Hrishikesh Thite is a second year management student at the Indian Institute of Management Calcutta. This thought piece was written as part of a submission for a course on Analysis of ICT Markets. It is fairly long, so consider yourself forewarned.

Microsoft released the Windows 7 Release Candidate (RC) to the general public and 7 went gold[1] on July 22, 2009. The first impression is not very much different from that of Windows Vista – Windows 7 looks and feels pretty much the same at first glance. Most internet reviews have evaluated Windows 7 from just the consumer perspective, with a “What’s New” list, and frankly there are not many bullet points in that department. Windows 7 is indeed based on the same kernel and architecture as Vista, and in many cases it is just a version bump. Few technology reviewers would even go on to say that Windows 7 is what Vista should have been all along[2]. So what has changed exactly? Is 7 indeed better than Vista; more importantly, is it an overall better value than XP that many current users refused to give up[3]?

In order to analyse if Windows 7 will succeed, we need to first define success; this by itself is a rather hard nut to crack. Microsoft has spent upwards of $6 billion[4] towards development of 7, and will spend a few hundred million in marketing it. Microsoft expects to sell 177 million copies and licenses[5] by the year end which will bring in revenues to the tune of $15 billion, making Windows 7 a commercial success[6]. The forecast estimates also mean that 7 must sell at a rate that is four times as effective as Vista[7]. This is, of course, rather hard to believe, given ScriptLogic’s statements[8] and Forrester’s research report[9] which predict a bleak forecast for 7. The global economy is not helping either, and many companies who skipped Vista (a whopping 89%) will also skip 7[10].

However, XP is now over 8 years old and beginning to show wear and tear. Windows 7’s improved security and usability features, 64-bit support and Microsoft’s promise to provide full compatibility of legacy software via a XP virtual machine licensed alongside Windows 7 and much improved hardware and driver compatibility[11] may be good reasons for enterprises to upgrade. In fact, if XP continues to be deployed in business environments, employees may wonder why they don’t have the latest Windows 7 that they already have at home[12]. Third-party software vendors, especially gaming studios may force upgrades, because they can only support so many different OS versions. Further, the beta-testing results scream faster boot speeds, a leaner UI than Vista and better tolerance for underpowered hardware, which may be underpinned to Microsoft’s latest target, the ever-growing NetBook market[13].

A lot also depends on how Microsoft markets the OS. There are two schools of thought on this: The first (Microsoft itself belongs to this camp) says that Windows 7 is targeted towards usability and the user experience, that the OS quickly gets out of the way allowing people to accomplish what they want to do, using slightly different[14] UI paradigms that are task-based rather than tool-based (the ribbon interface or the redesigned control panel are examples). The other school says that Microsoft should pretty much ignore the “consumers”, and market exclusively to geeks[15]. The premise is that resident geeks make-or-break an OS, and Microsoft’s exercise to appeal to the average consumer fails, unlike Apple’s for example, and the geeks create viral communities and influence a much larger base than ads or sales and marketing can ever do. Further, the changes in Windows 7 are largely behind the screens (full disk encryptions, improved networking stack for example), something that the mainstream will never directly notice, but over which the geeks will cry hoarse, like they did when Vista “sucked” and “blew hard”.

Either way, what really matters is that Microsoft and Windows 7 continues to receive a lot of positive publicity and media coverage[16], which by itself is another critical success parameter[17]. Windows 7 can be looked upon as an attempt to quickly replace the botched Vista release, and reviewers are noticing that while 7 may be based on the same architecture, it happens to do everything better than its predecessor. The law of relatives is extremely powerful in this regard: put an average product besides a bad one, and the average is perceived as over-the-tops excellence[18]. People, in general, and the CXOs that make the purchase decisions aided by the many “research journals”, in particular, tune-in favourably to all the hype that this positive press coverage generates.

An alternative way to look at success is by answering the question: “Who really cares about Windows 7?[19]” Techies, who understand OSes, choose Linux or other Unix-based variants, such as the Mac, while non-techies care only about their applications, and not about the underlying operating system. The delays in releasing Vista let XP seep into the “collective consciousness”, and when Vista did release, it fell flat because of the half-baked job; it forced XP to become the path of least-resistance for non-techies. Businesses don’t care about newer versions of Windows[20] because the existing solution works just fine and has been (almost) completely debugged. Children and older people don’t care about Windows because it is just too much pain to keep everything updated, patched and usable; it often requires jumping through the confusing hoops of the UAC, anti-malware software and the BSODs[21]. The above effectively leaves out only the “consumer” market – one that has little to say against the onerous-DRM, but needs to watch the latest BlueRay movie or play the latest OrangeBox released game[22] – to really give a wayward look at and maybe care about Windows 7.

Critics may continue to bad-mouth Vista and Windows 7[23], especially on raw performance. However, they are forgetting that most new PC and laptop purchases have extremely capable hardware, and that people are willing to use Windows 7 if they derive sufficient benefits in terms of usability, for example. The effective monopoly, whatever the anti-trust court may rule, that Microsoft has over OEMs coupled with consumer apathy ensures that a license for Windows 7 ships with every new machine purchased. These new machine sales may be slowing down, but they certainly do not appear to be declining at least in the near future, securing a constant “ka-ching” at the Microsoft’s equivalent of Scrooge’s money-pen.

In conclusion, whether Windows 7 will succeed depends on how one defines success. My weighing of the parameters described above results in a thumbs-up for 7 – Windows 7 will be a success. Even if it does not, the other cash-cow, the MS-Office system, and Microsoft’s existing (and burgeoning) cash reserves are more than sufficient to let it rethink strategies and come back anew to tackle its failures[24]. All in all, Windows 7, like Windows Vista, is “mostly harmless”[25].

Side-note: I have not covered the “new features” and hardcore benchmarking of the OS in this thought piece, even though I have access to a Windows 7 RC installation because I feel that these can be gleaned off any internet review website[26]. I’ve rather chosen to examine the market forces that will make-or-break Windows 7 and Microsoft.

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[1] Going Gold is a “traditional” phrase derived from the Release-To-Manufacturing (RTM) versions of software products, a gold master created for stamping the optical media during manufacturing for retail / OEM distribution.

[2] http://www.smallbusinesscomputing.com/news/article.php/3830971 and http://www.realtime-windowsserver.com/os_features_troubleshooting/2009/07/windows_7_is_what_vista_should.htm

[3] In fact, there exists some business users who are completely satisfied with Windows 2000, and need none of the “features” of the newer OSes, since they cause bloat and require newer and faster hardware, increasing costs.

[4] http://news.softpedia.com/news/Vista-a-6-Billion-Dollars-Operating-System-44096.shtml – Vista required $6 billion to develop; based on typical inflation adjustment et al, we can safely assume that 7 costs as much at least

[5] http://www.tgdaily.com/content/view/43208/140/

[6] Microsoft promoted Steven Sinofsky to a new position as the president of the Windows division. He is credited with improving the development process for Windows 7, compared to its long-delayed and under-performing predecessor, Vista as the president of the Windows division. http://www.computerworlduk.com/management/careers-hr/people-management/news/index.cfm?newsid=15611

[7] An effective rate of 30 million per month versus 8.5 million for Vista which sold 180 million in 21 months – http://www.tgdaily.com/content/view/43214/141/

[8] http://www.tgdaily.com/content/view/43201/140/

[9] http://www.tgdaily.com/content/view/38613/118/

[10] http://www.pcworld.com/businesscenter/article/159125/economy_could_slow_enterprise_adoption_of_windows_7.html

[11] Intel has been assured by Microsoft that it fully understands the problems that Vista had, including backward compatibility with various applications and peripherals, and that it has been working to make sure Windows 7 addresses these well – http://www.newsfactor.com/story.xhtml?story_id=13200AB9JSV0

[12] http://tech.blorge.com/Structure:%20/2009/02/07/microsoft-begins-push-to-convert-xp-users-to-windows-7/

[13] Microsoft even has a “Starter Edition” specifically targeted for NetBooks. Microsoft’s Gazelle project could build up to a substantial competition for the Chrome OS from Google – http://www.pcworld.com/businesscenter/article/160287/windows_7_the_six_versions_explained.html

[14] One of the reasons why Vista bombed is the alienation of upgrade-users from XP. Vista had sufficiently different UI paradigms that people had to relearn and retrain, something they immensely hate.

[15] http://www.macobserver.com/tmo/article/CNET_Key_to_Windows_7_Success_is_Geeks/

[16] The biggest bane of Vista’s existence is the amount and severity of negative publicity that it received, pretty much sealing its fate as a failed product.

[17] http://tech.blorge.com/Structure:%20/2009/01/18/the-key-to-windows-7-success-media-coverage/

[18] The Mojave Experiment shows this in action: Windows Vista when demonstrated to users who had no prior knowledge about how Vista actually looked and felt gave it much higher ratings, since they were unbiased by the negative media hype – http://en.wikipedia.org/wiki/The_Mojave_Experiment

[19] http://blogs.computerworld.com/who_cares_about_windows_7

[20] In fact, most business will upgrade only after a couple of months have passed since the original release, if not waiting for a couple of service packs!

[21] They are probably far better off using either a Netbook or a no-nonsense Mac.

[22] Even these guys are shifting to game consoles and stand-alone entertainment centers running off of alternative OSes.

[23] http://www.xpnet.com/iworldtest/ for example provides a report on the load times of various Microsoft Office packages on different versions of Windows on different hardware configurations. It conveniently ignores the minor, but important, usability improvements that have been built into the newer versions. There is a reason why Office 2007 over Vista is superior and more productive than Office 2000 over Windows 2000, if run on capable hardware.

[24] A recent example is the Microsoft Bing-Yahoo! deal. Also, even after the Vista fiasco, Microsoft OSes continue to maintain about 89% market share. Of course, this is already a cause for concern for Microsoft; but in the larger scheme of things, competition is good for both Linux and Mac.

[25] http://www.boston.com/business/technology/articles/2009/01/22/microsoft_tries_to_win_back_fans_with_vista_alternative/

[26] The Microsoft Fanboy, Paul Thurrott, covers these “new features” extensively at www.winsupersite.com, for example.

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