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Windows XP's looming retirement won't shake PC business out of sales funk

Gregg Keizer | April 15, 2013
But it might help Microsoft offset Windows revenue declines as companies splurge on pricy in-place upgrades for existing hardware.

Rod Helm of Directions on Microsoft could not put a figure on the difference -- in part because what Microsoft charges OEMs for a new license is one of the Redmond, Wash. developer's most closely-guarded secrets -- but said that the System Builder version was the priciest OEM license Microsoft sells, and so a maximum for what it charges computer makers.

Microsoft will probably post Windows revenue figures during 2013 that outperform the PC business because of in-place upgrades, Helm said.

In a purchase of 1,000 upgrade licenses for Windows 8 Pro -- which include downgrade rights to Windows 7 Professional -- each license costs $184 under Microsoft's Open Licensing program, one of its most expensive. Meanwhile, a copy of Windows 8 Pro System Builder costs $96 on Amazon.com.

In other words, Microsoft makes about twice as much from a corporate in-place upgrade than it does from a sale to an OEM. No wonder the company's happy to see businesses move off XP by upgrading existing hardware.

But not all XP users will bother to upgrade. IDC's Daoud said that many businesses have downsized to the point where they have a surplus of PCs, and will simply set aside older systems running XP. Consumers, on the other hand, are even less likely to buy a new PC to replace their aging XP machines, instead steering toward smartphones and tablets as substitutes.

Microsoft will hold its quarterly earnings call with Wall Street analysts next week, on April 18, starting at 2:30 p.m. PT, when it will reveal revenue figures, signaling whether in-place upgrades helped offset the drop in income from OEM licensing.

 

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