Microsoft Says Windows Market Isnt Saturated

Microsoft has a number of ideas, which it is sharing with its hardware and software partners, as to how to ratchet up Windows desktop revenues by billions per year. (Microsoft Watch)

SEATTLE—Just because Microsoft has cornered in excess of 90 percent of the desktop operating system market doesnt mean the Redmond software vendor has no plans for expansion.

In fact, Microsofts Windows client marketing team has a slew of ideas for how Microsoft and its partners can earn billions of additional dollars from Windows by making some fairly simple strategy tweaks.

If consumers would buy a new PC just one month earlier than they do currently, Microsoft and its partners could potentially see $1.4 billion in increased revenue, said Will Poole, senior vice president in charge of Microsofts Windows client business, to WinHEC (Windows Hardware Engineering Conference) attendees.

And if enterprise customers, currently on a five-year upgrade cycle, would increase the number of new PCs they buy annually by as little as 2 percent, Microsoft and its partners could see as much as $1.7 billion in additional revenues, according to Microsofts estimates.

Poole provided attendees of WinHEC here with some of Microsofts strategies for "redefining the PC opportunity."

While the PC market is growing 7 percent, year over year, in terms of worldwide unit shipments, the average street prices customers are paying for business and consumer PCs are declining about 7 to 8 percent per year, Poole said.

To counteract the effect of falling prices, Microsoft and its partners need to convince users to buy their first PCs sooner, upgrade to new PCs more quickly, and be willing to spend more on their PCs, add-on devices and software, Poole said.

Microsoft took a first step to realize these goals by launching its largest Windows ad campaign to date last week. That 15-month campaign, known as "Start Something," is the successor to Microsofts previous Windows XP marketing effort, "XP Reloaded."

Beyond the advertising side, Microsoft already is working to expand its presence in the less-PC-saturated developing-country markets via its Windows XP Starter Edition SKUs. And it also has been stepping up its focus on small businesses, not just in the Windows group, but in other Microsoft business units as well.

/zimages/3/28571.gifRead more here about Windows XP Starter Edition SKUs.

Microsoft believes that of the 75 million small businesses throughout the world, only 50 million have PCs. And these small businesses tend to wait five years before upgrading their PCs, Poole said. If Microsoft could find a way to get these customers to see their Windows machines as key to improving productivity, it could grow this business substantially, Poole said.

Microsoft and its partners need to think about the kind of small-business applications that would appeal to this market. Focus on building small-business PCs; small-business versions of existing applications. If Microsoft and its partners can latch onto these things, Microsoft believes "they [small businesses] will be more willing to buy and replace PCs," Poole said.

/zimages/3/28571.gifRead the full story on Microsoft Watch: Is the Windows Market Saturated? Microsoft Says No