Windows 8 could be huge for Microsoft

The tech giant is focused on widespread adoption of its new OS and is trying to make it more intuitive and 'cool.'

By Trefis Jul 31, 2012 8:48AM
trefisMicrosoft's (MSFT) offering of its Windows operating licenses has been a cash cow for the business, selling approximately 630 million copies of Windows 7. 

It has announced that the next iteration of the franchise, Windows 8, will be released to the public on October 26. For this release, the company is focused on widespread adoption and is trying to make the OS more intuitive and "cool." Part of its strategy is to encourage adoption by making the license for the OS cheaper.

Windows 8 will will be available via $40 upgrades for users on Windows Vista or Windows 7. This move also might have been undertaken, in part, to mitigate the impact that the adoption of free open source platforms such as Linux, and of the piracy of its operating system, are having on revenues. Additionally, Microsoft is facing increased competition from its primary competitors Apple's (AAPL) Mac OSX and Google's (GOOG) Chrome OS, and a decrease in prices will provide a financial incentive for continued adoption of Windows by consumers. In our model, we forecast that, by 2018, the average price for a copy of Windows OS for PC makers will drop to $50.

Microsoft Windows Pricing for PC Makers

Windows 8 has many new features which have fans excited. It has a new dynamic desktop, Windows Live sync, and Windows To Go (which allows the users to back up their computer on a thumb drive). These features seek to compete directly with Windows competitors; Apple's dynamic and intuitive desktop setup and Chrome OS' cloud based functionality. If Microsoft succeeds in its attempt to get greater consumer adoption with these new features and lower prices, it will not only gain market share in the PC space but could also gain market share for tablets since the Windows tablet will also run Windows 8 as users would prefer a consistent OS experience across platforms.

We currently have a $40 Trefis price estimate for Microsoft, which stands around 30% above the market price. The Windows Operating Systems are the second most valuable division of the company, representing 26% of Microsoft's total value.

Jul 31, 2012 10:29AM
I certainly agree with this. I think Microsoft is undervalued, party due to some negative press that is out of line with what the average consumer's experience will be, I think. As the products come out and more average users have time to experience it, I think we'll see sales increase and Microsoft's stock go up.
Jul 31, 2012 11:16AM
I think this fall will be Microsoft's biggest push yet. They are really getting everything aligned for their platforms. It's exciting! Undervalued, indeed!
Jul 31, 2012 11:19PM
Very smart of Msoft ot lure in the remaining XP home users to Windows 8 with a very hard to argue with $40 price tag. All of the naysayers who have been saying this is Vista 2 really don't know what they are talking about. Vista bombed because it sucked. End of story. Windows 8 will succeed because it integrates so many new technologies into one seemless package. I don't know exactly who all Ballmer has been firing for the past 3 years, but it seems releaving the old guard has been his best achievement yet. Maybe they were holding onto the glory days of Gates still being in charge, who knows. But he is quickly carving out his own legacy the past few years, and Windows 7 was a nice boost for his credibility, making the decision to pull Synofsky from the Office division to head Windows was another great decision. Wall Street really needs to wake up and give this company it's due. The media needs to grow up and stop being Google and Apple trolls. Microsoft is the real deal these days and no one wants to admit it. I can't wait to see the impact of Windows 8 on Apples earnings this time next year.
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