May 09, 2013, 6:50 AM — Microsoft this week said that it had sold 100 million licenses of Windows 8 in the operating system's first six months. But how many copies are being used?
That's a question Patrick Moorhead, principal analyst with Moor Insights & Strategy, had at the top of his list after seeing Microsoft's milestone, which was revealed by Tami Reller, the CFO of the Windows division, in a Tuesday blog post and interviews with several media outlets.
"The challenge is figuring out what that actually means," said Moorhead of the 100-million mark. "It doesn't mean that there are that many devices out the door."
Microsoft counts a license as sold when it provides a customer an upgrade or one of its OEM partners a copy for a new PC, tablet or "convertible" device. The licenses to OEMS make up the bulk of that 100 million. According to Microsoft, the number it regularly cites for Windows 8 licenses sold -- and before that, for Windows 7 -- exclude those sold to enterprises as part of their volume licensing agreements.
But because Microsoft considers a license sold -- and accounts for it on the books that way -- as soon as a Windows-powered device comes off the factory line, its "sold" label includes those PCs, tablets and 'tweeners that have been built but not yet purchased by a customer. OEM inventory, whatever is in retail or a warehouse, or for that matter, in transit from factory to destination, counts as sold Windows licenses.
Which was why Moorhead was suspicious of the 100-million figure as a valid indicator of how well Windows 8 has done. "How many Windows 8 PCs have sold and are being used?" asked Moorhead, arguing that that was a more accurate representation. "No specific news from Microsoft [on that] is bad news, because if it was good news, Microsoft would be shouting it at the top of their lungs. Instead, Microsoft is thinking they don't want to be persecuted over the number, so they're not saying anything."
Microsoft does have Moorhead's number -- Windows 8 devices in users' hands -- as Reller pointed out in an interview with the New York Times this week. Then, as she countered last month's reports from IDC and Gartner of steep declines in PC shipments during the first quarter, Reller said that Microsoft was seeing "consistent growth" in the number of PCs being activated as users turned on their purchases and connected to the Internet for the first time. Activations can be tallied by Microsoft because during the process, the device pings a company-owned server.