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Who's Watching Windows 7? Wed 14 Oct 09

Microsoft has lots of company ahead of the launch.

Windows7_v_Web A lot of people, myself included, are eagerly awaiting Oct. 22, the day Microsoft will launch its new operating system, Windows 7. As the manufacturer, Microsoft is obviously the one most concerned, but they aren't the only ones with an interest in seeing that it is a successful product launch.

Based on their latest latest earnings reports, operating systems are very important for Microsoft. The reports indicate that client systems, which represent all the various PC operating systems, account for roughly 25% of Microsoft's revenue but about 54% of its income. Microsoft does note that "revenue from Windows operating systems declined reflecting PC market weakness, especially PCs sold to businesses, and a decline in the OEM premium mix."

What Microsoft doesn't discuss is the general poor perception of the Vista operating system in the marketplace and what impact that may have had on its finances. Many corporations have chosen to skip Vista and have been holding on to Windows XP as the standard, in anticipation of Windows 7 as a viable alternative.

The weak economy has obviously been an important factor in both consumers and corporations delaying replacement of aging PCs. The desire by these same groups to avoid Vista makes the decision to delay a little easer.

PC makers are counting on Windows 7 and potentially a rebounding economy to pull them out of the doldrums. If consumers and corporations like Windows 7, it should result in an increase in PC sales as people replace older PCs in addition to upgrading operating systems. My home PC is more than seven years old and is severely undersized in terms of memory and storage. But I've been willing to put up with it while waiting for Windows 7. I bet I'm not alone in this.

Third-party software providers are also hoping for a successful launch. Just as new cars sales drive sales of third-party accessories and services, new PC sales will drive sales of new software as people want to take advantage of their new machines and new capabilities. I've got some software still in its shrink wrap waiting for a PC to put it on.

Lastly, corporate IT groups are rooting for a successful Windows 7 launch. Many corporate groups have both held off going to Vista and have skipped an annual PC refresh cycle. Corporate buying will have to pick up soon, and these groups are counting on Windows 7. Corporate buyers have been avoiding Vista as well as deferring spending.

If Windows 7 doesn't work out, corporate IT groups can expect to hear, "OK, so now what do we do?" You can almost hear the collective gulp as IT ponders that question. The good news is that so far the reports on Windows 7 have been favorable. Most people are expecting Windows 7 to perform better than Vista and to be better accepted by users. There have been some reports of issues such as Windows 7 appearing to boot up slower than Vista that give rise to concern, but as they say in the TV commercials, "result may vary."

The prospect of Windows 7 not being a success is scary. It's scary for Microsoft, PC makers, software firms and corporate IT. It has to be successful since there is not a good alternative. Sure, there are other operating systems, such as Linux. And, dare I say it, we could swap PCs for Macs. These alternatives might work in some situations, but they really aren't practical for many corporate environments due to the cost of switching and re-adjusting the support infrastructure.

Fortunately, it appears that Microsoft may have gotten it right this time. But if they haven't, they'll need to pull out all the stops to get it right. Otherwise this could be the tipping point that causes many corporations to start thinking about other alternatives. Switching would be costly and difficult, as I've mentioned, but Microsoft would be making a big mistake to even give people an excuse to begin thinking about that possibility.

"Windows 7 logo" Microsoft, Windows and the Windows logo are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries.

This article is also posted on Forbes.com.  Feel free to join in the discussion either on this site or at Forbes.com

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