Microsoft Will Offer $15 Windows 8 Upgrade to Boost Sales

by Trefis Team
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Microsoft (NASDAQ:MSFT) is expected to launch the next version of Windows, Windows 8, around the end of 2012. Windows 8 is expected to be one of Microsoft’s biggest launches to date, as it will target the desktop, notebook as well as tablet markets. Windows 8 will compete with Apple (NASDAQ:AAPL) and Linux-based distros in the desktop OS space, and Apple’s iOS and Google‘s (NASDAQ:GOOG) Android in the tablet OS market.

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Even though Windows 8 is still months away from launch, Windows 7 license sales have slowed down significantly as customers prefer to wait a few months and buy Windows 8, instead of buying Windows 7 and spending more money on an upgrade again.

Microsoft has just revealed its upgrade pricing for customers who purchased Windows 7 recently, and it’s just $15, much lower than what it has traditionally been. The lower pricing is a great way to incentivize users to continue to buy Windows 7 licenses, without stalling their purchases until the Windows 8 launch, knowing that they will be able to upgrade for a nominal cost.

Windows accounts for a significant portion of Microsoft’s revenue and around 26% of its total value.  We expect Windows 8 to be a bigger hit than Windows 7, which has sold around 550 million licenses to date, as it will target a much larger market. We expect Microsoft’s market share in the OS market to jump to 77% in 2012, following the Windows 8 launch.

We currently have a $40 Trefis price estimate for Microsoft, which stands nearly 30% above its market price.

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