MSFT Is Still Making Millions From Microsoft Windows XP

A cash-cow continues to deliver for MSFT and investors

   
MSFT Is Still Making Millions From Microsoft Windows XP

Even though Microsoft (MSFT) stopped selling Microsoft Windows XP PCs way back in 2010, the company will make millions on the 12-year-old version of Windows this year.

That’s because some 44% of businesses are still using Microsoft Windows XP, according to mobile device management company Fiberlink.

The largest of these companies are buying something called custom support contracts where Microsoft will still fix bugs found in XP for them.

But they’ll pay dearly for it. Microsoft used to cap a custom support contract at $200,000 for the first year, Gartner analyst Michael Silver told Computerworld’s Gregg Keizer.

However, it raised prices for the post-XP era and is now charging about $200 per device, with big increases for year two and three of custom support contracts, Silver told Keizer. One IT pro said Microsoft quoted his company $1 million for the first year, $2 million for the second, and $5 million for the third year to support XP on 5,000 machines, Keizer reported.

Microsoft has already landed some big custom support contracts:

  • The UK government signed a £5.548 million (approximately $9.2 million) agreement that covers XP, Office 2003, and Exchange 2003 for all British public sector customers, ComputerWeekly reported.
  • The Dutch government signed a multi-million Euro deal  to support of over 30,000 computers, Dutch News reported.
  • The IRS will pay Microsoft “less than $500,000″ for about 58,000 XP machines, Computerworld reported.
  • Various banks around the world are said to be paying Microsoft an unknown amount for custom support for their XP ATM machines, Reuters reports.

Despite such lucrative contracts, none of this is a particularly good news for Microsoft’s current flagship operating system, Windows 8.

That’s because most of these companies, like the IRS,  and the bank ATMs, are not using this extended support period to upgrade to Windows 8. They are still slowly moving to Windows 7, which is itself already over four years old, introduced in October. 2009.

Once they finish upgrading, companies may cling to Windows 7 the same way they did to XP.

Interestingly, Microsoft views custom support contracts as a “last resort” for its customers. Here’s the statement the company sent to us:

“Custom Support is provided to large, enterprise customers whose migration from Windows XP was not complete by April 8, 2014. It is a temporary measure designed to help large customers with complex migrations. It should be considered as a last resort for customers who are in the process of migrating from Windows XP to a modern operating system.”

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Article printed from InvestorPlace Media, http://investorplace.com/2014/04/microsoft-windows-xp-msft/.

©2014 InvestorPlace Media, LLC

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