XP Lives

Microsoft (Nasdaq: MSFT) has given its Windows XP operating system -- originally set to disappear from store shelves in January 2008, one year after the release of Windows Vista -- a reprieve.

"There are some customers who need a little more time to make the switch to Windows Vista," said Mike Nash, corporate vice president, Windows management. "So we're responding to feedback we have gotten from our [original equipment manufacturer] partners that some customers will benefit by extending availability of Windows XP to June 30, 2008, instead of the planned date of January 30, 2008."

In addition, as some of the PCs shipping to emerging markets do not meet the minimum requirements to run Vista, Nash said Microsoft would extend the availability of its Windows XP Starter Edition through June 30, 2010, thereby allowing its OEMs in emerging markets "more opportunity to offer genuine Windows licenses."

Customer Demands

In postponing the permanent shift to a Vista-only environment, Microsoft is acceding to an outcry from customers who reported compatibility problems with existing software. Stats from the NPD Group indicate that Microsoft sold some 40 million copies of Vista during its first 100 days on the market. XP sold 20 million copies during its first 100 days -- but the base of PC users was much smaller then.

Without taking software bundled with computer purchases into consideration, Vista sales during its first seven months were down 59.7 percent compared to XP sales for the comparable period. Revenue for Vista was 41.5 percent lower than for XP.

Microsoft's extension of XP's lifespan came as no surprise.

"They've responded to feedback from customers," Laura Didio, a Yankee Group research fellow, told TechNewsWorld. "They've decided to give small businesses and customers in emerging markets more time to test and prepare for the operating system upgrade, because I'm sure what they've been hearing -- and what I know I've been hearing -- is that people are having a lot of problems with Vista."

Since Vista's debut, Microsoft has worked strenuously to improve its interoperability, bumping up the number of devices compatible with the OS by 600,000 -- from 1.4 million to 2 million. The OS now supports the top 50 consumer programs.

"Microsoft responded to what most businesses have been calling for over the past six months," Benjamin Gray, a Forrester Research analyst, told TechNewsWorld. "Their Windows Vista deployment plans are tracking a little slower than they had originally anticipated, due to application and hardware compatibility concerns.

"The announcement shows that Microsoft is flexible when they hear from their customers," Gray continued. "What will be interesting to watch is if this announcement has any effect on the release of Windows 7 (Microsoft's next OS), as its release is largely dependent on the success of Windows Vista. If Vista deployments are being drawn out over a longer period, it wouldn't surprise me [if] this pushed out the launch of Vista's successor."

That said, Gray anticipates that Vista will rebound and eventually become a top-seller -- a contention supported by data from Microsoft, indicating sales of more than 60 million licenses as of this summer.

That puts Vista on track to become the fastest-selling operating system in the company's history. "The outlook for Windows Vista is still bright. More immediately, however, businesses need more time to prepare for the migration," said Nash.

Root of the Problem

"Maybe we were a little ambitious to think that we would need to make Windows XP available for only a year after the release of Windows Vista," Nash acknowledged.

That is exactly the problem, said Michael Silver, a Gartner (NYSE: IT) analyst, adding that the extension of XP availability is really only of interest to very small businesses and consumers.

"Anyone large probably has a volume license agreement with Microsoft -- Open or Select -- and is therefore eligible for downgrade rights on certain SKUs (stock keeping units) anyway," Silver told TechNewsWorld.

"Microsoft's real problem was that they announced such a short time originally," he explained. "Previous releases had up to two years of sales after the new version shipped. This should really be part of their product support lifecycle -- actually, it is."

Were Microsoft to strictly follow its own support lifecycle policy -- that a new OS should be available from OEMs and retailers for four years -- XP sales would have been halted one year before Vista shipped, leaving Microsoft without an OS to sell, Silver pointed out.

"Obviously that clause of the product support lifecycle is useless," he remarked, "but Microsoft has not yet addressed it to make it consistent."

Keeping It Simple

The basic issue beyond Microsoft's retirement policies for aging OSes is that with Vista, the company turned out a product that is not so easy for some business and consumers to migrate to -- and, more often than not, requires them to purchase an entirely new system.

"The root of the problem is the complexity of the hardware requirements," Mike Cherry, lead analyst at Directions on Microsoft, told TechNewsWorld. In addition, "many people want a very cost-effective computer that is likely going to be underpowered for Vista. Therefore, XP may be the better choice.

"You shouldn't have to be an electrical engineer to know what computer has the resources, including graphics capabilities, to run the OS," Cherry pointed out. "Part of the problem is an unclear log and five versions of a product. Rather than figure out the complexities of choosing the right hardware and the right edition of Vista, why not keep things simple and stick with XP?"

Come July 2008, Microsoft likely may XP once. "At the price most consumers want to pay for a computer, the hardware is likely underpowered for Vista," Cherry commented. "Vista seems to be getting painted with a label of failure, just like Windows ME. It may not be a fair analysis, but the way the negative perception is heading, things could get worse for Vista."

Gartner's Silver, however, is not so sure.

"Some ISVs will still not have addressed Vista support by [July 2008], but that won't mean that Microsoft will extend this again. Whatever they do, they need to make a predictable policy around this," he advised.