Windows: Still Not Dead Yet

windows thunderbolt

Photo: Dylan Love

The iPad is killing the PC, right?Maybe not. Microsoft surprised analysts today when it reported that Windows revenue was up 4% from last year.

That’s a reverse from last quarter, and from most of last year, when Windows revenue was dropping.

PC unit sales were up about 2% worldwide, according to recent reports from IDC and Gartner. But Microsoft’s Windows sales have been lagging behind PC unit sales — for instance, Gartner said PC sales were up about 2% in the second quarter of 2011, but Microsoft’s Windows revenue dropped anyway.

So what happened this quarter?

Investor relations chief Bill Koefoed explained that a lot of the growth is coming from businesses in developed countries. Business PC growth was up 8%, while consumer PC sales were flat.

Microsoft charges more for business versions of Windows. Hence, revenue grows faster than the PC market.

In particular, 40 per cent of businesses are now on Windows 7 — up from 33% last quarter.

But there’s still tons of upside: that means that “60 per cent of businesses are literally on a 10-year-old operating system,” Koefoed explained.

Windows XP goes off support in 2014, which means that every single one of those PCs will probably be upgraded over the next two years. And as Koefoed has told us in the past, Microsoft doesn’t even CARE that much if businesses don’t go to Windows 8 right away — the path to Windows 8 leads through Windows 7.

So what about the iPad in the consumer market?

In the past, the iPad has taken market share mostly from netbooks, the cheap laptop computers that were all the rage a couple years ago.

But now, netbooks are only about 2% of the overall market, down from 6% a year ago. It’s getting to be so small, that Microsoft isn’t really thinking about it any more.

Microsoft still needs its next generation of Windows tablets to be a hit so it can start seeing some growth in the consumer market. But for now, the PC’s place in the enterprise seems pretty secure.

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