The Windows 10 update cycle drives growth: Microsoft VP Kirk Koenigsbauer


Satya Nadella, CEO of Microsoft, talks with Herbert Diess, CEO of Volkswagen AG, (not in the photo) on February 27, 2019 in Berlin.

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Microsoft is looking for a great opportunity to get organizations to pay for more products – and that's all because of old products.

The company's customers are now about halfway through the upgrade cycle from Windows 7, an operating system released ten years ago, to Windows 10, a Kirk Koenigsbauer executive said in a financial event today.

With the upgrade or purchase of new PCs with Windows 10, Microsoft offers existing customers the opportunity to purchase new product packages, partly through a bundle called Microsoft 365. This could lead to more revenue per user, which in turn could lead to higher profits in the quarters ahead.

"It's an important year for desktop modernization," Koenigsbauer told JPMorgan's Global Technology, Media and Communications Conference in Boston. "It allows us to do a better job of up-selling at higher service levels and so on."

Microsoft is making the Azure public cloud the focus of the company in Amazon's relentless pursuit, but Windows still matters financially. Last year, Microsoft earned $ 19.5 billion in revenue, nearly 18% of the total, from Windows, and former CEO Steve Ballmer recently estimated that he still earns $ 13 billion to $ 14 billion in profits from Windows each year.

Koenigsbauer is responsible for a series of products called Microsoft 365, which includes Windows 10, the Office 365 subscription-based productivity app suite and mobility and business security tools. Microsoft introduced the Microsoft 365 package about two years ago, he said.

Updates will be driven in part by Windows 7 end of life. Microsoft said it will stop providing support for Windows 7 and security updates in January 2020. Some customers will upgrade existing PCs to Windows 10, which came out in 2015, though many will buy new Windows 10 PCs.

In addition to Windows, support for the Office 2010 productivity application collection ends in October 2020.

Organizations should upgrade to the latest products to achieve greater security and lower total cost of ownership, said Koenigsbauer.

The best Microsoft package for Office 365, known as E5, costs $ 35 per user per month. It comes with tools like Cloud App Security, which helps IT administrators monitor and control the use of cloud services for all people within organizations.

In general, Microsoft wants people to start paying regularly with subscriptions, Josh Trupin, vice president of research at Directions at Microsoft, told CNBC in an interview.

"The plan is definitely to want to push Microsoft 365," Trupin said. Microsoft does not list the cost of Microsoft 365 Enterprise on its website.

CLOCK: Cramer: Microsoft was "unbelievable", but should you buy it here?

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