Gartner: 80 Percent of Businesses Will Skip Windows 8


This one is a couple months old, but the headline caught my eye, as well as the analysis within. You know the punch line because we’ve already covered it — Windows 8 is the new Vista. But DailyTech asks, “Does it matter?”

Increasingly Microsoft’s revenue stream is driven by licensing software (such as Office and SQL Server 2008), rather than licensing operating systems. Last year OS sales only accounted for 25 percent of Microsoft’s bottom line versus 30 percent five years ago.

And a large portion of OS revenue — roughly 40 percent — comes from bulk licensing agreements with free upgrade provisions. For that type of licenses, IT departments’ decision to adopt or pass on a particular version of Windows makes no difference, as long as the business is using some version of the OS.

In other words, as murky as Windows 8’s business fate may be, the impact of those long-term sales on Microsoft’s bottom line is even more unclear. That said, the general air of skepticism from business users is a concern for Microsoft in the long term, and definitely something Microsoft will (or, at least, should) take into acount when crafting Windows 8’s successor.

I would assert that Windows 8 uptake does matter for Microsoft, even if the financials on Windows 8 aren’t so bad. That last line is the money quote, in my opinion.

For years, the company had a reputation of near invulnerability. As the 21st century rolled around, Microsoft had driven both Apple and Novell into the ground in the personal computer space, and was starting to make great strides against proprietary Unix systems in data centers. Other operating systems came and went (anybody remember BeOS?) without posing so much as a speed bump to the Microsoft juggernaut.

Then Linux, which had for years been quietly gathering strength around the margins, exploded as a real enterprise alternative in 2001 and 2002 as businesses looked for low-cost alternatives to expensive Unix systems. A couple years later, Microsoft suffered a big blow to its credibility with Vista. Now, the company is under increasing assault from a variety of non-Microsoft alternatives, both desktop operating systems like Mac OS X as well as mobile operating systems like iOS and Android.

Success breeds success, and Microsoft has been one of the biggest beneficiaries of that dynamic over the past couple decades. But the opposite is also true. When something is seen as a stale has-been, it’s likely to continue to suffer. Even if Microsoft is ultimately satisfied with Windows 8’s revenue numbers, it will have lost a critical bit of mindshare when it can least afford to do so.

Update (Jan 2, 2012): The fa├žade is cracking. This is the dynamic I’m talking about. When Forbes writers are openly calling you a “sideshow,” you’ve got an issue on your hands.

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