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. ®

Build a business case: developing custom apps

More from The Register

next story
6 Obvious Reasons Why Facebook Will Ban This Article (Thank God)
Clampdown on clickbait ... and El Reg is OK with this
No, thank you. I will not code for the Caliphate
Some assignments, even the Bongster decline must
Barnes & Noble: Swallow a Samsung Nook tablet, please ... pretty please
Novelslab finally on sale with ($199 - $20) price tag
Banking apps: Handy, can grab all your money... and RIDDLED with coding flaws
Yep, that one place you'd hoped you wouldn't find 'em
Video of US journalist 'beheading' pulled from social media
Yanked footage featured British-accented attacker and US journo James Foley
Primetime precrime? Minority Report TV series 'being developed'
I have to know. I have to find out what happened to my life
Netflix swallows yet another bitter pill, inks peering deal with TWC
Net neutrality crusader once again pays up for priority access
Judge nixes HP deal for director amnesty after $8.8bn Autonomy snafu
Lawyers will have to earn their keep the hard way, says court
Ex-IBM CEO John Akers dies at 79
An era disrupted by the advent of the PC
prev story

Whitepapers

Top 10 endpoint backup mistakes
Avoid the ten endpoint backup mistakes to ensure that your critical corporate data is protected and end user productivity is improved.
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.
Backing up distributed data
Eliminating the redundant use of bandwidth and storage capacity and application consolidation in the modern data center.
The essential guide to IT transformation
ServiceNow discusses three IT transformations that can help CIOs automate IT services to transform IT and the enterprise
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.