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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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SachinEE
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SachinEE,
User Rank: Ninja
2/20/2014 | 6:00:55 AM
Re: Microsoft Sells 200M Win 8 Licenses: Yawn
@ Brian.Dean, It is really amazing how many times we have to read about difficulty to use new UI of Windows 8 from people fairly well conversant with technology. I have used Windows 8 on a non-touch display and found it not-so-difficult to use, though one can enjoy full features of Windows 8 on touch displays.
SachinEE
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SachinEE,
User Rank: Ninja
2/20/2014 | 6:00:35 AM
Re: Microsoft Sells 200M Win 8 Licenses: Yawn
@ Joe Stanganelli, well that's a fairly balanced analysis I must say. Microsoft is playing its cards very carefully it seems. They are trying to penetrate the mobile market (Tablets and Smart Phones) slowly but surely deploying different techniques like lowering the prices of their tablets etc. Although we can't be sure, yet we can see some gains for Microsoft if they could persistently try to boost their tablets and smart phones and come up with smooth integration of all their devices with one platform.

 
SachinEE
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SachinEE,
User Rank: Ninja
2/20/2014 | 5:14:08 AM
Re: Microsoft Sells 200M Win 8 Licenses: Yawn
Windows 8 and Windows 8.1 sales may have fallen short of Windows 7 sales but 200 million is still a healthy figure to talk about standalone.  Your analysis is a valid one, but we have to take into account the post-Bill Gates problems faced by Microsoft. Overall slump in PC market and Microsoft's recent debut in tablets world are also things to be considered.

 
David LC
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David LC,
User Rank: Apprentice
2/19/2014 | 8:30:00 PM
Great news!
Funny how everyone always discounts Microsoft as a company.  Come on....can I actually get any work done on my iPad?  I have had an iPad for several years and mostly use it to check email, linkedin/facebook, read articles and read magazines.  I must have around 40 apps but they just don't compare to the productivity of using my laptop with 3 large monitors attached.  The high end HP Elite laptops have display ports.  I'm also switching over to a Windows 8 Pro tablet to replace my iPad.  The HP laptop Split X2 to be exact.  i5 Intel and 12 hours of battery life AND can run all my Windows software.  I use as an Ultrabook or detach and use it as a tablet.  I love it.

I recently updated my main machine to Windows 8.1 a few months ago.  I was worried because of all the negative press but Window 8.1 is actually great.  The tiles are much better than the start button.  I can now configure exactly how my tiles (shortcuts) are organized.  With the start button, you are stuck looking at every single thing you ever installed, even thou you may only use 5% of those shortcuts during a normal week.  I would also love to get a nice 24 or 27inch TOUCH  screen to go with windows 8.1.  The experience is just great.  I would still use a mouse for regular activity but what a nice convenience to just use touch at times.  I'm looking forward to it.
Brian.Dean
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Brian.Dean,
User Rank: Ninja
2/19/2014 | 12:52:06 PM
Re: 100 million since may 2013
I think on one level it shows that customers do not trust third party tools that are not well know and would open up their system to a possible security threat -- Win 7 has had that problem at times through third party widgets, in the enterprise security becomes a bigger concern. If win 8 was received in a better fashion at the consumer end then most probably it would have also found its way into the enterprise, making for better sales figures.
rradina
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rradina,
User Rank: Ninja
2/19/2014 | 8:49:40 AM
Re: Unbelievable
That's the challenge in today's "digital magazine" era.  As consumers of this media, we have to make sure we understand what we're consuming.  Is it reporting or editorial.  I think there's also a new class of media which is blogging.  Blogging can be reporting, editorial or what I call ranting/venting.  The latter category is quite broad and it's generally easy to spot because it begins with a sensational title designed to call attention to itself.

Since print died, I believe this is a natural outcome of our expectations of magazines to be more like a daily newspaper.  We want new daily content.  We want to know about new product announcements TODAY, not a month from now as is typical when trying to schedule a weekly paper publication (or far longer if it was a monthly publication.)  That puts tremendous pressure on sites to create new daily content.
Joe Stanganelli
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Joe Stanganelli,
User Rank: Ninja
2/19/2014 | 2:11:47 AM
Re: "Failure" seems a bit much
FWiW, and maybe this is just me, but I think the rush among UI designers to make everything "tablet-friendly" (whatever that means) is based upon an imagined, false demand.  We're not at a point where everyday users want big things to slide around.  We're happy with little and medium things to point and click.  Obviously, tablets present some interfacing issues when it comes to this, but there must surely be a happy medium.  I don't think MSFT has found that with Windows 8.
bttlk
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bttlk,
User Rank: Strategist
2/19/2014 | 12:45:17 AM
Re: Only a few Tablets so far
I have experienced the logon problem you describe with tablets (Samsung and HP) from time to time, and also an HP Windows 7 Slate when using the touch screen, but not with a USB or bluetooth keyboard.  Doesn't happen on every logon, but when it fails it takes several tries to logon; most of the time I find a keyboard to get logged on and to start working!
bttlk
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bttlk,
User Rank: Strategist
2/19/2014 | 12:30:47 AM
Re: Unbelievable
Articles with titles such as "hate Windows 8" or "failure" are poor journalism.  You may not like the new product, or worse yet not understand it and criticize it wrongly, but hate or fail do not belong in a reputable article.  I am offended by InformationWeek and ZDNet's approach in many articles, which I classify as "opinion" not reporting.  I often pass on reading them due to the titles, or the same titles running for weeks.  After a few days, it's old info, not news.  Take it down.  More objective articles should be written, not some bash Apple or MS or any other company or platform.  These two companies are doing nicely with their billions of profits. Not every product is a hit.
Michael Endler
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Michael Endler,
User Rank: Author
2/18/2014 | 10:26:22 PM
Re: Unbelievable
Thanks for the follow-up, petey.

"Not that their products are or were ever perfect, I think it's important to realize just how much of today's technology depends on their products."


Very valid point. Commentators sometimes act like Microsoft is dying, and I know I've sometimes described its problems too aggressively (such as my use of the word "failure" at the end of this story!). But as you suggested, the company is damn-near indispensable to the way the world works today. A lot of people don't realize how much of our business and societal infrastructure relies on Microsoft technologies. Windows 8 is problematic, but legacy Windows software is incredibly important, as are a number of other Microsoft products.

Windows is important to the company's overall strategy, but Microsoft is actually pretty diversified. We can debate how much power and influence Microsoft is positioning itself for, and what that might mean for customers and partners. But it will remain powerful and influential in almost all scenarios I can foresee.

You seem to feel strongly that Microsoft should be given its due respect as a phenomenally important company-- and I agree. Windows 8 is a legitimate sore spot that could open some of the company's strategies to disruption, but most companies would kill to have Microsoft's "problems."
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