Oh, come on, Microsoft: 60 million copies of Windows 8?

Nobody believes that 60 million PCs are currently running Windows 8. Let me get that out of the way right off the bat. The question is whether the 60 million number offered yesterday by Windows Chief Marketing Officer and CFO Tami Reller was a bit on the puffy side or whether it represents an epic case of corporate cognitive dissonance.

I tend to think of it as business as usual: Microsoft’s never played straight with Windows sales numbers, at least not in recent history, and there’s no reason to believe it’s doing so now.

Somehow the sales pace of Windows 7 has become the gold standard by which Windows 8 uptake is being measured. I’m not at all convinced that’s a valid measuring stick — the circumstances surrounding Win8 are so very different — but looking at Win7 vs. Win8 initial sales figures can be entertaining, if not instructive. 

Right now we have three official data points for Windows 8 license sales.

On Oct. 31, 2012, just days after Windows 8 hit General Availability, Steve Ballmer was quoted at the Build conference as saying that “tens of millions” of copies of Windows 8 had shipped to hardware manufacturing partners, and “more than 4 million upgrade copies” had been sold. If we take him at his word, Microsoft sold at least 24 million copies of Windows 8 that first fateful weekend.

Tami Reller told us in a speech at Credit Suisse on Nov. 27, 2012 that Microsoft had sold 40 million Windows 8 licenses. Then on Jan. 8, she said the number was up to 60 million. In her Nov. 27 speech, Reller gave zero details about what she meant by “sold Windows licenses.” In the more recent speech (transcript), she said, “[I]t’s similar to — it’s identical, in fact, to how we talked about Windows 7 licenses. So it’s OEMs. It’s sell-in to OEMs for new PCs as well as upgrades. So, it’s upgrades and OEM licenses.”

I’ll split a few hairs about the upgrades and OEMs later on, but first let’s continue with the Windows 7 comparison. With Windows 7, we had several early data points. On Dec. 31, 2009, Microsoft claimed in its quarterly earnings report for FY2010 Q2 that it had sold 60 million Win7 licenses. On March 2, 2010, at the Morgan Stanley Technology Conference, Microsoft claimed it had sold 90 million Windows 7 licenses.

If you do the arithmetic, Windows 7 sold 60 million licenses in the 70 days after General Availability. Windows 8 hit 60 million after 74 days. Those numbers certainly do line up. They line up so well you have to wonder how they’re being calculated.

What doesn’t track is the rate. If Ballmer was giving us numbers comparable to those provided by Reller, Windows 8 sold about 5 million copies a day for its first five days. Then (if Reller’s numbers are right) the rate fell precipitously to 600,000 copies a day for the next month, and 500,000 copies a day for the following six weeks.

How does that compare to Windows 7 sales? Good question — the last reliable sales number I can find for Windows 7 came more than six months ago, on June 6, 2012. Microsoft OEM vice president Steve Guggenheimer, speaking at the Computex trade show in Taipei, said Microsoft had sold 600 million copies of Windows 7. At that rate, through the middle of 2012, Microsoft had sold an average of 600,000 copies per day.

By that measure, Windows 8’s sales aren’t keeping up with Windows 7, and they’re falling.

But in many ways the numbers are just paper tigers. In November I wrote about the ways Microsoft fudges Windows 8 sales figures.

[W]e’re likely to know less about Windows 8 sales in January than we do now. How is that possible? Microsoft stacks the deck. Legally, and in full conformance with every accounting principle, generally accepted or not, Microsoft has polished its methods for obfuscating initial sales of new Windows versions. We saw the techniques used after the releases of Vista and Windows 7 — and we’ll see them again for Windows 8.

Sure enough, there’s obfuscation aplenty. Reller says the numbers reflect upgrades and OEM sales, but when does Microsoft count an upgrade as “sold”? How does it book OEM sales?

Upgrades come in many different guises. There are those customers who pay $40 for an online upgrade. Accounting for those upgrades is easy — presumably Microsoft counts the sale when it receives the money — but there are many who bought Windows 7 while Microsoft had $14.99 upgrades. At what point are those upgrades counted? Microsoft’s on the hook to provide $14.99 upgrades to a lot of people. Is there some sort of accrual? What if somebody bought the upgrade long ago and never used it? Then there’s the whole Volume Licensing/Software Assurance can of worms. Does Microsoft include any VL/SA numbers in the “upgrade” bucket? What about companies that renew their SA agreements but never intend to install Win8? Are those seats upgrades?

As for OEM sales, Microsoft books them as it makes the sale, presumably. But how many “sold” OEM copies of Win8 will end up running in the real world? Remember the Windows Phone 7 “OEM sales” debacle, where Microsoft claimed it had sold 10 — or maybe 100 — times more copies of Windows Phone 7 than ever reached consumers?

With 1,700 different computers now certified as running Windows 8/Windows RT, there are bound to be a few OEM copies of Windows 8 floating around that’ll never make it into consumers’ hands. Quite a few.

Hey, Microsoft! Want to score a few points with the developers you so desperately need? Stop showering us with mumbo-jumbo numbers that would only fool a Wall Street analyst. Show us the activations.

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