Microsoft recently announced an ambitious goal of putting Windows 10 on a billion devices in less than 36 months. Let's take a closer look at that target, and what hitting it would mean for Microsoft's future.
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Windows 10. Source: Microsoft.
Microsoft reports that various versions of Windows are installed on 1.5 billion PCs worldwide. According to Net Market Share, Windows 7 runs on 58% of those PCs. Windows XP is still found on 16%, while Windows 8/8.1 devices account for less than 15%.
Based on those figures, ifall Windows 7, 8, and 8.1 users upgrade to Windows 10, the new OS could reach around 1.1 billion devices. Microsoft is trying to reach all those devices by offering Windows 10 as a year-long free upgrade plan for consumer versions of Windows 7, 8/8.1, and Windows Phone.
The enterprise dilemma
However, we should remember that Microsoft isn't offering the free Windows 10 upgrade to enterprise users. Enterprise users account for over half of Microsoft's global customers, and they are known for sticking with "good enough" operating systems due to the costs and time required to upgrade large networks of PCs.
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Major enterprise customers -- including the U.K. National Health Service and the Chinese government -- used Windows XP until Microsoft stopped supporting the OS last year. Last year, a survey by Adaptiva found that over half of the 100 businesses that attended the TechEd North America 2014 conference were still using Windows XP. Microsoft could have a tough time convincing stubborn businesses to upgrade.
Not as hard as it seems
Despite those challenges in the enterprise segment, the road to 1 billion isn't as tough as it looks.
Gartner estimates that between 2015 and 2017, 951 million new PCs will be shipped worldwide. Using Net Market Share's Windows market share figure of 91%, we can assume that up to 865 million of those PCs will run Windows 10, since most new Windows PCs are shipped with the latest version of the OS. Half of those PCs would likely go to enterprise customers, which partially addresses the dilemma of paid upgrades for older PCs.
Assuming that just 10% of the 1.5 billion PC users keep their current systems but upgrade to Windows 10 within the next three years, Microsoft would gain 150 million more users, bringing the total count to over a billion.
Even if Microsoft falls short of 1 billion installations on PCs, Windows Phones and tablets could fill the gap. IDC forecasts that shipments of Windows Phones will rise from 35 million units in 2014 to 105 million in 2018. It also expects Microsoft's Windows partners to ship 38 million tablets and 2-in-1 devices annually by 2018. All of those devices are expected to run Windows 10.
Taking down Google
All of Microsoft's strategies are aimed at shoring up its defenses against Google .
By uniting all PCs and devices under Windows 10, Microsoft can finally strike back against Google, which has dominated the mobile market with Android's free license and open-source design. That growth tethered more users to Google's cloud-based ecosystem, and disrupted Microsoft's business of paid operating systems and productivity software. Google is now leveraging that strength in mobile to expand Chrome OS into the PC market via Chromebooks, one of the fastest growing niches of the PC market.
By handing out Windows 10 as a free upgrade for consumers, Microsoft is widening the defensive moat around its OS business by blurring the lines between phones, tablets, and PCs with Windows 10 -- which could keep Google out of its backyard. That growth across multiple platforms could also convince more users to use Office 365 and OneDrive instead of Google Drive.
The key takeaways
Microsoft's promise of delivering Windows 10 to 1 billion devices within three years isn't as tough as it sounds. If we only count existing consumer PCs, it seems lofty, but if we factor in new PC and tablet shipments and Windows Phones, it seems much more achievable. If the whole transition goes smoothly, it could be much easier for Microsoft to keep Google at bay.
The article Can Microsoft Corporation's Windows 10 Reach 1 Billion Devices? originally appeared on Fool.com.
Leo Sun owns shares of Apple. The Motley Fool recommends Gartner, Google (A shares), and Google (C shares). The Motley Fool owns shares of Google (A shares) and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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