Microsoft will attempt to reboot itself this week with the launch of Windows 7, its new operating system for personal computers.The software giant is counting on Thursday’s launch to reignite its growth and rescue its image as a leading technology innovator after its failure with Windows Vista, launched in 2007 to much criticism.
Analysts estimate that just one fifth of the world’s 1.2 billion computers use Vista. About four fifths use Windows XP, introduced eight years ago, or even older Windows operating systems.
The impact of the Windows 7 launch will be felt far beyond the company’s Washington state headquarters as, it is hoped, it will drive growth for hardware, software and IT service companies worldwide.
PC manufacturers like Hewlett Packard and Dell are hoping for a big boost in sales of new machines with Windows 7 in the run-up to Christmas and research analysts say that the launch will have an immediate impact on PC unit growth.
“Recent OS releases have not been a growth driver in the PC market. However, the timing of Windows 7 is favourable for the industry due to expected economic improvements and an overdue hardware replacement cycle,” Mikako Kitagawa, principal analyst at Gartner, said. “We anticipate renewed interest in hardware upgrades from consumers and small business during the holiday season.”
Larger business and corporate customers are expected to take their time before upgrading. “In the corporate market Windows 7 adoption is not expected to ramp up until late 2010,” she said.
Gartner estimates that migration costs could be between $1,035 (£633) to $1,930 (£1,180) for a user to move from Windows XP to Windows 7, and $339 to $510 from Windows Vista. Large corporations can expect to spend millions of pounds upgrading.
The analysts IDC predict that around 177 million copies of the operating system will be in place by the end of 2010, 50 million of which will be in Europe. The firm estimates that products and services surrounding Windows 7 will generate $320 billion (£195 billion).
The IDC research shows that by the end of 2010 more than 7 million people worldwide in the IT industry and at IT-using organisations will be working with Windows 7 — or 19 per cent of the global IT workforce.
PC makers, among Microsoft’s most important partners, are busy talking up the prospects for Windows 7 as they need the boost it will give their sales.
Michael Dell, the founder and chief executive of Dell Computers, told a gathering of technology industry luminaries in Silicon Valley last week that he was expecting a “powerful refresh cycle”.
The combination of Windows 7 and the latest processing chips and productivity software meant that “you will love your PC again,” he said.
Reviews of early releases of the system have been favourable and Microsoft and its partners are due to launch a multi-million pound global advertising blitz.
According to Credit Suisse, 58 per cent of corporate customers were either dissatisfied or extremely dissatisfied with Vista. With Windows 7, which has been available in pre-release versions for several months, only 21 per cent are dissatisfied and none extremely dissatisfied.
Microsoft needs a hit to revitalise itself. The company has been accused of settling into staid middle age as it manages the mountains of cash and established customer relationships from its lucrative Windows and Office software franchises.
But the company suffered its first drop in annual revenue in the fiscal year to the end of June: a decline of 3 per cent, including a 17 per cent drop in the fourth quarter. Its share price, down 30 per cent since the beginning of 2008, has also been less than dynamic.
The company has lined up a blizzard of innovations to go with its new operating system. In a “year of product launches unlike any other in Microsoft history” there have already been revamps of the Windows Server software, a new range of the Zune HD MP3 players and a new Windows Mobile operating system for mobile phones.
In the coming months there will be launches for its Internet Explorer web browser, Xbox Live and the Bing search engine. This week should also see Microsoft burst into retailing with the opening of two stores in the US — a strategy perfected by Apple in recent years.
Steve Ballmer, the company’s chief executive, has been unchartisteristically reticent in his predictions for the new operating system, mindful, perhaps, of how high praise for Vista quickly sounded hollow after its launch in 2006.
Happily for Windows 7, the world’s appetite for personal computers is edging up again after the recession. PC shipments had fallen during the first six months of the year but last week analysts at IDC said that shipments from July through September rose 2 per cent from the same period last year.
IDC said that such growth ahead of the launch of Windows 7 boded well for the fourth quarter and next year.