For Microsoft, there's a difference, a big difference, between a Windows upgrade and an update, even though both can be handed out free of charge to customers.
A free upgrade requires the company to set aside revenue at the time of sale, then recognize that revenue only when the upgrade is released. An update, on the other hand, lets the firm book all sales immediately.
The distinction may seem arcane or even meaningless to customers, but it has an impact: If Microsoft had called Windows 8.1, the overhaul slated to ship later this year, an upgrade, it would have had to either charge customers for the software or retroactively adjust Windows revenue to account for the deferrals, depressing that division's earnings over the last several quarters even further.
Microsoft spelled out the difference between upgrade and update in a regulatory filing this week with the U.S. Securities & Exchange Commission (SEC).
