Does Windows 8's Three-Month Report Card Read Pass or Fail?

Windows 8 is passing two big milestones this week.A On Thursday, Microsoft released its quarterly financial results, and hidden inside the numbers are clear indicators of the new operating system's impact on the company's bottom line. Tomorrow, meanwhile,A marks the three-month anniversary of Windows 8's October 26 release date. The world has had plenty of time to live with the new OS, and now we can more comfortably score whether it's a success or failure.

By Brad Chacos
Fri, January 25, 2013

PC World

Microsoft Windows 8
Windows 8 is passing two big milestones this week.A On Thursday, Microsoft released its quarterly financial results, and hidden inside the numbers are clear indicators of the new operating system's impact on the company's bottom line. Tomorrow, meanwhile,A marks the three-month anniversary of Windows 8's October 26 release date. The world has had plenty of time to live with the new OS, and now we can more comfortably score whether it's a success or failure.

Has the OS stepped up its game since our none-too-cheery one-month progress report? Let's just say that Windows 8's school grades still aren't quite meeting expectations.

Sales

The multi-billion dollar question: Are people actually buying Windows 8 and Windows 8-powered laptops, desktops, and tablets? The answer's far from cut-and-dry, because Microsoft refuses to provide many concrete details.

The company's quarterly earnings report showed the Windows division earning $5.88 billion in the holiday quarter, a staggering 24 percent increase over holiday 2011, but Microsoft maddeningly refused to provide specifics beyond that total. We still have no idea how many Surface tablets are in consumer hands, for example. At CES, Windows business head Tami Reller said that the company has sold more than 60 million Windows 8 licenses--but that figure includes licenses sold to manufacturers like Dell and Lenovo, making it an unreliable tool for figuring out whether everyday people are actually buying Windows 8.

Third-party research firms paint a dreary retail picture. Computer sales have actually dropped precipitously since Windows 8 hit the streets. NPD reports that holiday sales of Windows notebooks dropped a whopping 11 percent in 2012, while both Gartner and IDC say that overall PC sales dipped in the fourth quarter by an estimated 4.9 and 6.4 percent, respectively. Net Applications says Windows 8's user adoption lags behind Windows Vista's. All that corresponds with talk from executives at HP, Acer, Asus, Fujitsu, Newegg, and more, who have universally said Windows 8 is off to a slower-than-expected start.

"To really know the state of Windows 8, Windows Phone 8 and Surface, additional granularity is required," says Patrick Moorhead, founder and principal analyst at Moor Insights & Strategy. "We really need to know how many Windows 8 licenses and Surfaces sold through retail. The biggest unknown is why Windows 8 revenue looked good while all [manufacturers] had shaky quarters."

Software sales of Windows 8 will no doubt slow going forward as the pricing of a Windows 8 Pro upgrade is set to increase from $40 to $200 in February. Windows 8 has also largely been a dud in the enterprise arena, a few large exceptions aside. When Reller was asked about enterprise adoption of Windows 8 at CES, she explained how BYOD Windows 8 devices should work just fine alongside a Windows 7 deployment.

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