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October 19, 1995

MICROSOFT FINDS NO NEED FOR MAINTENANCE WINDOWS95 RELEASE

By CBR Staff Writer

Microsoft Corp’s Windows95 turns out to have sold 7m copies in the seven weeks it has been on sale, significantly more than had been assumed, giving the company a 58% jump in profits for its first fiscal quarter on turnover that just made it through the $2,000m mark with a 62% rise, implying that Microsoft will do close to $9,000m for the full year to June 30. The 78 cents a share for the quarter was well ahead of the consensus estimate of 70 cents and the shares opened sharply higher, up $6.875 at $98 yesterday. Microsoft says it has sold 3m copies of Windows95 at retail, which is why people had been underestimating total sales – it pushed some 8m copies into the retail channel at launch, so dealers are still choking. The other 4m copies went out to end users pre-installed on new personal computers. Senior vice-president Brad Silverberg told Reuters that 28% of US customers buying Windows95 are also buying the company’s Plus product for the operating system, an attach rate he called unbelievable. Windows95 already is available in 17 of 30 planned languages, and the Japanese-language version was released to packaging last week; Chinese and Korean language versions follow this week, and all three Asian languages will be available to end users by next month. People like the thing, too: more than 91% of users of Windows95 told Techscan Inc, an independent market research firm that they are satisfied or very satisfied with the product, he said. Adoption of Windows95 within corporations will be much slower, but than 160 major accounts worldwide have signed purchase agreements, the Redmonder says. Microsoft also says the BackOffice range of products continued to build momentum, with Windows NT revenues up nearly four times over last year’s first quarter. On the Microsoft Network, Microsoft said it was very happy with the sign-up rate, but has not yet reached its self-imposed temporary limit of 500,000 members.

Really, really solid

Silverberg said that Windows95 has performed so well in customer acceptance research that no maintenance release is currently planned. The product quality has been really, really solid, he said. We have no plans to do a maintenance release. Before the launch he had said that updated versions would be released as necessary to include new features and any needed bug fixes. The message is that sheep – corporate data processing managers – may safely graze. The company said OEM sales rose 50% from the year ago period to $548m. Silverberg said his team is continuing to develop future versions of Windows95 but he declined to give any details.Directly, Microsoft did $260m business from retail sales of the Windows95 upgrade, chief financial officer Mike Brown said. Another $130m in revenues from the product were booked in the quarter, but will be recognised over the life of the product, currently estimated at 18 months, Brown said in a conference call with analysts and reporters. He also said that the company earned $780m revenues from desktop applications during the quarter, and deferred another $120m in desktop revenues to recognise the effect of its Office applications upgrade: most of the deferred Office revenue will be recognised in the current quarter. The idea of making the deferrals are to iron out the worst of the peaks and troughs that traditionally occur.

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