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

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.
Written by Zack Whittaker, Contributor

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.

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.

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.

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.

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