Tech's Bottom Line | Bill Snyder » TAG: Save XP

June 12, 2008 | Comments: (0)

Businesses saying a stronger no to Vista

TAGS: Microsoft Vista, Save XP, Windows Vista, Windows XP

Hardware costs, driver problems, application incompatibilities, and more -- you've heard the litany of complaints about Windows Vista before, but perhaps you thought IT would roll over and move to Microsoft's new OS as Microsoft expects. You'd be wrong: IT is not moving to Vista, at least not in the numbers the software giant had hoped.

A just-released survey by Sanford Bernstein & Co., a Wall Street investment bank, finds that support for (that is, planned adoption of) Vista in small, medium, and large businesses has slipped substantially in the last year. "The inescapable conclusion of our 2008 survey is that support for Vista has been battered across all enterprise sizes and corporate constituencies. As a consequence, the Vista cycle looks likely to be materially less robust than indicated in our prior survey," writes Bernstein research analyst Charles Di Bona.

[ Get the latest on InfoWorld's "Save XP" efforts and add your voice. ]

The numbers are striking. In 2007, just under 31 percent of the IT execs surveyed figured they would upgrade to Vista within two years; in the current survey, that total dropped to 8.1 percent. Even more dramatically, just 20 percent of the execs now expect to have deployed Vista three years after its launch, down from 67.6 percent a year ago.

Any survey can be open to question, but this one was led by an analyst who does not have an axe to grind about Microsoft. Indeed, Di Bona has an outperform rating (equivalent to "buy") on the company and figures the stock should hit $41 a share, well up from its current price of about $28. The survey was conducted by Bernstein, Ziff Davis Media, and Peerstone Research.

The researchers queried 372 IT professionals with input into and control over PC-related decisions regarding their adoption of Vista. The respondents were well distributed among small, medium, and large enterprises that collectively own nearly 2.7 million PCs, some 95 percent of which are Windows machines.

Flunking the compatibility test
Perhaps typical of the Vista rejecters is Gary Roberts, director of information technology services at Alfred University, a medium-size college in western New York. Earlier this year, Roberts asked his staff to road test Vista on half a dozen machines and give him a recommendation about deployment. The answer? Wait a least a year.

The biggest issue was a compatibility problem with two critical, vertical applications. (He asked me not to mention the names of the applications as a courtesy to his vendors.) It appeared that there was a problem related to Vista's use of Java to load Web-based applications. "It wasn't insurmountable, but it gave us pause," he says.

Before making a final decision, Roberts posted a query in a listserv frequented by the CIOs of other universities and found that his colleagues were overwhelmingly negative about Vista. By a four-to-one margin, the execs said they had no plans to deploy Vista for at least six months.

"I don't have the staff to be on the bleeding edge," says Roberts, adding that he'll stick with Windows XP for now and make another assessment at the end of the year.

Roberts didn't mention the cost of buying the beefier PCs needed to run Vista, but the execs surveyed by Bernstein certainly did. In fact, the stiffer hardware requirements, followed closely by application compatibility issues, were the factors most influential in deciding not to upgrade. The higher price of Vista was another major issue, along with performance, ease of use, and problems finding drivers.

One surprise: Security did not show up as a major negative; on the contrary, of the execs surveyed, more than half of those most favorable to Vista listed security (the BitLocker disk encryption capability in particular) as a positive.

Microsoft has its say
The steady drumbeat of negative publicity is obviously a big factor in the reluctance to deploy Vista in the enterprise. Microsoft, of course, is well aware of the image problem but is still proceeding with its plan to begin the phaseout of XP at the end of the month.

Since InfoWorld (and I) have been beating the drums to save XP, I think it's only fair to present at least some of Microsoft's arguments. Here are a few bullet points and a page that presents them in more detail.

* Windows Vista now supports 77,000 printers, cameras, speakers, and other devices and components.

* More than 2,700 software programs are now certified to work on Windows Vista, including 97 of the top 100 consumer applications.

* 62 percent of small business said Windows Vista saves them time, and 70 percent said that it makes them more productive, according to an independent survey.

* More than 140 million copies of Windows Vista have already sold, making it the fastest-selling operating system in Microsoft history. (That number is of all Vista licenses sold, but it does not subtract the enterprises, businesses, or individuals who have "downgraded" those licenses by reinstalling XP. That's common practice in large enterprises, and Microsoft also provides this option for individuals and small businesses.)

It's worth noting that there are still a number of options to acquire XP for business.

And it's not too late to make your voice heard. Join the more than 200,000 other people who have signed the petition demanding that Microsoft keep XP for sale beyond June 30 and find out why XP is so worth saving.

(Disclosure: I own a small number of Microsoft shares.)

I welcome your comments, tips and suggestions. Reach me at bill_snyder@infoworld.com.

Posted by Bill Snyder on June 12, 2008 03:00 AM

May 01, 2008 | Comments: (0)

Don't be a cheapskate, Steve: Keeping XP won't hurt Microsoft's bottom line

TAGS: Microsoft, Save XP

Virtue may be its own reward when you go to church. But, like it or not, virtue generally takes a backseat to profit in the corporate world. But isn't it nice when the two come together?

Case in point: Windows XP, an operating system whose time has not yet passed. At least, we hope not. InfoWorld, of course, has been leading the charge to save XP, and I'm not going to repeat all the reasons that's a good idea.

[ If saving XP is revenue-neutral for Microsoft, keeping XP could mean actual big savings for users, argues Galen Gruman. ]

But to be honest, as a Microsoft stockholder and Wall Street watcher, I might well be inclined to tell InfoWorld to stuff it if I really thought there was a compelling business reason to toss XP overboard. After all, Windows is the engine that drives a huge chunk of Microsoft's revenue and profits; damage it and shareholders suffer. But a legitimate business case for dropping XP doesn't exist.

No loss in revenues if XP stays on the market
"Saving XP would be revenue-neutral," says Trip Chowdhry, managing director of Global Equities Research and a longtime software analyst. Why? Despite a lot of deservedly bad publicity and a slowing economy, Microsoft has sold about 10 million copies of Vista a month.

Even factoring out the copies preinstalled on consumer PCs (where XP has not been an option for a year), there's real Vista demand out there that will continue to enrich Microsoft, whether XP is supported or not. "In any case, the remaining customers will upgrade on their own time," says Chowdhry.

Suppose Chowdhry is wrong, and a continued availability of XP Pro, the rough equivalent of Vista Home Premium, did cut into Vista sales. In case you've forgotten, Microsoft is a monopoly, according to courts in the United States and Europe. And that means it has pricing power. It wouldn't be hard to tweak prices and licensing terms a bit to maintain a more profitable revenue mix, says Matt Rosoff, an analyst with Directions on Microsoft. That could entail a price increase on the XP side, or a price cut on the Vista side to drive demand. In either case, it's a wash.

Microsoft's telling lack of blame on XP for low Windows sales
Interestingly, there was some chatter on Wall Street and in the blogosphere that the results of Microsoft's last quarter, which were good, but not great, were hurt by some slowing in sales of Vista. That was certainly a good opportunity for the company to talk about why it should kill XP, but it didn't.

Indeed, CFO Chris Liddell points the finger for slowing client revenue at piracy, and said the OS brouhaha not only wasn't an issue in the quarter, but adds, "If we sell a unit of XP rather than Vista, we're still relatively happy."

I suppose you could say the company is spinning the results to cover its embarrassment over hostility to Vista. Call me naive, but I don't believe that Liddell, who has an excellent reputation on Wall Street, is dissembling.

Microsoft already has a way to get Vista revenues from XP sales
And then there is the strategy Microsoft has taken to allow some users to get XP after the sales cutoff on June 30. Microsoft's position on exceptions to the end of business sales of XP is certainly complicated, perhaps deliberately so. (For a good explanation of the technicalities, see my colleague Galen Gruman's article.)

It may seem burdensome (OK, it is burdensome), but the so-called downgrade option, which entails purchasing a Vista license to buy XP, clearly protects the company from revenue loss on the enterprise and small-business sides of the business. It's also worth noting that enterprise upgrades tend to be driven by hardware replacement cycles, not operating system changes, says Rosoff.

Would supporting XP and Vista increase Microsoft's costs?
Then there's the question of supporting two code bases, and it's a complicated one. On the one hand, says Rosoff, Microsoft isn't about to pull an Apple and build a version of Office, its other cash cow, that doesn't run on XP. Therefore, it's going to tend the code in any case.

On the other hand, says Mike Cherry, also of Directions on Microsoft, "The company is already under the gun to get Windows 7 out, which is hard enough without having to worry about Windows XP."

He figures that despite its intention to stop issuing significant fixes to XP, the emergence of a major new bug would force the company to divert resources in the operating systems group to solve the problem. (Microsoft says it will support XP until April 2009, and issue security fixes through April 2014. Its Third World and cheap-PC versions of XP will be supported through spring 2014 as well.)

What Microsoft has to lose from not keeping XP
Cherry has a point, but does it really outweigh the enormous loss of goodwill the company will suffer if it kills XP? And remember, I'm not talking about virtue as its own reward. The computing world has changed enormously this decade, and Microsoft is facing challenges on all sides.

Angry customers tend to look for alternatives, and with Google, Mac OS X, Linux, and any number of upstart Web 2.0 technologies vying for attention, it's not smart to push them away.

Moreover, the more hostility Microsoft manages to engender, the more likely it is that regulators here and in Europe will find it politically acceptable to again lower the antitrust boom.

There you have it. Microsoft can do both the right thing and the smart thing by saving XP. So don't be a cheapskate, Steve. Listen to your customers.

(Disclosure: I own a small number of shares in Microsoft.)

I welcome your comments, tips, and suggestions. Reach me at bill_snyder@infoworld.com.

Posted by Bill Snyder on May 1, 2008 03:00 AM