Microsoft has said for years that its customer base includes 1.5 billion Windows users. Among pundits and analysts, this number is often treated as authoritative and precise. It is not.
It is, rather, an aspirational bit of rhetoric, called forth when Microsoft's senior management wants to emphasize the sheer size of the Windows customer base to motivate its workforce or rev up its partners. Satya Nadella's invocation at a Windows 10 event in January 2016 is a perfect example of the genre:
The fact that there are 1.5 billion users of Windows is incredible and humbling. It's a responsibility that none of us at Microsoft take lightly.
I believe that 1.5 billion number has shrunk quite a bit in the past few years. Here, let me show you.
The rise of Windows 10
Microsoft executives have, unsurprisingly, focused mostly on the growth of its Windows 10 installed base, reporting steady growth over the past five years. The company can be extremely confident about that metric, thanks to the update and telemetry components built into every copy of Windows 10. (As my colleague Mary Jo Foley notes regularly, Microsoft's "monthly active devices" metric counts devices that have been in contact with Microsoft's servers in the past 28 days.)
These statements are also material representations from a publicly traded company, so they're vetted by lawyers and likely to be accurate. Making a material misrepresentation about the performance of a core business unit is the sort of thing that brings down the wrath of regulators like the Securities and Exchange Commission.
As of September 24, 2019, Microsoft officials said that more than 900 million active devices were running Windows 10. That figure includes 40-50 million Xbox One consoles, an insignificant number of HoloLens and Surface Hub devices, and a rapidly shrinking population of Windows Phones. After making those adjustments, let's call it 850 million Windows 10 PCs.
That number has been increasing by about 100 million every six months, and usage statistics I've reviewed show that the pace is ticking up slightly as the Windows 7 deadline nears. Given those trends, it's reasonable to project that the number of active Windows 10 devices will be over a billion by the end of the first calendar quarter of 2020.
But how does that number compare to the current Windows installed base? After reviewing all the available evidence, I'm convinced that the current installed base of Windows PCs as we head into 2020 is down significantly since its peak and is probably close to 1.2 billion today.
Erosion of the Windows installed base
A decade ago, when the PC era was in full swing, Microsoft executives regularly shared the company's estimates of how many Windows PCs were in use worldwide.
For example, then-CEO Steve Ballmer told financial analysts in mid-2007 that the Windows installed base was approaching 1 billion and that the company expected to cross that threshold by mid-2008.
The reported number of Windows users went up to 1.25 billion at the end of 2011 and had increased again to 1.5 billion by the end of 2014. Five years later, that public number has not gone up, and executives rarely mention it. In short, if you're looking for the highwater mark in the PC era, 2014 is a pretty good place to zero in.
Every bit of available data since that time says the Windows installed base is declining, although probably not as steeply as it grew in its heyday. One obvious deduction from that 2015 number is the population of roughly 70 million Windows Phones, almost all of which have long since been retired or replaced.
Businesses are mostly in PC replacement mode, often using hardware upgrades as an excuse to migrate PCs to a new operating system. One of the biggest replacement cycles in enterprise PCs in recent memory is happening now, as companies and government institutions migrate their workers from older Windows versions (mostly Windows 7) to Windows 10.
Some old machines are being retired and are not being replaced, especially in the consumer space. Enthusiasts who used to have multiple PCs now have only one or two. In consumer households, smartphones and tablets are handling the majority of computing tasks these days. Aging PCs, if they're replaced at all, are likely to be swapped out for iPads and Macs (and perhaps even Chromebooks) rather than a Windows PC from Dell, HP, Lenovo, or Microsoft.
How do you measure the shrinkage in the PC population? One way is to look at PC sales based on the average useful life of the current population. For this estimate, I assume that 95% of PCs sold seven years ago are no longer in active use. According to Gartner's estimates, OEMs shipped 351 million PCs in 2012. Seven years later, at the end of 2019, Gartner's estimates of PC shipments for the trailing four quarters total less than 260 million for the year. Allowing for some of those old PCs to still be at work, that's a gap of about 75 million PCs dropping out of the installed base.
The numbers are similar for a year earlier: In 2011 the PC industry shipped 353 million PCs; seven years later, in 2018, the total was below 260 million.
In the five years since Microsoft hit its high of 1.5 billion customers, I think it's reasonable, even conservative, to assume that the PC population worldwide has shrunk by about 60 million every year, which means there are probably no more than 1.2 billion Windows PCs in use worldwide today.
How many Windows 7 holdouts remain?
If my estimates are accurate -- 1.2 billion Windows PCs worldwide, with 1 billion running Windows 10 -- then Microsoft will have successfully migrated more than 80% of its active customers to Windows 10 by the middle of 2020. Roughly 200 million PCs worldwide will still be running older Windows versions, mostly Windows 7.
That estimate lines up nicely with the most recent real-time traffic reports available from the United States Government's Digital Analytics Program, which is the world's largest credible source reporting actual, unfiltered web traffic analytics. The dataset includes nearly 700 million visits from Windows devices to a broad mix of sites for the six-week period ending December 14; the list includes sites that attract non-business visitors, including the National Weather Service and NASA's Astronomy Picture of the Day; destinations designed for individuals doing government business (passport applications and Social Security claims, for example); and sites like the National Science Foundation and Centers for Disease Control, which serve businesses and educational institutions. It also includes visits to widely popular sites that cut across population lines, like the United States Postal Service and the Internal Revenue Service.
Here's what the mix looked like:
Do those numbers match up perfectly with the Windows installed base at large? No one knows for sure, of course, but I suspect any differences would be minor, probably no more than a few percentage points.
Meanwhile, I still see people citing data from NetMarketShare and StatCounter Global Stats. I addressed my reasons for skepticism about these data sources nearly three years ago, in January 2017, and nothing I've seen lately leads me to change my mind. For November 2019, StatCounter GS shows the Windows 10/Windows 7 split at 64.7% and 27.4%, while NetMarketShare's (normalized) numbers show Windows 10 usage at 62% with Windows 7 at 31.2%.
The only way either number would be consistent with Microsoft's reported base of 850-900 million active Windows 10 PCs is if the worldwide base of Windows PCs were nearly 1.4 billion. A much more likely explanation is that botnets masquerading as Windows 7 PCs are skewing the results. That's an ongoing problem for both sites, which are driven by advertising networks.
NetMarketShare, for example, notes that 76% of the sites in its population "participate in pay per click programs to drive traffic to their sites." That provides a powerful motive for scammers to rig the statistics. On its About page, NetMarketShare acknowledges that reality: "Bots and fraudulent traffic are responsible for a large and growing percentage of web traffic," and the only question is what percentage of the fake clicks are able to evade these anti-fraud measures.
Regardless of which numbers you find most believable, the inescapable reality is that by the middle of 2020 hundreds of millions of PCs will be running an unsupported Windows version. That's a massive target for online crooks, and a challenge for anyone who's worried about the health of the PC ecosystem.