Windows 7 Sells Strongly, but Business Spending Lags

 
 
By Nicholas Kolakowski  |  Posted 2010-03-02
 
 
 

The Windows 7 operating system continues to sell strongly five months after its release, but a tech refresh among businesses may take additional time to develop, according to Microsoft Chief Financial Officer Peter Klein.

Klein told those gathered for a Morgan Stanley investor conference March 2 that Microsoft expects fiscal 2011 to see the beginnings of a revival in enterprise technology spending, according to Reuters.

"There will be an enterprise refresh cycle," Klein reportedly told the audience. "It's not precisely certain when that will happen or how fast it will happen, but we expect it to happen this calendar year and go into next calendar year, and that will be a really good catalyst for growth for our PC business."

However, he said Windows 7 has continued to sell strongly, with total sales of the operating system now standing at 90 million copies since its release in October 2009. That number represents a substantial short-term spike from January, when Microsoft said about 60 million Windows 7 licenses had been sold. In a Jan. 28 earnings call, Klein suggested that the operating system was selling well due to "strong consumer demand."

A study by statistics-tracker Net Applications found that Windows 7 averaged a 7.57 percent share of the U.S. operating system market in January. By comparison, Windows XP held 66.15 percent, Windows Vista held 17.47 percent, Mac OS X held 2.37 percent, Mac OS X 10.6 had 1.80 percent and Linux claimed 1.02 percent. Net Applications uses data from about 40,000 Websites, allowing it to analyze adoption numbers not only for mobile devices, consoles, handhelds and servers as well as PCs.

While Windows 7 has proven commercially successful, Microsoft experienced revenue declines in its other divisions in the second fiscal quarter of 2010. For example, Microsoft's Business Division reported a year-over-year dip from $4.88 billion to $4.74 billion during that period, while the company's Entertainment and Devices Division saw its bottom line drop from $3.25 billion to $2.9 billion.

During the Jan. 28 earnings call, Bill Koefoed, Microsoft's general manager of investor relations, blamed the lack of growth in enterprise software sales on "weak business PC sales." He also added that "conditions from last quarter remain unchanged" for many businesses keeping their IT budgets tight as the global recession recedes. However, according to research company NPD Group, U.S. technology sales through commercial resellers rose 7 percent in December, a slow trend that could possibly be the precursor of a more widespread tech refresh.

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