Windows' share of Microsoft sales falls to four-year low

Revenue from the OS group plummets 33% as users wait for Windows 8

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A year ago, Windows accounted for 28% of Microsoft's revenue. The four-year high was 36.3% in the fourth quarter of 2009, the first three-month stretch of Windows 7 sales.

The one bright spot, said Microsoft, was that the third-quarter sales of Windows 8 to OEMs -- $783 million -- were up 40% over the same quarter just prior to the launch of Windows 7.

And Klein continued to press the optimism button about Windows 8. "October 26 only marks the beginning of the journey we will take together with our partners and developers," he said. "Our collective success will be evident over time as we change the way people experience the power of technology."

Microsoft launches Windows 8, its tablet-centric spin-off Windows RT, and the Surface RT, its first attempt at designing and manufacturing a tablet-style PC, next Friday, Oct. 26.

Koefoed also argued that the shift to Windows 8 would divorce Microsoft from its dependence on traditional PC sales, the biggest reason why, as those sales stagnate and even decline, the Windows division has under-performed.

"We have discontinued the bridge to the PC market as Windows 8 will be a platform across a broad set a form factors," Koefoed claimed.

But that shift will be slow, said Alan Krans, an analyst with Technology Business Research.

"High growth from the operating system will not initially be apparent," Krans wrote in a note to clients yesterday. "Success and continued use of prior operating systems, including Windows XP and Windows 7, will cause a delay in initial adoption of Windows 8 in enterprises. Widespread adoption within enterprise customers will likely come within the first two years on the market as Windows 7 matures."

Microsoft's best shot at boosting Windows sales, Krans continued, will be in the consumer market. "Where Microsoft will see the largest near-term growth will be in the consumer space, with mobile device and tablet users being the first to heavily adopt the operating system," Krans said.

The other money-making divisions of Microsoft -- Business, which handles the Office suite, and Server and Tools -- again beat Windows in sales last quarter.

The Business group generated $5.5 billion, while Server and Tools did $4.6 billion. While the Business group was down 2% -- in part, like Windows, because of $189 million in deferred sales to account for the Office 2013 upgrade program that kicked off today -- Server & Tools was up 8% year-over-year.

The Business division accounted for 34.4% of all revenue; Server and Tools produced 28.4%.

Windows share of Microsoft revenues chart
Windows' sales last quarter dropped to four-year low as a percentage of Microsoft revenue. (Data: Microsoft.)

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is gkeizer@computerworld.com.

See more by Gregg Keizer on Computerworld.com.

Copyright © 2012 IDG Communications, Inc.

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