Will Windows 7’s Exit Trigger a Windows 10 Upgrade Wave? (Premium)

As you must know, Windows 7 will finally reach the end of its support lifecycle one year from now, on January 14, 2020. Yes, Microsoft will offer expensive paid support past that date for the biggest businesses. But Windows 7 usage is fairly ubiquitous with individuals and smaller businesses that will never even be offered additional support. So the theory here is that Windows 7’s exit will result in a massive wave of upgrades, with customers of all kinds buying new Windows 10 PCs.

That could happen. But it’s far more likely that the ensuing upgrade “wave” will be quite small, and much smaller than previous upgrade waves. It’s even alarmingly possible that Windows 7’s exit will have little to no positive impact on the PC market at all.

I know. That sounds awfully negative. There’s just one problem: It happened before.

Windows XP was finally put out of its misery in April 2014, 12 long years after the platform was first made available to customers. That’s two years longer than the typical Windows support lifecycle, but Windows XP’s ubiquity ensured that users of all kinds stuck with the system for years after support officially ended. And Microsoft was forced more than once—including an infamous hacking episode with UK-based hospitals—to keep patching XP for many years after that date.

I’m sure Microsoft intends to be more resolute this time around. But the Windows 7 support retirement comes at an even more precarious time for Windows and PCs. And it’s important to understand how this event if both different and similar to Windows XP’s early support end.

First of all, the Windows 7 installed base is massive, and is much bigger than was XP’s installed base as that system cruised toward retirement: With 41 percent usage share, there are approximately 615 million PCs out in the world running Windows 7 today. And those individuals and businesses that still run Windows 7 today do so for a very good reason: It just works, and they see no reason to spend money on a new PC when the one they’re using is fine. (This runs contrary to the thinking of most enthusiasts, but it’s important for us to collectively understand the most of the user base views Windows as a tool that is otherwise not central to their lives.)

That fact, coupled with Microsoft’s early promise to continue supporting Windows 7 in big businesses, suggests that this upgrade cycle will be as impactful, or less so, than was the case when Windows XP retired. Which leads to the question: What was the impact of Windows XP’s retirements on PC sales?

Surprise: It was a non-event. PC sales fell that year by 1 percent.

As I just reported, PC sales have now fallen for seven consecutive years. The best-ever year for PC sales occurred in 2011, when PC makers collectively sold 365.4 million units to customers. Windows XP was finally retired in 2014, and if you look at PC sales that year—compared to PC sales during the years right before and after that—you can easily see that PC sales still fell, year over year. But the fell less than was the case the year before and the year after. You can literally see the impact of XP in the sales chart.

In other words, the previous big wave of Windows upgrades did nothing to halt seven years of falling PC sales. All it did was slow the fall, and for that one year only.

Moving forward to the current year, if you examine that same chart again, you’ll see an interesting trend: PC sales have still fallen since then, but the rate of fall has slowed dramatically. PC sales in 2017 fell just 1.5 percent over 2016. And they fell barely 1 percent in 2018. And this trend does suggest that PC sales could rebound, if temporarily, in 2019 and 2020, as Windows 7 is led out to pasture.

There’s just one problem: Much of that growth, such as it is, has come from Chromebooks, not Windows-based PCs. In fact, Chromebook growth was 8 percent last year, vs. -1 percent for the broader PC market. So it’s likely that Windows-based PC sales are down even further than that figure.

And this is a serious issue. While many still discount the threat of Chromebooks because they can’t understand the wider world beyond their own experiences—“I never see anyone using a Chromebook, therefore they are not popular”—the reality is that this Windows alternative has been making strong gains. And this isn’t just in education, not that it matters: Education, like the enterprise, is a massive market all by itself. And its influence on future technology usage is likely more impactful than many would like to admit: A generation of students are now growing up on Chromebooks and Google services.

Chromebooks are also a serious issue because they are part of a broader trend that’s been sweeping the planet since that 2011 high point for PCs sales. Most users have turned to smartphones for much of their personal computing interactions, making PC-type devices a secondary, mostly work-related chore. Many users can get work done on a phone or tablet. And many more will simply use a PC occasionally, when they need to type a long-form document or perform more complicated tasks than is possible or comfortable on a mobile device. Chromebooks are simpler and cheaper than PCs. And many will simply make the pragmatic choice for this secondary device.

Put another way, anyone who believes that the Windows 7 retirement will in any way benefit Windows 10 needs to wrap their mind around an equally-plausible future: That the Windows 7 retirement will likewise benefit Chromebook adoption too. That it could, in fact, be better for Chromebook than it is for Windows.

In other words, when Windows XP retired, there were no viable alternatives to Windows, but users were turning to mobile en masse, and the PC sales shortfall slowed but didn’t reverse. In 2020, when Windows 7 retires, there is now at least one completely viable alternative to Windows in Chromebooks, and some other outliers like Mac and iPad that can get the job done for the wealthy. And that mobile wave, while slowing as well, is now as ubiquitous as it can be. Everyone has a phone. And some of those people don’t even need a PC or PC-like device.

So, what it’s going to be?

My guess is that Windows 7 will have a modest and positive impact on PC sales over 2019 and 2020. And that this impact will result in on-again, off-again quarters of actual year-over-year growth. It is possible that this growth will extend to year-long time segments and temporarily reverse the industry’s several-year-long slide. But long term, I think we’re looking at the PC market as it will be for quite a while: A slight seesawing up and down around its current size.

To be clear, that’s just a guess. And you may look at these conditions and come away with a different outlook. Perhaps the Windows 10 upgrade wave is real, and it will impact the market more than I think. And maybe Microsoft will continue making smart moves in education, combined with a growing distrust of Google and its cavalier approach to privacy, it will blunt the impact of Chromebooks and reverse that trend.

Anything is possible. The future’s fun like that.