Windows 7: 175 Million Copies Sold

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Paul Thurrott

Windows IT Pro

InstantDoc ID #125662

As part of its quarterly and annual financial results released late last week, Microsoft announced that it had sold more than 175 million copies of Windows 7 through the third week of July. That milestone comes less than a month after the company's previous Windows 7 sales announcement, when the company revealed that 150 million units had been sold.

"With 175 million licenses sold to date, Windows 7 is the fastest-selling operating system ever and now runs on over 16 percent of all PCs worldwide," Microsoft COO Peter Klein said in a discussion with financial analysts. That means that Microsoft's new OS has an installed base several times larger than that of Windows' closest competitor, Apple's Mac. And it's only been available in the market for nine months.

According to Microsoft, Windows 7 is now selling at a rate of about 10 units every second. Put another way, Microsoft sells almost 1 million copies of Windows 7 every single day. (The company reported 25 million unit sales in the previous 25 days, for example.)

Many have tried to downplay Windows 7 sales statistics simply because Windows is bundled with new PCs. And since PC sales are exploding, Windows 7 is riding that wave, they say. That may be the wrong way to look at this situation. Rather, PC sales are taking off in part because Windows 7 is so good. According to Net Applications, which tracks OS usage via the web, Windows 7 has achieved 14.4 percent usage share on the web in nine months. It took Windows Vista 22 months to reach that point. (StatCounter reports that Windows 7's global usage share is even higher, at 17.6 percent.)

You need only to look at Microsoft's financial statements to understand the impact of this success, however. The company reported record quarterly revenues of $16 billion for the quarter ending June 30. And over a quarter of those revenues, or $4.55 billion, were attributed to the Windows division. That figure represents $1 billion in growth, year over year. (And one year ago, the software giant reported its first-ever annual sales decline in company history.)

Many had speculated that Apple would earn more revenues than did Microsoft in the previous quarter, based in part on the fact that the company had surpassed Microsoft's market cap earlier in the year. That didn't happen—Microsoft's record $16 billion in revenues outpaced Apple's record $15.7 billion—and Microsoft also earned significantly more profits than did Apple: $5.93 billion for Microsoft versus $3.25 billion for Apple. Microsoft has also wrestled the market-cap mantle back from Apple this month, though few bothered to report on that. (The companies have switched positions a few times over the past two weeks.)

Looking ahead, Microsoft is on track to sell 250 million copies of Windows 7 in its first year on the market and well over 300 million copies of the OS in calendar year 2010.

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"PC sales are taking off in part because Windows 7 is so good."

*LOL*
(Shills are so comical ..)

MysterMask7/30/2010 7:07:13 AM

"The OEM is a middle-man after-all trying to make a profit."

I agree, but that does not change the fact that you, as a consumer, are still paying $200 if you upgrade to an ultimate license. That still represents a substantial amount of the cost.

For as much as we like to compare prices, it is almost impossible to find out what the true cost of a Windows license if when you buy a computer because there is never a way to price a machine and get it without Windows from a major OEM. Those who sell linux do so on a separate line so you can't compare.

The fact remains, you are guessing at the cost of Ultimate OEM prices when you get it on a new computer. At least we can see how much the upgrade cost is when you move from Home premium to Ulitmate.

What about the cost of Windows Server licenses. How much do those cost compared to linux servers or even OS X server. The mac mini server with OS X server is a bargain compared to a Windows server machine with the same specs. No seat restrictions.

The truth is the ONLY area of Microsofts business where you can make an argument that is is inexpensive is for consumer and enterprise desktop OS licenses.

17/29/2010 1:28:26 PM

"You may want to try using numbers based in reality."

I am. The numbers I listed are what the OEM pays Microsoft. If they charge $150 for an upgrade, that's 30 to MS, and 120 to them.

That's why higher-end PCs start with Pro or Ultimate, and low-end PCs start with Home.

"In fact most estimates place the cost of Win 7 STARTER at $35 for OEMS, which is HIGHER than the cost of XP is for lost cost netbooks."

That was thoroughly debunked. The netbook price is around 15-25 for a tier 1 OEM. Some Tier 3 OEM with no volume might pay 35, but tier 1s aren't anywhere near that.

"If I buy an $1,000 computer with Ultimate, its very likely the cost of the OS is 20% of the computer."

Uh, no. $60 of the computer was Ultimate, unless you paid to upgrade to ultimate -- in which case the OEM kept most of the upgrade fee. And *no* home user *ever* has a need for Ultimate unless they happen to have a massive home network, SAN, or have hardware assisted encryption on their motherboard (mine have TPM modules) etc. Home Premium is going to be sufficient for 99% of users, with business fine for corporations. Given that businesses is a super-set of Home Prem, 99.9% of people never need Ultimate.

The OEM is a middle-man after-all trying to make a profit.

There is no PC on the planet where the amount of money to MS exceeds $60. Unless you buy a full retail copy from *their* store. However something like 90% of a Windows purchases are with a new PC, the upgrade market is pretty much non-existent in comparison (tens of millions of units, but relatively nothing).

"why is it not relevant to look at any given Microsoft product?"

That's a cheap straw-man rhetorical device. If you equate $300,000 database servers built for thousands of concurrent connections, on the same level as desktop consumer electronics -- you've got some reality distortion problems. SQL Server is very inexpensive for what it does, compared to everyone else.

O7/29/2010 12:54:54 PM

"Unless you want to argue that tiny little Mac-Mini case, missing a lot of ports, etc, actually costs *more* to manufacture than a mini-tower."

You are paying for the compact size of the computer. Most people don't want a mini-tower size machine on their desktop. That is part of the attraction of the mac mini. It costs more because it uses laptop parts and has been engineered to be as small and power efficient as possible. To many people, that is worth the extra couple hundred dollars.

Once again, you are blinded by 4 parts of the computer. The CPU, the RAM, the Graphics card and the Hard Drive. You are not accounting for the rest of the machine. You just see commodity parts, and not HOW they are put together. That is fine for many people, who don't care about the ENTIRE package. But many others do care about the entire package. What about the resale value. You pay more for a Mac, but you can get a lot more when you sell it. There are so many other things like this to consider to determine the VALUE of a computer, and not just its COST.

17/29/2010 12:44:52 PM

"With the exception that a $60 copy of Windows Ultimate isn't installed on a $499 computer. It's more like a $30 copy.

So, on a commodity piece of hardware a whopping 6% goes to Microsoft -- less than *sales tax*. Oh my gosh, a whole 6% for an OS."

You may want to try using numbers based in reality.

I just checked Dell's website and the cost from upgrading from Home Premium to Ultimate is $150, not the $30 difference you claim, and that makes the $60 cost you claim for Windows 7 Ultimate highly suspect.

In fact most estimates place the cost of Win 7 STARTER at $35 for OEMS, which is HIGHER than the cost of XP is for lost cost netbooks. So once again, Microsoft is making computers MORE expensive than before.

If I buy an $1,000 computer with Ultimate, its very likely the cost of the OS is 20% of the computer.

"How in the heck can you lump SQL Server in this? Of course it's a fortune."

Because those products account for a vast amount of Microsofts sales and profits. If you make the claim that Apple overprices based on a single laptop purchase, why is it not relevant to look at any given Microsoft product?

17/29/2010 12:25:05 PM

"What percent does the $60 cost of Windows represent for all the $499 computers? How about 12%."

With the exception that a $60 copy of Windows Ultimate isn't installed on a $499 computer. It's more like a $30 copy.

So, on a commodity piece of hardware a whopping 6% goes to Microsoft -- less than *sales tax*. Oh my gosh, a whole 6% for an OS.

Currently a Dell can be bought with better specs, and a 24" monitor for less than the price of a Mac mini *without* a monitor, a *comparable* mini is still $600 more.

Given that we've established *all* computer hardware is a commodity, and only *software* is not (since they have a *single* supplier and the rest is bought and sold on the open market... Even on the cheapest Mac, OSX costs, by my estimates, at least $400 per computer.

Unless you want to argue that tiny little Mac-Mini case, missing a lot of ports, etc, actually costs *more* to manufacture than a mini-tower.

"How about the tax on their other products, like Office or SQL server?"

How in the heck can you lump SQL Server in this? Of course it's a fortune. When you have 200,000 clients, and spend several billion developing the software, they *pay* more. And strangely enough it's *cheaper* than Oracle and generally performs better. So you're just highlighting a better product, that's cheaper than any competitive alternative. What exactly is your point?

And Office is 129 for the most common version for a 3-user license. That's not exactly over-priced. And no one forces a user to buy that. Open Office works fine for home. If you want a business copy, it's a little more, which is no great expense because it is considered the best office suite period.

Even then, alternatives still exist. You can use web-exchange and open-office just fine. Or if you use CRM software, it's likely they don't even need Exchange or office software in the organization.

O7/29/2010 12:06:45 PM

Ha ha, Windows has 90% market share. Mac OS has just 6% market share. More than 10 copies of Windows 7 being sold every second!!!

crApple = Fail!!! Ha ha ha.

Nadal7/28/2010 2:53:59 AM

"there is no MS tax, unless you count the cost that ~4% of my computer price went to MS. Oh my gosh, 4%!!! *gasp*"

So on a $1,500 laptop, its 4%. What percentage of PC sales are even over $1,000 let alone $1,500. What percent does the $60 cost of Windows represent for all the $499 computers? How about 12%. When you lower the price, the overall percent of the Windows tax goes up. Microsoft does nothing to reduce the cost of a computer. In fact, Microsoft does not make computers. So you are really comparing Dell or HP to Apple, and not Microsoft. Let's compare the same machine with linux, now Windows costs infinitely more.

Also, Windows sales only account for about 25% of Microsofts revenue. How about the tax on their other products, like Office or SQL server?

In the end your argument tries to mask the fact that the Microsofts margins are greater than Apple by saying their products cost less. Which is irrelevant, and not always true. iwork costs much less than Office.

17/27/2010 9:01:26 PM

"The reason the iPad has succeeded is two-fold. First, it's from Apple, and it doesn't have to make any sense because customers will just buy anything this company makes, allowing them to fix issues and fill in the functional gaps over time." - http://www.winsupersite.com/mobile/slate.asp

"That may be the wrong way to look at this situation. Rather, PC sales are taking off in part because Windows 7 is so good."

This is the perfect example of Paul's bias.

Apple sells a 3M of a product and its because "customers will just buy anything this company makes", but Microsoft sells 175M of a product and it has to because "its so good". He even seems to deny the fact their sales piggyback off the entire industry, or even that most consumers are "locked" into Windows.

17/27/2010 8:21:43 PM

Paul has said before that the Market Cap has fluctuated several times recently but hasnt reported it as simply because it dosent really mean much. However I don't see the harm saying it here simply because he is referring to the quarterly returns. No need to get all jumpy about it. Getting all fussy about something we don't really care about is arguing for the sake of it.

Gordon7/27/2010 3:42:09 AM

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