Why Is Windows 10 Launch In July ’15 Vital For Microsoft? – Forbes

Microsoft announced that it will release Windows 10 on July 29. Furthermore, it said that the OS will be a free update for users running Windows 7 or Windows 8.1 on PCs or notebooks for the first year. In the initial phase, the adoption among beta tester was strong; however, it remains to be seen whether it will gain traction with general users.

Since the company’s suite of products and devices are more or less dependent on the usage of Windows OS, we think that the way it fares over the ensuing months will be key for the health of Microsoft Microsoft’s business, in 2015 and beyond. In 2015, we will specifically be looking at whether Microsoft’s overall market share among consumers and Windows 10 help the company influence consumers in their purchases of phones, especially in emerging markets.

See our complete analysis of Microsoft here

Is Windows 10 Release Vital For Windows OS Division?

Windows Operating System is Microsoft’s third largest division and makes up 9.7% of its stock value by our estimates. However, it contributes 25% to Microsoft’s top line. One of the primary drivers for Microsoft’s Windows division is global PC sales. Approximately 65% of total Windows Division revenue comes from Windows operating systems purchased by original equipment manufacturers (OEMs) and pre-installed on their devices. According to IDC, global PC sales continue to decline and global shipments were down by 6.7% in Q1. IDC also expects that PC sales will continue to decline by 6.2% in 2015. Currently, we forecast that global desktop sales will decline by 5% to 130 million and the global notebook market will remain flat at 180 million units shipped in 2015.

The company has offered the free Windows 10 upgrade to existing users of Windows 7, Windows 8 and Windows 8.1. We believe that this will help Microsoft stabilize its market share in the OS industry. However, since it is offering Windows 10 for free for the first year of its launch, Microsoft might not report a substantial increase in revenues from this division. The biggest question in the coming months is what strategy Microsoft plans to implement to improve the top-line and bottom-line. It remains to be seen if pent-up demand for PCs prompts an increase sales in the latter half of the year.

Focus On Phones And Emerging Markets

One of the primary reasons for the decline in PC shipments has been the increased popularity of tablets. According to Gartner Gartner, tablet shipments exceeded those of PCs in 2015. Furthermore, IDC predicts that total device shipments (including handsets, tablets and PCs) will reach 1.4 billion in 2015, up 12.2% year over year, and will only continue to slow in the next few years. While iOS and Android-based smartphones and tablets continue to rule the market, Microsoft’s Windows-based Surface tablets and phones have not fared that well. According to IDC, Windows-based tablets’ market share was 2.5% in Q4 2014. Despite offering discounts on its tablets and selling smartphones at lower price points, Windows mobile sales continue to lag the overall market.

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