Microsoft attempts to decouple Windows 8 sales from flatlined PC sales

With Windows 8, it seems that Microsoft is more interested in creating as large a user base as possible for the operating system rather than focusing on revenue.
Written by Adrian Kingsley-Hughes, Senior Contributing Editor

Much data points to the fact that the PC industry is dying. The PC industry is hoping that Windows 8 is the catalyst needed to jumpstart the market, but it's becoming clear that Microsoft isn't so sure that it can rely on the OEMs to buoy sales of its new operating system.

Signs that the PC industry is in serious trouble are all around us. Take the latest Gartner report which revealed that a total of 87.5 million units were shipped in the second quarter of 2012, a fall of 0.1 percent compared to the same quarter in 2011.

"In the second quarter of 2012, the PC market suffered through its seventh consecutive quarter of flat to single-digit growth," said Mikako Kitagawa, principal analyst with Gartner.

The problem is that PCs are just no longer sexy in the eyes of consumers, and even new classes of products such as thin-and-light ultrabooks have failed to convince buyers to part with their money.

"Consumers are less interested in spending on PCs as there are other technology products and services, such as the latest smartphones and media tablets that they are purchasing. This is more of a trend in the mature market as PCs are highly saturated in these markets," Ms Kitagawa said.

Another problem is that PCs are being made to last longer, both in homes and businesses, and this is contributing to the decline in sales.

While the big name PC OEMs are hoping that Windows 8 will reinvigorate sales -- although off-the-record, most are pessimistic that it will have the desired effect -- Microsoft, it seems, is pulling all the stops to decouple Windows sales from new PC sales.

Traditionally, the way that most people got their hands on a new copy of Windows was by buying a new PC. While Microsoft has always offered retails copies of Windows, these sales have been a drop in the ocean compared to sales through OEM channels and enterprise sales. Microsoft made the operating system, then sat back and relied on the OEMs to do the hard work of selling it.

But those days are gone. The power that the OEMs once had seems to be dwindling, and that leaves Microsoft in a position where is has to pick up the slack and start selling.

First, it plans to offer cheap $39.99 upgrades to Windows 8 Pro to pretty much everyone from launch through to January 31st, 2013. Doesn't matter whether your PC is running Windows XP, Windows Vista, or Windows 7, you can take advantage of this deal. While the deal isn't as good as Apple's $20 upgrade, it's still a very good one indeed.

Rumors are also circulating that Microsoft is getting ready to drop the retail versions of Windows 8 and offer only OEM "system builder" and upgrade versions which would dramatically simplify the buying options available. It's also been rumored that this switch will be accompanied by a price reduction. Considering that a full version of Windows 7 Home Premium has a $199 price tag and the upgrade alone costing $119, this price drop is long overdue.

The way that Microsoft has taken a scalpel to Windows prices suggests that the company is less concerned about the effect that this will have on its bottom line and more concerned about the long-term effect that Windows 8 failing, similar to the way Vista did, would have on the company. Microsoft's priority, it seems, is to get Windows 8 installed on as many machines as quickly possible as possible.

Given the huge paradigm shift that the new operating system represents, not to mention introducing a new platform -- Metro -- that the company has to nurture, Microsoft is willing to take a hit in terms of revenue in order to get as many eyeballs on the new OS as possible.

Image source: Gartner.

Editorial standards