative value of different license types if Microsoft's various tactics had resulted in blockbuster device sales or stimulated developer interest in the Modern UI. But Microsoft has seen disappointing progress on these fronts. The company might still have some cards up its sleeve (stay tuned for Build in April), so the Live Tile interface might not be down for the count. But currently, Windows 8 has sold more slowly than Windows 7, and probably at lower margins. It also hasn't provided tangential benefits. In all ways, that sounds like a product line headed in the wrong direction.

To be clear, Microsoft is very strong overall. Outside of Windows 8, most things are going well. Azure, for example, could become for the cloud era broadly what Windows was to the PC era. But Windows has been a traditional cornerstone of the company's strategy, and no small part of the influence it's been able to wield among customers, competitors and partners. 200 million licenses might sound like a lot, and in certain ways it is-- but from a sales perspective, the OS hasn't lived up to its heritage. Some people say that Microsoft is doomed. That's ridiculous. But that doesn't mean that Microsoft isn't experiencing disruption, with Windows at the epicenter.
Rob Peterson
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Rob Peterson,
User Rank: Apprentice
2/17/2014 | 4:25:32 PM
Re: 200Million Licenses ??
Where do you get your figures from to calculate only 37.3% came for the update, as far as I know Microsoft are keeping tight lipped about actual numbers, they are only stating how many licenses they have sold and most of these could still be held by OEMs and machine builders. It is entirely possible that the entire Windows 8/8.1 user base could be even smaller than current predictions. The accurate figure is how many Windows 8 product keys have been activated but microsoft won't reveal these numbers (which suggests the number is dire). I will stick with my theory that most Windows 8 users updated to 8,1 and that this would suggest that the total number of windows 8/8.1 users is a lot lower than current estimates.
Michael Endler
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Michael Endler,
User Rank: Author
2/17/2014 | 12:44:36 PM
Re: 200Million Licenses ??
I think that download (as opposed to OEM sales) figures paint an incomplete picture but still mostly reinforce that desktop users haven't been impressed by Windows 8.1.

Windows 8.1 is free to everyone with a Windows 8 machine, but among desktop users, only around 37.3% of Windows 8/8.1's January traffic came from the update. This traffic would include newly-bought machines, which means the upgrade rate among existing Windows 8 users was most likely even lower. 

What does this suggest? Well, a contrarian might argue that people aren't upgrading to Windows 8.1 because many of them are happy enough with Windows 8. Most other evidence (as this article elaborates) suggests Windows 8's word of mouth is so-so at best, however, so it's pretty hard to argue too many Win 8 users are satisfied. It could be that many consumer Windows 8 users rely on tablets or other devices for many needs, and only use Win 8 for Office or other specific legacy applications. That could keep Win 8 machines active in usage share statistics while also allowing for a lack of upgrade urgency among seemingly unhappy users. But this is one of the strange data intersections. People seem dissatisfied with Windows 8, so you'd think most users would have jumped at the free Windows 8.1 upgrades. But they haven't.
Michael Endler
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Michael Endler,
User Rank: Author
2/17/2014 | 12:24:37 PM
Re: Only a few Tablets so far
Thanks for sharing your experiences as an IT professional working with Windows tablets, proberts551. Sorry to hear about the authentication problem (which I fortunately haven't had on any of the five Win 8 devices I've extensively used, though I have had to deal with Microsoft's incredibly long recovery keys when I was inexplicably locked out of a Surface 2).

But how do the employees seem to like the tablets? Are the Windows devices causing a measurable uptick in worker productivity? Do the employees enjoy using the Windows tablets more than older devices? Compared to everyone else, do employees using these tablets call the help desk more often, or less?

Also, yes, you're right: Windows 8 and 8.1 license figures refer to both PC and tablet sales (and possibly Win RT ones too, though I don't believe that's been verified). As you mentioned, this potentially wide user base should have helped Windows 8/8.1 to overcome weakness in the PC market. But as I explored in the article, that hasn't been the case.
owade83
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owade83,
User Rank: Apprentice
2/17/2014 | 12:20:58 PM
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