Windows 8 Licensing On Track, Retail Data Indicates 'Slow Start'

A significant number of paid Windows Store apps have passed the $25,000 mark, according to Microsoft.

Windows 8 upgrade momentum is outpacing that of the company's Windows 7 operating system, according to Tami Reller, the new head of the Windows business at Microsoft.

The chief financial officer for Windows, Reller took the stage and fielded questions at the Credit Suisse Annual Technology Conference in Scottsdale, Ariz. earlier this week. She said that Microsoft has already sold 40 million Windows 8 licenses. Windows 8, with its new touch-based interface, was first launched on October 26. At its Build developer event in late October, the company indicated that individuals had purchased four million Windows 8 upgrades in three days' time.

However, Microsoft's efforts have not translated into retail sales, according to several reports. Windows 8 sales were broadly eclipsed by Apple iPad sales during this month's Black Friday sales, according to an estimate by investment banking company Piper Jaffray. An IBM study of Black Friday sales had a similar finding, with 88.3 percent of all smartphone and tablet sales associated with iPads.

Consumer market researcher, NPD Group, is also reporting a 21 percent drop in Windows hardware sales compared to the same quarter last year, in the initial weeks since Windows 8 release at retail, noting that Windows 8 touch-based hardware shows promise, but currently represents only a small percentage of available devices. The NPD data does not include sales at Microsoft Stores. It also leaves out sales of the Microsoft Surface RT tablets, which are only available at the company's stores or through Microsoft online.

The moderator at the Credit Suisse Annual Technology event asked about the lack of touch-based Windows 8 devices on the market. Reller said that OEM partners were doing great work, with new devices expected to arrive in December, but that some vendors will take longer to roll out their Windows 8 products. She explained Microsoft's role in getting into the hardware business as good for the overall ecosystem. As Windows 8 devices gain success, it helps the whole of Windows, she said.

Despite the uncertainly, more developers may be embracing the new platform. Since the launch of Microsoft's Windows Store, the number of apps in the store has doubled, Reller said. She added that several Windows 8 apps have achieved 1 million downloads and that a significant number of apps have passed the $25,000 mark, which means that the developer of the app gets to keep 80 percent of the revenue for the life of the app. Reller didn't provide a count for the number of apps in the Windows Store, but Forrester Research estimated earlier this month that Microsoft had less than 10,000 apps.

Microsoft is just beginning its journey with Windows 8, which represents a generational shift for the company, Reller told analysts. Unlike Windows 7, Windows 8 was built for two platforms, ARM and x86. People are going to need a little time to learn Windows 8, she admitted, but user stats are showing that people "get" the new operating system.

Since Windows 8's launch, there have been more than 1.5 million impressions of people using the start screen as their home base, she said. More than 85 percent of users have accessed the desktop user interface. Over 90 percent of customers are using the Charms on the very first day. Half of users visit the Windows Store on the very first day of use, according to Microsoft's stats.

Reller described Windows 8 as "one of the most tested releases in our history." The OS has undergone more than 1.2 billion hours of testing across 190 countries, she said. At launch, there were 1,000 PCs and tablets certified on Windows 8. Now, Reller said, there are 1,500 PCs and tablets certified on the new OS.

While Microsoft has already released its own Windows RT ARM-based Surface device on October 26, a second Windows 8 Pro x86-based Surface device is yet to come. Reller revealed during the Credit Suisse talk that the new Windows 8 Pro x86 Surface devices can be expected to arrive on the market sometime in January.

Reller's Credit Suisse talk is available on demand at Microsoft's investor relations page here.

About the Author

Kurt Mackie is online news editor, Enterprise Group, at 1105 Media Inc.

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