Why Microsoft won't hit 1 billion Windows 10 installs

Hint: it's to do with mobile

At last year's Build conference, Windows and devices chief Terry Myerson announced one of those "bold ambitions" that Microsoft's CEO Satya Nadella is so fond of: "Within two to three years of Windows 10's release, there will be 1 billion devices running Windows 10".

That wouldn't be just upgrades or even new PC sales; it would include Surface Hub, Xbox One, the upcoming HoloLens and Windows Mobile phones.

Surface Hub was delayed for some months. It took longer than expected to ramp up the brand new factory Microsoft was building in Portland, but they're shipping now. Xbox One sales dropped in Microsoft's most recent financial results, but it's already announced the Xbox One S and Project Scorpio.

HoloLens isn't on sale yet, but businesses as well as gamers are interested in the promise of mixed reality. But having taken a long, hard look at the smartphone market and the rise of local phone makers in China and India who are taking share from Apple and Samsung alike, Microsoft seems to have decided not to compete in the budget smartphone market where the bulk of device sales are made.

Typically it s larger businesses that are adopting Windows 10 faster

Typically, it's larger businesses that are adopting Windows 10 faster

Shifting goalposts

Talking to investors when Microsoft announced its most recent financial results, Nadella pointed out that Windows 10 has had the fastest adoption rate of any version of Windows (helped no doubt, by the free upgrade offer), but admitted "given changes to our phone plan, we've changed how we will assess progress". Microsoft will now report not just how many devices have Windows 10 installed, but in active use, and 2018 is no longer the target.

A Microsoft spokesperson confirmed that to TechRadar. "Windows 10 is off to the hottest start in history with over 350 million monthly active devices, with record customer satisfaction and engagement. We're pleased with our progress to date, but due to the focusing of our phone hardware business, it will take longer than FY18 for us to reach our goal of one billion monthly active devices. In the year ahead, we are excited about usage growth coming from commercial deployments and new devices – and increasing customer delight with Windows."

There s a steady stream of businesses planning to move to Windows 10 in the next year

There's a steady stream of businesses planning to move to Windows 10 in the next year

With no new phones from Microsoft so far this year (and only a few new models from the OEMs Microsoft is now relying on), phone revenue in their latest financial results was down 71%, and sales have dropped 57% from the previous year.

Microsoft seems to be doing better at bringing Office 365 to iOS and Android than on shifting its own mobile devices.

It's not that Microsoft is abandoning phones entirely; Terry Myerson confirmed at Build this year that Microsoft is "fully committed" to phones and plans to "do some cool things with phones" but for 2016, they're important but they're not the focus that PCs and Xbox and HoloLens are, because they're not the right place to reach a lot of customers.

The anniversary update to Windows 10 Mobile certainly improves the platform, but it still has a number of rough edges (the previously impressive shape-writing keyboard and Wi-Fi have both been problematic in recent builds).

What businesses like in Windows 10

What businesses like in Windows 10

Bigger in business

Until those new cool things come along, where Windows Mobile is most likely to prove popular is with large businesses like BT, Telefonica and Delta who want to buy phones that they can run the same apps on that they're building for Windows 10. That's a reasonable market, but it's not the same as the huge consumer market for phones.

IDC analyst and VP Al Gillen agrees that phone sales are an issue. "Without a meaningful contribution from Windows Phone, Microsoft won't get to one billion Windows 10 devices until 2019 or 2020. We project the total to be at about 700 million units by the end of Microsoft's Fiscal Year 2018, when the company had hoped to get to one billion."

ABOUT THE AUTHOR

Contributor

Mary (Twitter, Google+, website) started her career at Future Publishing, saw the AOL meltdown first hand the first time around when she ran the AOL UK computing channel, and she's been a freelance tech writer for over a decade. She's used every version of Windows and Office released, and every smartphone too, but she's still looking for the perfect tablet. Yes, she really does have USB earrings.