So in this month's episode of Microsoft (MSFT) releasing numbers whenever it wants, CFO of Microsoft's Windows Division Tami Reller announced that the company had sold 100 million licenses of Windows 8 to date. On first blush that actually is a very impressive number but (as usual) there are some caveats.
First, it's important to understand what actually counts as a "license sold".
The minute that a PC rolls off the manufacturing line with a new version of Windows on it, it is counted as a "license sold," Reller explained.
Interesting. Here are some points to ponder:
First of all, we don't know if that 100 million number includes Windows RT sales. Windows RT is not sold separately but comes with RT compatible devices so is that a larger number or is it all baked in?
We also don't know how many Microsoft Surface tablets were sold since release (Microsoft ain't talking). A breakout would help put more context to these license numbers as well.
Next, we don't know what the breakout of numbers is between OEM sales and consumer sales. Maybe OEMs have a ton of unsold "licenses" lying around because of sagging consumer demand - hard to tell.
Mary Jo Foley at ZDNet is also careful to remind us that:
It's worth repeating that Microsoft's "licenses sold" numbers are totally different from usage share data. Based on usage statistics from various firms, Windows 8 still lags substantially both Windows 7 and Windows XP, in terms of usage at the moment.
While the 100 million number is very similar to Windows 7 initial sales number at the same point, the entire device (not PC) market is much bigger now. By definition, that means the same rate of sales can't be great - Windows 7 didn't really have the option to sell on tablets/hybrid devices.
Paul Thurrott points out that when you factor in that 3 months ago Microsoft was at 60 million licenses (the initial three month number which = 20 million a month) and three months later, the number is at 100 million, it means the rate of licenses sold is approximately 13.3 million licenses a month for the past three months.
There has clearly been a decrease in license sales after the end of promotional pricing for Windows 8, not rocket science.
Transparency is always a good thing and in this case it has yielded some good metrics and somewhat of a baseline. 13.3 million licenses a month for Windows 8 seems to be the baseline (post discounts) at this point. It's a good number to look for going forward to see if this Operating System is making any headway in the market.
A lot of people talk about the relative lack of applications in the Windows Store as a reason that the OS may lag behind competitors. I respectfully disagree.
I think that with 60,000 + apps in the Windows store, regardless of the perceived quality, there are enough apps for the average user to be satisfied. How many apps can you install anyway or will you realistically use?
The real trend to watch is whether consumers fundamentally like the operating system and will abandon Windows 7 and XP to upgrade to 8. So far, the numbers are somewhat inconclusive and I suspect seem to indicate that consumers just aren't there yet.
As I have said before, in light of the fact that the pricing for that product is now $119 and $199, it's hard to see masses of consumers rushing out to buy this. Windows Blue (Microsoft's next OS refresh) will be very interesting to watch. I expect the update or upgrade to Windows 8 to be free and it's widely touted as a way Microsoft will "address customer feedback" on Windows 8.
If that doesn't move the needle substantially and numbers stay flat or drop, it may be time to call the time of death for this OS.
The public's issue would be similar to the same issue I had with Windows 8 over a year ago.
In my case, I have Windows 8 on a tablet and on my laptop and (at this point) don't see any reason to use it day to day.
It has turned out to be a great source of screenshots and research but I don't see it replacing my Windows 7 Ultimate PC anytime soon.
One more thing - yes I am fully aware that 13 million licenses a month for anyone else would be amazing and this entire discussion would be absurd in the context of most other companies. This is life as Microsoft.
The takeaway for investors
Nothing in these numbers has changed my position and I still stand by what I said in my last article:
Personally, I would hold until I see the next quarter's Windows 8 sales figures, learn more about the Surface hardware sales and then see how Windows Blue or Windows 8.1 is received by the public (maybe the quarter after that).
I think the future of this stock will be clearer at that point.