News

Windows 7 Shows Steady Pace at 350 Million Sold

• By Scott Bekker
• 04/25/2011

Microsoft indicated late last week that it has sold more than 350 million Windows 7 licenses.

The new operating system sales figure, announced on Friday, arrived ahead of Microsoft's earnings call this week. The licenses were sold 18 months after the Windows 7 launch. Other positive signs for Microsoft have been described by analyst firm IDC, which estimated that more than 90 percent of businesses have Windows 7 migrations underway.

This new benchmark represents a doubling of the number of licenses sold since last July. At that time, Microsoft reported in its annual earnings for fiscal-year 2010 that it had sold 175 million licenses of Windows 7. That was about nine months after the October 2009 launch of Windows 7.

The sales pace amounts to nearly 19.5 million copies a month. For partners, that's a very stable platform to build businesses on, but weirdly so.

Usually momentum behind a new operating system (when the operating system is solid like Windows 7) builds slowly to a crescendo as businesses evaluate, pilot and deploy. On the other hand, PC sales have been all over the map -- very high through much of 2010, and then slowing considerably in the first quarter of this year. Has that had a steadying effect on the numbers?

It's also possible that there's a new paradigm in PC purchases. By skipping Windows Vista and only replacing Windows XP systems when they failed, have companies permanently changed their purchase cycles so they're mostly replacing PCs as needed rather than doing major rip-and-replace rollouts of each new Microsoft release?

I put those questions to Al Gillen, the analyst at IDC who is mainly responsible for the firm's widely cited operating system market numbers.

"I have trouble with that too," Gillen said of the flat rate. "It should have more of a profile," Gillen said, referring to the shape of a statistical graph showing change over time.

Gillen's figures for IDC put Windows 7 paid new license shipments at 31 million (7 million commercial, the rest home shipments) for 2009, 158 million (102 million commercial) for 2010 and projected 204 million (113 million commercial) for 2011.

Part of the difference in the figures is that Gillen uses customer surveys to model how many businesses are exercising downgrade rights on their Windows 7 licenses and deploying them as Windows XP systems.

"I would estimate that probably 80 percent or even more of the initial shipments of Windows 7 got downgraded," he said. On the consumer side, however, Windows 7 licenses sold maps almost 1:1 as a Windows 7 deployments, he noted.

The other element is that PC shipments have gone up. Gillen said that IDC's PC tracker shows the worldwide market went from about 300 million systems a year in 2008 and 2009 to nearly 350 million systems in the recovery year of 2010, with fast growth in the second half. Even Bill Koefoed, Microsoft general manager of investor relations, said back in January of calendar Q4 2010, "We estimate close to 90 million PCs were sold globally, the biggest quarter ever....Business PCs grew faster than consumer PCs as companies continued to refresh hardware and adopt Windows 7."

That rising tide doesn't seem to have lifted the Windows 7 boat.

"It would seem to me that they should have been lower in the first nine months and higher in the second nine months. Putting the downgrade rights aside, just the fact that the PC market was growing, the numbers should have gone up," Gillen said.

Ultimately, the numbers are very high, and that's a plus for Microsoft partners. We'll keep an ear out during the Microsoft earnings call for any clues to why the numbers are so steady.