Windows 7: 83% Of Businesses Won't Deploy Next Year

New data shows that the vast majority of corporate IT departments won't touch Microsoft's next OS until at least 2011.
Microsoft (NSDQ: MSFT) may need to keep its Windows XP operating system around a little longer—at least for its deep-pocketed corporate customers.

Mainstream support for XP ends Tuesday but, in news that bodes ill for Redmond and the broader PC industry, new data first obtained by InformationWeek indicates that only a small percentage of businesses plan to migrate to Windows 7 in its first year of availability.

Economic concerns and worries about compatibility—the bugbear that doomed Vista in the corporate market—will keep Windows 7 on the shelf for all but a handful of enterprises until at least 12 months after the OS becomes available later this year or early next, depending on Microsoft's release schedule.

"Early beta testers are providing many glowing reports about the functionality and performance of Windows 7, especially compared to Windows Vista," note market watchers at Dimensional Research, in a survey that will be released this week. "But is corporate IT excited about the new operating system, or do they dread yet another release?"

They pretty much dread it.

The survey, of more than 1,100 IT professionals, is one of the first extensive looks at Windows 7's early sales prospects. It found that a whopping 83% of enterprises plan to skip the OS in its first year. While the business market typically tends toward caution when it comes to new products, the figure is nonetheless surprising given that almost no large companies migrated to Vista and as a result most have been using XP much longer than planned.

"The majority of participants do not plan to upgrade to Windows 7 in the next year. Economic factors are contributing to the delay in Windows 7 adoption for almost half of all participants. Software compatibility is the most frequently cited concern with Windows 7," notes the study, which was carried out by Dimensional on behalf of systems management appliance vendor KACE. KACE's KBox appliance is designed to help IT managers more easily deploy Windows, Mac, and Linux software across the enterprise.

The news for Microsoft doesn't get much better in Windows 7's sophomore season. Less than half of the IT pros surveyed, 42%, said their organizations planned to deploy Windows 7 within 12 to 24 months of release. 24% said they would wait 24 to 36 months, and 17% said they would wait more than 36 months to migrate to Windows 7.

Widespread failure by corporations to embrace Windows 7 could cause problems on a number of fronts. For Microsoft, it would surely mean a further slip in its already declining share of the PC market. Due in large part to Vista's unpopularity—users griped about its resource requirements, intrusive security features, and lack of compatibility with older software--the company's Windows sales fell 8% in the most recent quarter, even as rival Apple's Mac OS gained share.

The open source Linux OS also could benefit from slow uptake of Windows 7 in the enterprise market, as could Google (NSDQ: GOOG)'s Android OS--which some computer makers are reportedly testing as a netbook platform. 50% of those surveyed by Dimensional Research said they've considered switching to a non-Windows OS to avoid Vista or Windows 7.

Failure by Windows 7 to catch on early might also cause headaches for the wider IT market, slowing sales and innovation.

Windows XP, still in use by the vast majority of businesses, was released in 2001—meaning that it will be a decade old in two years. As such, it's hardly an inviting platform for developers looking to employ the latest and most innovative technologies in their products. For instance, XP is a bit long in the tooth when it comes to full support for multithreaded applications, that is, those programs written to take advantage of today's ubiquitous, multi-core processors. Also, Windows XP is not compatible withMicrosoft (NSDQ: MSFT)'s glitzy new graphics API, DirectX 10.

Meanwhile, large PC OEMS, such as Dell (Dell) and Hewlett-Packard (NYSE: HPQ), could see hits to their top line if the corporate market shuns Windows 7 boxes the way it did computers bearing the Vista logo. System integrators also might suffer. Technically, XP is not even supposed to be still available to big computer makers, though sales continue through a Microsoft-sanctioned marketing program that allows users to "downgrade from Vista to XP.

Also looming, should Windows 7 stumble out of the gate, are support and compatibility problems. Microsoft is no longer issuing service packs for Windows XP, and its mainstream support for the product ends on Tuesday. Businesses that don't upgrade to Windows 7 until, say, 2011, could be facing a two-year service gap.

On the other hand, early adopters of Windows 7 could see broken applications. Microsoft has warned that apps that don't work properly on Vista won't fair much better on Windows 7 because the two operating systems share the same code base. 67% of the tech pros surveyed by Dimensional Research said they had "concerns" about deploying Windows 7; of those, 88% said their biggest worry was application compatibility.

Talk about a rock and a hard place: Wait too long to migrate to Windows 7 and face XP support issues; upgrade too soon and deal with compatibility gremlins.

Despite early, positive feedback on Windows 7, Microsoft clearly needs to do more to help businesses overcome fears, born in large part from bad Vista experiences, about upgrading to its next operating system. It must engage the developer community more aggressively than ever to ensure that the driver issues and other glitches that plagued Vista upon release don't happen to Windows 7, and it needs to provide white glove migration support for high-profile customers who can set the tone for the rest of the industry.

The company, and the broader PC market, can ill afford another bomb from the Redmond software labs.

The contrast between Windows 7's glowing beta reports and tepid sales forecasts—as implied by surveys such as the KACE/Dimensional Research study--shows that, when it comes to Windows 7, Microsoft's biggest challenge may have less to do with technical matters and more to do with restoring lost credibility in the enterprise PC market. The software maker needs to start on that now, regardless of Windows 7's actual release date.

BY Paul McDougall

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