New Windows in 2009?

Implications: The best course for Microsoft is to release the next OS ahead of schedule and write Vista off as an interim step.  If Microsoft can get a solid Windows 7 released in the middle of 2009 they will retain their hold on the desktop market.  If not, they risk losing a large percentage of that market.

Analysis:

It’s not clear whether it’s even possible for Microsoft to rescue Vista at this point, with all the bad publicity it has garnered in the past year or so.  While the shipping numbers around Vista are quite good, Vista’s penetration into the business market remains abysmally low.  Virtually all Vista’s numbers relate to the consumer market, and particularly the new PC market.  This provides much revenue for Microsoft and allows them to fend off the naysayers, but the continuing dominance of XP in the business market is becoming increasingly difficult for Microsoft to brush off.

Business adoption of a new OS usually takes a year or so, and the SP1 release is in many cases the trigger.  Since SP1 was just released, it seems reasonable to assume that the real adoption of Vista should now start, and the previous low adoption rates can be written off as normal.  Yet very few businesses today have any concrete plans to adopt Vista, with or without SP1.  On the contrary, over the past year most businesses have solidified their intention of remaining on XP as long as possible, with no intent of ever upgrading to Vista. 

Normally during the first year of an OS release businesses are testing it, working through the issues, and putting in place plans to upgrade after SP1 is released.  A short testing period with SP1 then results in the beginning of the upgrade cycle.  In this case most businesses have tested Vista and found it so seriously lacking that all upgrade plans have been shelved.  This is not likely to change unless SP1 installs flawlessly and resolves a raft of issues.  Early feedback from the field suggests that while SP1 does generally install cleanly and does resolve a lot of issues, it’s not enough.  First of all, SP1 won’t even install on a huge number of machines due to driver problems.  There have been well-documented issues with the installation itself with a small but vocal group of users.  Finally, given the ongoing driver and software issues, it’s pretty clear SP1 has not solved all the Vista issues.

With this backdrop, something has to change in the desktop OS world for businesses.  If Vista isn’t going to happen, then what is?  XP is the answer today and probably until late 2009 or sometime in 2010.  By then a new solution will be required as XP becomes too old.  A cleaned-up Vista is one possibility, but between the technical and PR issues that seems risky.  Apple starts looking like a viable choice, albeit not one most CIOs will embrace readily.   One of the various desktop Linux flavors may well be the least-worst choice.  However this scenario plays out, it is most definitely not to Microsoft’s advantage.  They risk losing their stranglehold on the desktop OS market for the first time in decades.

Microsoft, for all their faults, can learn from mistakes, even if they may not admit in public they were mistakes!  They have to be very aware of the true adoption rate of Vista and very concerned about the potential threat to their desktop market.  They have three choices remaining to them:  1) they can continue to flog Vista, 2) they can fix all the issues in Vista and release an SP2, or 3) they can accelerate the release of Windows 7 and use that as a platform for releasing a “fixed” Vista.

The first choice is an obvious non-starter.  The second choice may or may not be technically feasible, and even if it is they still have the massive mountain of negative PR to overcome.  This leaves the third alternative looking VERY attractive.  Windows 7, by all accounts, addresses the bloat aspect of Vista.  Assuming it can use Vista-compatible drivers and software, the compatibility issues should be largely solved by then.  Most of all, Microsoft never has to admit Vista was a mistake!  They can boast about how quickly they released a new OS, put all the Vista ugliness behind them and move on. 

A release somewhere around the middle of 2009 will give businesses a year or so for testing and planning, with widespread adoptions starting early in 2010, which will likely be soon enough to maintain Microsoft’s desktop market.  If the Windows 7 release slips much later than that it will miss the window for businesses and many will already migrate to something else, starting perhaps around mid- to late-2009.