Lower Attach Rates

That’s a phrase that caught my eye in M$’s latest quarterly report.

Three months ended December 31, 2010 compared with three months ended December 31, 2009
Windows Division revenue decreased primarily due to the prior year launch of Windows 7, including recognition of approximately $1.7 billion of revenue in the prior year related to the Windows 7 Deferral. OEM revenue decreased $1.8 billion or 32%. This decrease was driven by the prior year launch of Windows 7, reflecting a decrease in inventory in our distribution channels, and lower Windows attach rates in China, partially offset by PC market growth. Other revenue decreased $314 million or 20%, driven primarily by the prior year launch of Windows 7. Considering the impact of the Windows 7 launch in the prior year, we estimate Windows Division revenue growth was in line with PC market growth. We estimate total worldwide PC shipments from all sources grew approximately 2% to 4%.
Windows Division operating income decreased primarily as a result of decreased revenue. In addition, sales and marketing expenses increased $22 million or 3% reflecting increased advertising of Windows and Windows Live.
Six months ended December 31, 2010 compared with six months ended December 31, 2009
Windows Division revenue decreased due to the prior year launch of Windows 7, partially offset by PC market growth. OEM revenue decreased $43 million or 1%. This decrease was driven by the prior year launch of Windows 7, reflecting a decrease in inventory in our distribution channels, and lower Windows attach rates in China, partially offset by PC market growth. Other revenue decreased $181 million or 7%, driven primarily by the prior year launch of Windows 7. Considering the impact of the Windows 7 launch in the prior year, we estimate Windows Division revenue growth was in line with PC market growth. We estimate total worldwide PC shipments from all sources grew approximately 6% to 8%.

see 10-Q

Consumers can buy whatever they want in China. They have retail choice. Further, to get mention in the 10-Q, the effect must be large and it is a trend. The share of PCs shipping with that other OS is dropping in China. That is the result of OEMs and retailers not being locked into M$’s game. They can ship more PCs with a higher margin using other operating systems like GNU/Linux. That this merits mentioning in spite of the low prices M$ charges in China means the share has dramatically reduced.

China’s love affair with GNU/Linux has been a factor for a long time. There has been growth there for nearly a decade and now it is too large to ignore. It will only be a year or two before this phenomenon is global. We are already there in smart phones. Next will come tablets, notebooks, netbooks and desktops. We read that Ballmer was whining that 90% of users of that other OS had not paid for a licence. Perhaps he should have said, “We don’t have a monopoly in China.”

The world does not owe M$ a living. By not installing that other OS, China ensures its many manufacturers better margins and developers actually have employment in China. You don’t have to live in China to use GNU/Linux. Get it. Install it. Run it. Check it out.

About Robert Pogson

I am a retired teacher in Canada. I taught in the subject areas where I have worked for almost forty years: maths, physics, chemistry and computers. I love hunting, fishing, picking berries and mushrooms, too.
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6 Responses to Lower Attach Rates

  1. Dann says:

    @spc:

    Feel free to doubt. One of the major causes of people moving from GNU/Linux back to Windows is familiarity, their legacy apps or for games. Not because the OS itself is superior in any way.

    The OS shouldn’t be a deciding factor in purchasing computer equipment. Sadly, if I can’t get a computer without getting charged for an OS I don’t want, I don’t buy said computer.

    The HP Envy 14 is a perfect example of an awesome laptop encumbered by a $100+ tax.
    I say no.

  2. spc says:

    I had one Lenovo something, lowest end of them all, and it was with linux preinstalled – it was god-only-knows distro. I installed on it Linux Mint, unfortunately, two days later nice Mint was repalaced with Win XP.
    I seriously doubt about surge in Linux market share comming from China!

  3. Ray says:

    Or they could be massively pirate Windows… instead of buying them

  4. oe says:

    If Obama fall for that line from Ballmer and other CEOs of the Big Boys who feel the are owed market clought just by bought access…that will just help ensure that the Chinese surge ahead in tech innovation with a much truer free market for innovation….

  5. Richard Chapman says:

    President Obama seems to have swallowed Ballmer’s line, hook and sinker about piracy in China. I wonder if he understands how much economic damage Microsoft causes each year. Both sides of the security equation alone should be enough to cause one to stop and think. Want to boost the economy? Hire a bunch of guys to go around pouring corn syrup in peoples’ gas tanks and smashing windshields. Keep it up for a few years and before you know it, you’ve got a huge industry fixing seized engines and replacing broken windshields. We’ve got a huge industry creating security holes in Microsoft software, exploiting those holes in Microsoft software and creating and selling more layers of software to protect Microsoft’s software. That’s just the security. It’s a huge industry by any standard but it’s a false economy just like the bunch of guys wrecking things so people need to be hired to fix them.

    Microsoft’s desperation is showing once again. Steve Ballmer is asking the President of the United States to put the power of his office behind Microsoft’s bully tactics. That is a very bad idea. It will not help Microsoft and it will cost President Obama some credibility.

  6. Dan Serban says:

    A parasite attaches itself to a host.
    Microsoft loves attaching itself to every retail PC offered to us in brick-and-mortar stores.
    They’ve noticed it’s no longer working as well as it once did and the above quote is corporate-boardroom-speak for “We can no longer lead la dolce vita – the sweet, parasitic lifestyle of yesteryear”.
    So long Microsoft, it was a nightmare knowing you. Don’t let the door hit you on your way out.

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