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Analyst: Windows 7 to Add $1.5B to MSFT Revenue

Although Microsoft’s product line is now diversified into many areas, its core business is still its operating system.

According to Bloomberg’s earlier report on Microsoft’s desire to encourage users to upgrade to more expensive versions of Windows 7, operating system software accounts for 28 percent of the company’s $60.4 billion in annual revenue and is its most profitable business.

Collins Stewart analyst Sandeep Aggarwal projected that Microsoft could rake in as much as $1.5 billion in additional revenue from the release of Windows 7. ZDNet reported that, of that $1.5 billion, nearly two-thirds of it will come from upgrades--which we assume means licenses from owners of Windows XP and Windows Vista.

Aggarwal said that as much as $680 million could go Microsoft’s way if the company manages to increase the number of ‘premium versions’ of Windows 7 sold to users. This relates heavily back to yesterday’s report on Microsoft’s aim to profit from netbook users wanting to upgrade their Windows 7 to something beyond the Starter Edition.

Finally, Aggarwal chimed in on the most hopelessly often discussed Windows 7 topic – the release date. While Microsoft stands firm on its original target of an early 2010 release, many signs are pointing to a date sometime later this year. The analyst believes that Microsoft will finalize the code for Windows 7 by June or July, giving the industry ample time to push for the holiday season. Of course, we won’t know for sure until word from Microsoft.

Marcus Yam
Marcus Yam served as Tom's Hardware News Director during 2008-2014. He entered tech media in the late 90s and fondly remembers the days when an overclocked Celeron 300A and Voodoo2 SLI comprised a gaming rig with the ultimate street cred.
  • A Stoner
    I think that is a conservative estimate. Considering the fans of Windows 7 here on Tim's, I am guessing that several posters here will be buying multiple copies just to support Microsoft, not even to install into systems. Of course, it is also possible that these same posters are similar to all the Bots that were out and about during the presidential race, paid staff members that simply put out alot of propaganda.

    I do honestly think that $680 million dollars is conservative for upgrades. Maybe though the biggest sales will happen the year after release, so $680 million for either 2009 or 2010 might be accurate, while 2011 may see much more.
    Reply
  • wikiwikiwhat
    Windows 7 is great. I like it so far and thats just the beta. They might be getting my monies. Not sure which version though.
    Reply
  • hellwig
    $1.5B is only 7.5M copies sold at $200. 7.5M isn't even a drop in the bucket considering how many computers exist in the world (over 70M new computers sold each year). Am I missing something here? $1.5B doesn't even cover office supplies for the company of 100,000 people. Microsoft doesn't unlock for doors for $1.5B, much less for an OS release. Why write an article about made-up numbers?
    Reply
  • tenor77
    Windows 7 adds 1.5 Billion, shareholders pump arm up and down saying "Cha-Ching"
    Reply
  • Tindytim
    hellwig$1.5B is only 7.5M copies sold at $200. 7.5M isn't even a drop in the bucket considering how many computers exist in the world (over 70M new computers sold each year).Funny that you mention those right next to each other. Those new computers may have Windows 7 on them already. In which case, Microsoft makes a fraction of even the OEM retail price, as the OEMs like Dell get huge bulk discounts. But then you have the people that will buy the retail version, and the people buying the premium versions. So it could balance out.

    Am I missing something here? $1.5B doesn't even cover office supplies for the company of 100,000 people. Microsoft doesn't unlock for doors for $1.5B, much less for an OS release. Why write an article about made-up numbers?
    Reply
  • hellwig
    See, I would have been amazed if that was 1.5B in profit (from their 9B yearly profit), but they used revenue, then stated that MS's annual revenue is 60B (so they aren't talking profit/cash flow).

    Lets say that MS only gets $40 for each OS they sell (OEM, after-market, upgrade, whatever), that's still only 37 million copies. That's not a good forecast for Microsoft, predicting only 50% market share. I can't imagine MS will still sell Vista after 7 hits the market, so what is going to be sold on the other 33 million PCs (and note, ~70mil was the 2007 number for PCs sold in the U.S.).
    Reply
  • jsloan
    didn't i say it, and you'all gave me the thumbs down, now the truth comes out, their stock price has been hammered and windows 7 is all about raking in the money and hopefully getting their stock price to rise by a few cents. linux anyone?
    Reply
  • fuser
    "linux anyone?"

    Why?
    Reply
  • Shnur
    About that 70M computers, they will probably almost all come with starter edition that will be costing about 10$ to OEMs, the rest will be from upgrades from end users.

    Plus since we expect a Q3 release this year, Microsoft maybe be talking only for 2009 year, so 1.5B in 3 months is not so bad.

    Add up that the 2007 numbers don't apply here anymore, we are in and out of an economical crisis people try to spend their money more wisely. So we may see different numbers this year...
    Reply
  • mdillenbeck
    I personally think Windows 7 should have really been a patch to Vista to bring that product up to the expectations. However, that wouldn't help then make a lot of money. (All said and done, I'm a tablet pc user so I am very happy with Vista due to its inking capabilities.)

    However, at my university the pressure is growing to migrate to the new OS and utilize the features of Server 2008 - we won't go Vista, but we will probably go Windows 7.

    However, I am again seriously considering Linux again. I'm no longer a heavy gamer, and I can get most the software I want. If I'm really need windows apps, then I'll use VMWare to get access. However, I cannot afford to shell out the high price for Microsoft's OS and Office products anymore. That money could be put to much better uses while going open source.
    Reply