Microsoft Surface Book. Image Source: Microsoft.
Windows 10 is well on its way to becoming Microsoft's (MSFT +0.17%) most popular operating system.
Just six months after its debut, it's been installed on more than 200 million devices -- a rate of adoption that blows away all of Microsoft's previous operating systems. Although the larger PC market remains in decline, the rapid uptake of Windows 10 is a positive development for the Redmond tech giant.
140% better than Windows 7
Windows 7, released in the fall of 2009, was widely praised by critics and saw strong demand in the months immediately following its debut. By July 2010, Microsoft had sold more than 175 million licenses, making it (at that time) the fastest adopted version of Windows in its history.
Its successor, Windows 8, enjoyed a much less favorable reception, and struggled to find an audience. In its first 8 months, Microsoft sold just 100 million licenses of the operating system, and didn't break the 200 million mark until more than a year after its debut.
Windows 10 launched last July, and just six months later was running on more than 200 million machines. On the company's earnings call late last month, CEO Satya Nadella underscored Windows 10's rapid adoption, noting that it had grown 140% faster than Windows 7. This is particularly notable given the ongoing declines in the larger PC market. Worldwide PC shipments fell 8.3% in the fourth quarter of 2015, according to research firm Gartner.
Windows 10 has been widely praised by critics, and consumers who intentionally avoided the confusing and touch-orientated Windows 8 may have been eager to upgrade to a modern operating system. Still, it's worth noting the unprecedented steps Microsoft has taken to ensure Windows 10's popularity. Consumers with a PC running Windows 7 or Windows 8 can upgrade to Windows 10 for free. Microsoft heavily encourages users to take this step, automatically downloading the Windows 10 installer on many PCs in the background. Moreover, that 200 million figure is somewhat inflated by Microsoft's video game console, the Xbox One, which was upgraded to Windows 10 back in November. Microsoft hasn't disclosed the exact number of Xbox One consoles it has sold, but estimates put the figure at around 19 million.
Universal apps and greater search share
Still, the rapid uptake of Windows 10 should be viewed favorably by shareholders. The growth of the Windows 10 ecosystem benefits Microsoft's search engine Bing, its cloud services, and its mobile prospects.
Windows 10 includes deep integration with Bing. The search engine powers Microsoft's digital personal assistant, Cortana, and is freely available directly from the taskbar. It's also integrated into Windows 10's new Internet browser, Edge. Bing achieved profitability for the first time last year following the release of Windows 10. Microsoft's management expects Bing's share of the U.S. search market and its revenue to continue to grow as Windows 10 sees greater levels of adoption. Last quarter, 30% of Microsoft's search revenue came from Windows 10 devices.
With Windows Phone's share of the smartphone market hovering in the low single digits, Microsoft's mobile prospects appear increasingly bleak. But Windows 10, with its Universal Windows apps, could help. Apps written for the Windows 10 app store can run across all Windows devices, including mobile phones. Developers have yet to put much focus on the Windows app store, but if they do, it would strengthen the appeal of Windows Phone.
Windows 10 also includes integration with Microsoft's cloud services. Cortana integrates with Office 365 (Microsoft's subscription-based version of its Office software suite) and OneDrive (its online file storage service). As Windows 10 has seen increased adoption, the number of consumers subscribing to Office 365 has also risen. Last quarter, Microsoft added 2.4 million subscribers, bringing the total to 20.6 million.
On track for 1 billion devices
Windows 10 has considerable room to grow among business users. Of the 200 million devices running Windows 10, 168 million are owned by consumers. But more than 76% of Microsoft's enterprise customers are piloting Windows 10 in some capacity, and could adopt the operating system in the near future. Other institutions could as well -- earlier this month, the U.S. Department of Defense committed to upgrading to Windows 10 within a year.
For now, Windows 7 remains the most popular version of Windows. It powers about 52% of the traditional PCs currently in use, according to NetMarketShare. But Windows 10 is in second place, with nearly 11% share.
Microsoft's goal is to have Windows 10 installed on 1 billion devices within two years. That looks to be well within reach.
