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Windows 10 is officiallyMicrosoft's fastest-growing operating system ever.In January, Microsoft revealed that it had been installed on more than 200 million devices -- a rate of adoption that blew away all of its previous operating systems, including Windows 7. But the operating system Microsoft released in 2009 is still far more popular on a global basis: According to Net Market Share, Windows 7 powers more than half the world's traditional PCs. Windows 10 comes in second place, with around 13% market share.
Microsoft's management plans to change that. The company wants Windows 10 installed on more than 1 billion devices within the next two years. In order to get there, it will look to a new group of its customers to make the switch.
Unprecedented steps fuel Windows 10's rapid adoptionSo far, Microsoft has largely relied on individual consumers to fuel Windows 10's growth. Last year, it took an unprecedented step, announcing that it would offer Windows 10 as a free upgrade to nearly any consumer using a Windows 7 or Windows 8-powered PC. Microsoft also updated its video game console, the Xbox One, to Windows 10.
The result was a massive surge in Windows 10 uptake. In previous cycles, Microsoft had charged consumers for the privilege of upgrading to its latest operating system -- usually around $100 per PC. It's hard to beat free, and on Microsoft's earnings call back in January, CEO Satya Nadella noted that Windows 10 was growing 140% faster than Windows 7 at this point in its life cycle.
Accelerating enterprise adoptionThere are still plenty of consumers Microsoft can capture in its quest to hit 1 billion Windows 10 devices, but the company is hoping to attract a different set of users going forward. Specifically, Microsoft is interested in converting its enterprise customers to Windows 10.
More and more, consumers are turning to mobile devices, such as Apple's iPad and iPhone, which run on iOS, for their computing needs. Enterprise customers, in contrast, still overwhelmingly depend on the Windows platform. Notably, Microsoft has excluded the Enterprise versions of Windows from its free Windows 10 upgrade offer.
That makes businesses less eager to upgrade, and in general, large organizations are loathe to undertake the costly and complex process of moving from one operating system platform to another (about half the IRS' 110,000 PCs were still running 2001's Windows XP in 2014). But that means that Microsoft can generate quite a lot of revenue from enterprise users if it can convince them to upgrade. Last quarter, Microsoft's Windows OEM revenue fell 5% on an annual basis in constant currency, with OEM Pro revenue declining 6%.
On the company's January earnings call, Nadella detailed the company's progress in getting the enterprise to consider Windows 10 (via Thomson Reuters):
Later, Nadella added additional color:
In February, Microsoft announced that the Pentagon had ordered 4 million of its PCs upgraded to Windows 10 within the next year. The U.S. military is a government agency, not the traditional enterprise customer, but the announcement bodes well for Microsoft's plans. If the Pentagon can upgrade quickly, so too can large corporations.
Beyond adding to Microsoft's top line, growing Windows 10 use should make the platform more attractive to developers. It may also help Microsoft beat back Apple's advances. Although the Cupertino tech giant remains a limited player in the enterprise segment, it has seen some success in recent quarters. (Its enterprise business ballooned to $25 billion last year.) Windows 10 is capable of running across an array of different devices -- not just PCs and laptops, but also smartphones and tablets. If Microsoft can get enterprise customers to adopt Windows 10 for their PCs, they may be more likely to choose a Surface or another Windows tablet in place of an iPad Pro or an Android-powered device.
Microsoft appears to be on track to hit its Windows 10 goals. Investors should look to the company's earnings report next month for insights on just how well it's succeeding.
The article Windows 10 Is on 200 Million Devices -- Here's How Microsoft Plans to Get the Next 800 Million originally appeared on Fool.com.
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