Following a stunning quarter result, Microsoft is upbeat on the future to come. There is a clear enthusiasm for Windows 7, which seems to be digging Microsoft out of the Vista hole and is putting the company back on track. And there is even some unusual excitement that Windows may be gaining back market share from Apple, based on sales numbers published by Microsoft. However, statistics can be twisted and if we believe market share numbers published by Net Applications, Microsoft is still bleeding market share and Windows 7 is not selling as quickly as it needs to hold or get back market share it has lost in key markets.

Oh, those Mac-PC ads. How they made fun of the PC user hopelessly lost in and how they painted the glory of the Mac in bright colors and slightly arrogant way. Let’s admit it, some of the fun described the reality a PC user is all too familiar with and the majority of those Windows users who watched these ads may have at least thought about switching to a Mac. The campaign is credited with driving boatloads of PC users to Macs. Add to that a much-hated Windows Vista operating system that ignored user needs and you get a Microsoft that is virtually defenseless against Apple.

But times change. Without doubt, Windows 7 is the operating system Windows Vista should have been. I can’t quite remember an overwhelmingly negative review of Windows 7. The new OS is repairing the reputation Vista has damaged and there is the growing perception that Microsoft in fact can still build great operating systems that have the user in mind. It should be no surprise that Windows 7 is selling much faster than Windows Vista did, especially since the U.S. economy seems to be crawling out of a disastrous recession as well.

TechFlash and Softpedia were among the most visible publications that not only said that Windows 7 is selling very well, but have started a wave of speculation that Microsoft could be capturing market share from Apple. Even Microsoft pitched in. However, it appears that there is no clear and conclusive evidence that this is the case and if you want to twist available data into a negative tone, you could also claim that Windows 7 sales are disappointing and hopelessly behind schedule.

Here is what Techflash reports:

“In the financial data accompanying its earnings release, Microsoft said worldwide Windows consumer licenses grew by more than 35 percent in the recent quarter. By comparison, Apple this week reported an increase of 33 percent in Mac sales over roughly the same time period. That was impressive, too, of course, but Microsoft is growing from a significantly larger base of sales to begin with, making its higher growth rate considerably harder to achieve.”

I was not able to confirm the 35% growth rate, not within the 10-Q earnings data and not within the earnings call transcript. In an email conversation with ConceivablyTech, Microsoft declined to comment on the consumer license growth rate, stating that the company “does not break out specific percentages” of sales performance. However, Microsoft stated that operating income of its Windows and Windows Live division jumped by 35% year over year, while revenues climbed by about 28%. The company said that “total worldwide PC shipments from all sources grew approximately 13% to 15%” and demand for OEM license units increased 19%.

Furthermore, the FQ3 10-Q states that “Windows Division revenue growth is directly impacted by growth of PC purchases from original equipment manufacturers that pre-install versions of Windows operating systems because the OEM channel accounts for approximately 80% of total Windows Division revenue. The remaining approximately 20% of Windows Division revenue (“other revenue”) is generated by commercial and retail sales of Windows and online advertising from Windows Live.” Based on this data set, it is impossible to draw a conclusion how well Windows 7 is selling in comparison to Mac OS X and if it actually achieved an annual growth rate that is greater than the 33% claimed by Apple.

In its earnings press release, Microsoft said that “Windows revenue was up 28% [in the third fiscal quarter], compared with the same quarter a year earlier, driven by strong demand for Windows 7. More than 10% of all PCs worldwide are running Windows 7 today, making Windows 7 by far the fastest-selling operating system in history.”

Based on what Microsoft has said, estimating the actual growth rate of Windows is risky business. Even Microsoft general claim of the fastest selling OS in history does not say much and should be taken with a grain of salt. Every new operating system of Microsoft has generally sold faster than preceding versions (even Vista had record sales initially) as there are many more PC customers out there. Given the weak launch and catastrophic sales of Windows Vista, and the extension of Windows 7 into the netbook space, which was not available to Vista, it is not surprising that Windows 7 is “by far the fastest-selling operating system in history.” Also, we should remember that PC sales were up 24% overall, which was the main force behind the faster growth rate of Windows 7.

What we know as a fact is that Microsoft has sold more than 100 million Windows 7 licenses and that more than 10% of computers apparently run Windows 7. Microsoft has reached those goals within six months, which is an impressive achievement. Microsoft never revealed when Vista hit 100 million unit sales, but the numbers that were published by the company indicate that Vista needed at least one year to get to this mark. So we can assume that Windows 7 is selling about twice as fast as Windows Vista – and data from Net Applications shows that Windows 7 crossed 10% market shared 22 months earlier than its predecessor Windows Vista.

But numbers published by Net Applications do not necessarily paint a picture that reflects a stunning growth of Windows 7. According to Net Applications, Windows 7 held a market share of 10.23% in March, up from 8.92% in February. Vista’s share fell from 16.51% to 16.01% and XP fell from 65.49% to 64.46% in the same time frame. You may notice that the combined loss posted by XP and Vista, 1.53 points, exceeds Windows 7’s gains of 1.31 points.  Add in the fact that Windows NT also had a bad month with a loss of 0.31 points down to a market share of 0.21% and it is clear that March wasn’t a particularly good month for Microsoft.

For the first calendar quarter of the year, Windows XP/Vista share was down 3.25 points, while 7’s share was up 2.71 points, which means that Windows 7 can’t pick up the market share XP and Vista loses. In case you are wondering, the “other” Windows operating systems with significant market share, Windows 2000 and NT are stable (2000) and gained share (0.1 points), respectively. The data available do not allow us to draw conclusions which users are actually upgrading or switching to Windows 7. What we know, however, is that the market share loss of Windows XP has accelerated since Windows 7 has become available. Conceivably, Windows 7’s growth may be much more in the corporate space than it is in the consumer space. We also know that Mac OS X is, according to Net Applications, not losing market share. Over the first quarter of this year, Mac OS X versions 10.4 .5 and .6 were up 0.2 points to 5.14% market share.

I don’t want to be too negative, but I will note that you have to be careful with overly optimistic predictions or you might have to eat your words later on. Prior to the release of Windows 7, Microsoft intended to sell about 177 million Windows 7 licenses by the end of 2009. Well, we are not quite there yet, but 100 million is a start, I guess.

There is not enough data available to suggest that Microsoft is gaining back market share from Apple. To support such a claim, Microsoft would have to reveal much more data, which it obviously is not prepared to do. The conclusion: Windows 7 is selling much better than Vista. It is most certainly selling much higher unit numbers than Mac OS X, but it is difficult to claim that it is outgrowing Mac OS X on a percentage basis and whether it is growing enough to reclaim lost market share.

However, given the Windows Vista disaster, Windows 7 is the success Microsoft was hoping for. Even if it is just a fixed operating system that will bridge the gap until Microsoft has an entirely new operating system ready. If our usually well-informed sources are correct, we should be seeing a new OS that is being built from the ground up by 2013.

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