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Aiming low: Windows 8 upgrade prices

Windows 8 is going to be cheaper than previous upgrades (see for example CNET). It seems a huge risk given that software is Microsoft's main income. However, a look at the user figures might shed some light.

While MS still have a global market share (when taking into account XP, Vista and Windows 7), according to StatCounter, of 88.34%, it is actually a drop from 91.58% a year ago.

Exact numbers from June 2011 to June 2012 are:

    XP 45.04% -  29.91%

    Vista 12% - 8.32%

    Windows 7 34.54% - 50.2%

Not only does this three and a bit percent drop feature in the reason why Windows is becoming cheaper in order to retain users of MS software, but also one has to question what users of XP add to the value of Microsoft today. After all, they are happily using an OS that was first released over ten years ago and many haven't paid a penny to Microsoft since that very date.

XP users instead have been a cost to MS in terms of releasing updates and service packs, with the only advantage of the user base being that one day many of them will upgrade. And now is the time that Microsoft wants to shed that burden and to have them upgrade.

But if Windows updates are falling in price then you can expect, like Apple, you'll see them more frequently (read once a year) otherwise it becomes difficult to conceive how the company's income will be generated without the same hardware sales (and sizeable profit margins) that Apple has.

How will all of this sit with the users of Windows, who after all are happy to stick with the same OS for ten years? Will they suddenly become as update and upgrade hungry as Apple users? And what about businesses that wait for new OSes to settle in for one, two, three, four or even more years?

Who knows, maybe the Microsoft Surface will increase the company's profits and supplement the OS. But on my mind is what hardware partners will think of a low cost upgrade path for Windows. We've already heard in the news that some of the partners are annoyed by the competition from the Surface, but won't this annoyance grow when people buy the software and don't upgrade their machine?

I don't know, but what is clear is that MS needs the nearly 30% of users still clinging by their nails to XP, because without them Windows market share looks closer to 60% than it does to 90%, and the company knows from experience that an incredibly popular piece of software can sink like a stone: three years ago Internet Explorer had 60% market share, and today it has closer to 30%. Of course switching browser is a more casual decision than switching OS, but not only is it in the interest of MS to encourage people to upgrade to keep them as Windows users but also to encourage a renaissance for Internet Explorer, which will be one of the key components of the Windows 8 experience, just as Safari is on iPad and iPhone.