Windows 8 hits 100M milestone, but usage remains low: Where's the disconnect?

Windows 8 hits 100M milestone, but usage remains low: Where's the disconnect?

Summary: Microsoft sold about the same number of Windows 8 licenses in six months after release as it did with Windows 7. But its usage share stands at one third of what Windows 7 had in the same time. There's a disconnect between what's being sold and what's being used. Here's why.

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Windows 8 is an "unmitigated disaster," said MarketWatch's John Dvorak. "The worst thing since fried Vista," said Pocket-Lint's Dan Sung. "Windows 8 is very much like Vista," said Winsupersite's Paul Thurrott.

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Microsoft sold 100 million Windows 8 licenses. But why is usage share so low? The devil is in the details: "sold" doesn't mean "shipped." (Image: CNET)

Microsoft has seemingly proven everyone wrong by hitting the 100 million licenses sold milestone in just over six months of its general availability. By comparison, Microsoft also sold 100 million licenses of Windows 7 during its first six months of general availability.

Just because Microsoft "sold" 100 million licenses doesn't mean 100 million machines are running the operating system. There's a disconnect between what Microsoft is pushing out and what consumers and businesses are receiving.

The fact is that Windows 8 is selling as well as Windows 7 during the first six months of final release. While that may be true, the devil, as always, is in the details.

"Sold" not "shipped": Why it matters

ZDNet's Mary Jo Foley, who broke the news, cited Microsoft officials as saying that a "license sold" counts as a sale to a computer maker (OEM), such as a PC that rolls off the manufacturing line, as well as direct upgrades from retailer store shelves and from an older Windows-based desktop.

These "license sold" figures do not include volume-licensing figures, such as those being sold to enterprises. That's a key figure that we still don't know — Microsoft could have sold a further 100 million volume licenses that it simply hasn't disclosed. The figure may or may not include Windows RT licenses sold — essentially, Windows 8 copies sold on ARM-based tablets — though this is expected to be significantly lower, considering the market reaction to the slimmed-down platform.

(Dell said Windows RT demand has been "weaker than hoped," while Samsung pulled the plug on its Windows RT-based tablets in some countries.)

But that's "sold," not "shipped." The two are not the same. Because Microsoft sold 100 million copies of Windows to retailers and OEMs, it receives revenue regardless. But what's happening, in a nutshell, is that retailers are either not selling store shelf copies of Windows 8, or OEMs aren't selling desktops and laptops with Windows 8 installed.

That's where the disconnect is — why Windows 8's usage share appears to be significantly lower than Windows 8 sales are.

On par with Windows 7 sales, but one third of the usage share?

There's on-the-surface evidence to suggest that Windows 8 shipments — not sales — are going as well as Microsoft had hoped.

Windows 8's usage share shows how much the operating system is being used, based on metrics generated by analytics firms. It gives a good overall — albeit rough around the edges — indication of how many users of Windows 8 there are in a percentage.

Recent statistics from Net Applications show that Windows 8 has a usage share of just 3.8 percent in the six months that it has been available on store shelves. (Actually, it's been around longer, with developer and release previews.) Meanwhile, Windows 7 was given a head start just as its successor was by way of early pre-release versions. This added to Windows 7's overall boost in initial general availability usage share.

During the six months that the final Windows 7 was available to the public, it had about a 12 percent usage share. Windows 8, during the same period, has less than one third of Windows 7's share.

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Windows 7 vs. Windows 8 before and after general availability. (Image: Net Applications)

Getting Windows out there is a two-way process. Microsoft sells a Windows 8 license to either a retailer or an OEM, which is paid for by the recipient. The retailer then has to sell the store shelf copy of Windows 8 to a customer, while OEMs have to ship a whole computer. (Upgrades are slightly different. Some upgrades run via the desktop, ergo from Microsoft directly, cutting out the retailer altogether.)

That said, once Microsoft makes a sale to retailers and OEMs, it's almost out of its hands. Microsoft can wash its hands of any responsibility by that point, and still be content with the fact that it received cash in hand for what it sold.

It seems that according to a high Windows 8 sell rate to a lower usage share ratio, something's getting stuck at the retailer or OEM level. This could be a result of the ongoing decline in the PC market.

Forrester Research's David Johnson told ZDNet on the phone: "Our data on Windows 8 adoption shows about half the interest in the enterprise than we saw with Windows 7. It's been clear that consumers are confused by Windows 8. I would be very surprised if the consumer adoption of Windows 8 was on par with that of Windows 7 at this point."

One likely reason is that the man in the middle — such as the retailer or the OEM — simply isn't shifting their stock of inventory. Windows 8 remains on store shelves, and PCs that are pre-loaded with the operating system aren't being shipped to end users.

It wouldn't be a surprise, considering the state of the PC market as of late. According to recent IDC figures, global PC shipments plunged by 14 percent during the first quarter of 2013. Based on the numbers, it's the steepest decline since 1994.

Tablet share: Does it count?

While the PC market has been in decline, the tablet market has been cannibalizing desktop and laptop sales. The slow shift toward post-PC devices has been clear for some time. According to more IDC figures, global tablet shipments increased by 142 percent year over year during the first quarter.

"Tablets have shown no sign of slowing down," the firm's analysts said.

Windows 8 is continually pitched as an operating system for both desktops and tablets. But as Microsoft loses ground in the contracting PC market, the software giant's bet in the tablet market hasn't exactly taken off much, either. Windows-based tablets still aren't yet the norm, with iPads and Androids taking the majority of the overall market share. IDC's figures show that Microsoft had just 1.8 percent of the tablet vendor market share.

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Based on responses from 9,766 information workers for employee interest on both PCs and tablets. (Image: Forrester Research)

But Tami Reller, Microsoft's chief financial officer for the Windows client team, said the company's touch hardware situation should shift in July, ahead of the back-to-school season. This is typically the mid-year season that replicates the December quarter in which the holiday season pushes sales through the roof. The back-to-school season is just as lucrative.

The bottom line

In the end, a mix of a declining number of PCs being sold, along with a poor share of Windows-based tablets on the market, is hampering retailers' efforts in getting Windows 8 out into the market.

Microsoft has already made its billions from Windows 8 just by creating something new.

If we had a figure of how many Windows 8 copies were actually activated on each machine — a figure that Microsoft knows, but has never released for any of its Windows versions — we could determine the ratio between Windows 8 licenses sold and Windows 8 activations, which would then ultimately show us how many are still on store shelves.

While Windows 7 and Windows 8 share the same amount of licenses sold during roughly the same time since general availability, Windows 8 remains mostly on the shelf — either in branded box packaging, or in a computer maker's warehouse.

Topics: Windows 8, Microsoft, Microsoft Surface

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136 comments
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  • Then why do they keep buying licenses?

    Your theory (and be honest, you've provided no facts, merely a theory) falls apart at that simple question. Companies that aren't selling their products don't keep making more. When the initial 40 million PCs were built and sat on store shelves (according to you) then why did they build 20 million more? Then 40 million more?

    Oh right, because your theory is wrong.

    Kudos Microsoft for a fantastic product in Windows 8.
    toddbottom3
    • Wrong?

      Joined just to point out...they plan this out years in advance, and pay for it years in advance...the point of the article is that whereas the RETAILER has to sell the software to the consumer, MS has already got their money, and counts it as a "sale". Retailers are shipping these out, but nobodies buying...I've worked in retail, and the old stuff will be thrown IN THE DUMPSTER, to be replaced with the new, they won't just somehow cancel them...exactly the same thing.
      And MS still gets paid...
      Lionhead4
      • Wait....

        You're saying the six month old computer will get thrown in the dumpster?
        blazing_smiley_face
        • They are putting Android on tablets/hybrids etc. to make them sellable.

          http://www.smartcompany.com.au/information-technology/055350-with-the-pc-market-crashing-intel-says-200-android-laptops-are-on-the-way.html
          Mah
      • Retail VS OEM

        Not quite there Skippy, retailers do not control the licensing on computers the OEM's do.
        Part of what is going on here, Lenovo as an example, is still shipping Windows 7 on it's computers but has Windows 8 disks bundled into the package for the change-over if the purchaser decides to go that route. Each system shipped with Windows 8 disks is considered a Windows 8 system shipped. Not quite the same thing. OEM's get a blanket license based on the number of systems they intend to build over a specified period of thime and those licenses are allocated to those systems, installed or not. In Lenovo's case, I'm sure they are still working with their Windows 7 license allocations and the Windows 8 disks cost them next to nothing to be included. AS far as MS, shipped is shipped.
        kfortner51
        • Enterprise vs consumers

          Zack spelled it out clear enough for everyone to see:

          Enterprise adoption is less than what it was with Windows 7. The reason is simple: Many Enterprises usually do not adopt a new OS before it's first service pack, for various reasons that can be condensed as "it's cheaper that way". Windows 7 was the major exception to this rule, and had record adoption rates among businesses. Right now the adoption rate of Windows 8 matches that of Windows XP (which matches that of Vista) according to another article on Zdnet.

          For proof, check a OS usage tracker that delivers daily results, such as gs.statcounter.com, then look for daily usage of operationg systems over the last 30 days. Windows 8 has upward spikes at the weekends (as does iOS). Windows XP has downward spikes on weekends, Windows 7 is relatively flat (could vary by country).
          Sacr
          • less than, greater than brackets?

            I put Zack's quote I was referring to in less/greater brackets, and it was swallowed. I'll put it again, this times in single quotes:

            'These "license sold" figures do not include volume-licensing figures, such as those being sold to enterprises. '
            Sacr
      • You should've stayed on the sidelines...

        since you sound pretty clueless about the maker and distributor and retail sides of any business.

        In retail, if a product doesn't sell, and it can be returned to the distributor, then it will be returned for a refund or as an exchange for other products or for credit on future purchases.

        If food isn't sold, and it gets ready to spoil, then, that's the product which will go to the DUMPSTER.

        Computers, and tech gadgets in general, don't get DUMPED in the trash. If you do know of any retailer who does dump computers and tablets and other hardware that isn't sold, then, I'm pretty sure that, there would be millions of people who would be very happy to go dig them out of the trash; in fact, the line to the dumpster would be longer than the lines of people waiting for the special Xmas sales on black Friday.

        Now, go and unsubscribe from this site, if all you're going to contribute is a bunch of lies and nonsense and ignorance in your own field.
        adornoe
        • Actually, they do dump them.

          When the price obtained for salvage is higher than what they can charge the user to get them to buy, they WILL sell them for scrap.

          And that is equivalent to putting them in the dumpster.
          jessepollard
          • Actually, no...

            Do you understand that, many things that are sent to "salvage" actually get recycled and/or restored, and put back into circulation in the economy?

            Meaning of salvage:

            - Prevent being ruined, destroyed, lost, or harmed

            - Property or goods saved from damage or destruction

            - The act of saving goods or property that were in danger of damage or destruction

            So, even when items aren't or won't be sold at the retail level, they do find their way into the economy, and sometimes, it's through sales at discount shops like Big Lots and at auctions. Not much goes to "waste", except for rotten food.
            adornoe
      • retailer paying for stock in advance?

        is an exception rather than the rule.
        planning and paying years in advance is just outright ridiculous especially with tech products.
        warboat
      • your wrong

        just to point out that toddbottom3 is an idiot, Lionhead4 clearly gets it. if you can comprehend english better you would know why, I could explain it but i'm betting you still wouldn't get it. Read enough of the other responses and maybe you will. Glad you like windows 8, but if it was so fantastic then why are the vast majority of windows users unhappy with it. A fantastic product would have been when all the users are happy and joyfully working on their new computer, instead of pulling their hair out. And the article leaves out all the people that bought a new computer that came preloaded and feel stuck with it. I have no means to do a survey but i'd bet my last dollar of all the computers running win 8 that more than half wish it was running win 7. I remember when vista came out if you wanted a computer with XP then you had to go online and purchase a from their business section at a markup in price. So basicly they are forcing win 8 on the people and many are unhappy and resisting, I think a better way to gage how well its recieved it to look at the number of upgrade disks sold. to separate the people who got a win 8 machine for a lack of options and those who chose to run win 8. I only have one friend that chose to upgrade his home computers to win 8, he was a microsoft employee.
        knelson276
    • This brings back memories

      No good ones though…

      A bit of history: “The 180 million number came along with the company's announcement that it had hit an annual revenue mark of $60 billion. Vista has been available for over 18 months, so an average of 10 million licenses sold per month is quite impressive. Microsoft is, however, counting sales and not users; some customers have decided to downgrade from Vista back to XP (they can upgrade to Vista as they please) but these are still counted in the sales numbers.”

      So the same recipe is used for Windows 8…because it is a flop, a big one that is.
      mil7
      • A flop that's still generating revenue?

        I'm not going to argue usage statistics because they've been argued to death already, but what I will say is that, despite those usage statistics, one-hundred-million sales are still very much sales, regardless of their usage. Despite this "flop" being "poorly rated by millions," it's still making money, and that alone is enough for Windows 8 to have some kind of success.
        Figments0
        • ...

          Microsoft is exchanging this small in take of cash for the loss of its consumer base and its computer partners who will eventually look else where for an os that people actually want and that will drive computer sales. Yes the manufactures bought licenses but at the end of the day if they can't sell their inventory due to one drawback which is no demand for windows 8 they will have to look else where and abandone Microsoft if Microsoft doesnt create what the public wnats to buy which in turn if what Microsoft created doesnt get excepted by long time consumers then Microsoft dies off too. I am not sure why Ballmer has been allowed to run Microsoft into the dirt but it would seem until he is gone Microsoft is in real trouble.
          Fletchguy
          • Except that it is still making money hand over fist.

            While this particular segment is not doing well. Server business is doing well. Games are doing well. Cloud services are doing well.

            I agree with you that the company could definitely execute better and Ballmer is responsible. But the company isn't dead or dying. It is doing rather well and even improving in some areas.

            I personally believe that Windows 8/8.1 will do well once the PC market recovers and once we truly have ultra light notebooks with great battery and performance and touch. Those pieces are coming together. Intel's ultrabook concept was correct but really achieved fully. Battery life is still lagging. Boot times have improved but really improve with Windows 8. Make a laptop that gives much of the simplicity of a tablet and you will have something.
            DevGuy_z
          • It is all smoke and mirrors.

            The reverse of the Hollywood accounting system.

            Shows a profit even when there isn't one.
            jessepollard
          • Are you really that dense?

            Microsoft is not government, where creative accounting can make a budget look good, or an agency show a savings in spending.

            Microsoft has to perform, and they can't lie about that performance. They are being watched, not only by internal and external auditors, but by the shareholders and government itself. Lying about earnings can't be done easily, because, the shareholders will be examining, very carefully, every single item in the quarterly reports.

            What Lincoln said is a lot more applicable to a business entity than to government:

            "You can lie to some of the people all of the time, and you can lie to all of the people some of the time, but you can't lie to all of the people all of the time."

            A company cannot lie about earnings and get away with it for a prolonged period of time, because eventually, they will run out of money to keep the company operating. No company can continue to operate with a prolonged deficit or with big losses. No company can operate like the federal government, where, if they run out of tax revenue, they just borrow and print the money to continue operating, while still hurting the economy. If MS were to play with the numbers, they'd be hurting themselves and the shareholders, and that could send Ballmer and other high-ranking MS officials to jail.
            adornoe
          • I don't think Win 8 will be successful...

            ..with all the negative reviews/feedback coupled with a different UI will shun some people away. Even if the PC market got back on its feet it'll still be a rough patch for Win 8 users. WIth that being said the PC market is not going to get any better. It might get a bit better from some of the XP users that are finally deciding to upgrade but with companies still working it's way to Windows 7 (which is most of the XP user base) it seems that Win 8 is still out of luck. There will be consumers who will blindly buy a new PC once their old one dies and most likely will be getting a Win 8/8.1 machine but for those who pay attention to reviews, they're going to possibly going to stick with what they got or they will choose Apple over PC. It hasn't happened yet and so far MS has been doing ok with ME and VIsta being the worst OS's those were mostly bugs and terrible software/hardware support. The UI didn't change on them. Now since there is a difference in UI and along with negativity, people jumping down each others throats about the UI conflict that changes the playing field. Win 8 is only 6-7 months in.. doesn't mean that the trends will change overnight. It'll eventually take hold once people decide for themselves whether they enjoy Win 7 vs WIn 8. Chances are though that people will be dumb enough to make the mistake and continue trusting in MS. They are losing me and i won't be giving them any more money if they continue down this road. Linux hasn't gain much traction but it is very slowly becoming.. there are already game devs that are working with the Linux distros. Doesn't mean it's going to cause everyone to jump towards Linux right away. Google already has released a Linux based OS (well it's a web browser) so that's a start. Linux is weaving it's way into the market and while there is no market yet and you can argue that it will never happen. Just remember it's only just been 6 months since the release of Win 8. Wait 6 years later and see what happens. If it's the same thing as it is now then MS was successful in the UI change, but if it isn't and the user OS share is different, ie: Apple iOS or Linux is gaining user traction then i was right. Even 10 or 20 people makes a difference unfortunately that's not going to change the OS statistics much but it shows that there are people out there who are willing to sacrifice in order to make a point. Should be enough for others to follow.
            spineshank155
          • Let's be realistic

            Neither Mac OSX nor Linux will ever overtake Microsoft Windows. Something someday might--but it won't be either of those OS's. They are too limited in what they can do.
            jasongw