Microsoft's goal of one billion Windows 10 devices is admirable, but not ambitious

At Build 2015, Microsoft stated that it has a goal of having 1 billion Windows 10 devices in the next 2-3 years. While at first this figure sounds impressive, if you dig into the numbers, the goal is obtainable and, in fact, is far from ambitious.

To get a better understanding of this goal, we need to take a look at PC shipments and forecasts going forward. According to the IDC, they expect 293 million PCs to be shipped this year and 291.4 next year. While that is a small decline and goes against Microsoft's goal of one billion Windows 10 goal, the numbers, in fact, heavily sway in-favor of the Redmond company's objective.

Starting with 290 million PCs, we need to work backwards from that number to give a more realistic expectation of what figure will be Windows 10 machines. We know that corporations will still want Windows 7 but it's likely safe to assume that Windows 8 machines will disappear very quickly from the OEM channel.

Further, we need to account for Mac sales (generously at 5 million per quarter) in these figures which is 20 million per year on the high end; Chromebooks are a non-contributing factor due to the low sales rate, as a percentage, to impact these figures. This means that in a year there will be 270 million PC and tablet sales (IDC notes this does not include the iPad, Android tablets or the Surface) which gives us a starting point for looking at Microsoft's one billion figure.

The largest unknown variable is how many enterprise PCs are purchased per year versus consumer PCs. This matters because consumer PCs will come with Windows 10 and the enterprise will still likely push for Windows 7 as they move slowly towards upgrading (if at all). For this post, we will make an educated estimate of 20% of PCs sold in the next three years will come with Windows 7 to fulfill the enterprise needs, which is a conservative figure based on estimates from research institutions like the IDC and Gartner. This means that 216 million machines for the next three years will be shipping with Windows 10 or a total of 648 million Windows 10 machines will be released by OEMs.

Simply based on new machines, Microsoft will be roughly 65% of the way to their goal to one billion goal.

Another significant chunk of the growth for Windows 10 will come from Windows 7/8 users upgrading to the OS; seeing as it is free, expect a high conversion rate for upgrading.

Microsoft says that they have 1.5 billion users of Windows at this time and using Net Marketshare data, 71% of those users are on Windows 7 or Windows 8, meaning they could could upgrade to Windows 10; Windows XP is not being counted because these users have already decided to use an obsolete OS and are less inclined to upgrade.

To achieve the goal of one billion users in three years or less, of the 1.5 billion PCs, one billion are in the target market to receive a free upgrade which means they need 40% (rounding down to account for any mobile users in the 1.5 billion figure Microsoft cited) of users to upgrade to reach their goal.

But Microsoft's figure of one billion machines includes more than traditional laptops/desktops, it also includes phones too. In the latest quarter, Microsoft sold 8 million Lumias (32 million on an annualized basis going forward) which means over the next three years, they will have 60 million phones running Windows 10 (assuming Windows 10 for phones comes out in years two and three of the three year plan to get to one billion machines) with 32 million existing devices that can be upgraded. When you account for existing Windows Phone 8 devices in the wild now that can run Windows 10, Microsoft's mobile arm will contribute at least 100 million devices to the one billion goal.

And there are even more devices running Windows 10 including Xbox One and they have IOT devices as well. Because IOT sensors can be mass produced at a low cost, this segment could add a significant amount of Windows 10 devices to Microsoft's count in the next few years too.

When you breakdown the numbers, Microsoft's goal of one billion devices is easily obtainable based on their current install base and projected sales over the next three years.

So yes, Microsoft will reach one billion devices in the next three years which is a tremendous achievement but with free software, and a huge install base, the achievement is notable but it's not exactly ambitious based on what they have already managed to accomplish.

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