Feeds

Microsoft's Windows 7 buy early plan builds to climax

Prays for netbook distraction

Boost IT visibility and business value

Price discounts and high channel expectations are paving the way for a healthy holiday shopping season for Microsoft.

In its first-fiscal quarter, Microsoft claimed its highest ever number of licenses sold in a three-month period. September was the highest single month of Windows unit sales ever.

Given Windows 7 wasn't actually available for the period, it looks like Microsoft pump-priming through a range of price cuts to drive pre-sale orders was a good idea.

OEMs stocked up on copies of Window 7 during the period too. Microsoft claimed OEM units increased 19 per cent sequentially, or about three per centage points faster than the overall PC market.

Revenue from sales of Windows 7 licenses to OEMs, increased 20 per cent sequentially - exceeding OEM unit growth.

Sequential was better than year-on-year: unit sales increased six per cent from last year.

The net result to Microsoft was that company deferred $1.47bn in revenue relating to Windows 7 upgrades and sales of the software. This revenue will be rolled into Microsoft's second quarter.

Given this is the shop-tasitc season of Thanks Giving and New Year - a period that boosts revenues of companies serving consumer markets - you should expect Microsoft to claim victory for Windows 7 and some kind of record sales once the numbers are added up.

The truth will be, though, that these numbers will consist of sales that were actually made outside the quarter. The second-quarter results will need to be seen in the context of what was actually sold and what was rolled over.

The Windows 7 launch on Thursday proved consumers are central to the money Microsoft makes on Windows 7 - at least for now, and for the foreseeable future as businesses are not buying. The launch couldn't have been warmer and fuzzier, drawing on tots, old people, and an "I'm a PC" ad campaign that barely touched on hard business features. It was a world away from the cold-hard reality of the Windows XP launch in 2001.

Chief financial officer Chris Liddell said Microsoft expects corporate upgrades to certainly begin in 2010 but "we talk about it spreading over maybe a couple of years."

According to Liddell, companies are simply spending their existing budget so aren't allotting cash to upgrades.

Consumers might be the bright spot, but they will pose a challenge to Microsoft, thanks to their love of netbooks.

Netbooks account for around 11 per cent of Microsoft's PC business, but don't earn as much money as Microsoft would like. That's because they are running Windows XP rather than more full-featured and pricier copies of Windows, like Windows Vista Ultimate on full PCs or netbooks.

In the new Windows 7 era, netbooks will be available with Windows XP, Windows 7 Starter Edition, or Windows 7 Home Premium. Microsoft's will want customers to pick the latter based on this summer's concerted price discounting.

Chief financial officer Chris Liddell said Friday that Microsoft expects that as more copies of Windows 7 hits retailers, people will default to buying standard PCs and notbooks - even ultra-thins. It'll be a wave that - Microsoft hopes - will "correct" the bias in its business towards netbooks. ®

Maximizing your infrastructure through virtualization

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.