Microsoft Corp. (MSFT) has been busy prepping the Windows 7 replacement for the much-maligned Windows Vista operating system, and it’s finally here in beta. And programmers are so far raving. That’s good news for the software giant, since a number of IT departments are sitting Vista out. But there are also implications for the industry as a whole: Avoiding Vista has delayed some companies’ IP communications plans, while more and more of them are turning to rival Macs, Web-enabled services strategies and hosted VoIP to run their IT and telecom operations.
What’s more, with an estimated launch date of early 2010, Windows 7 could be too little too late to prevent Microsoft from feeling the first tingle of tech leprosy aka obsolescence.
With its clear market share dominance in desktop computing and overall household-name status, Microsoft is not going anywhere anytime soon. But it should be worried about being nimble enough to change with the times, or risk being regarded as somewhat of a dinosaur, with the rest of the world passing it by — an image Apple Inc.’s (AAPL) been trying to foment for a long time.
Changing With the Times...
Microsoft recognizes the challenges it faces; its latest annual report to the SEC stated: “The Windows operating system faces competition from alternative platforms and new devices that may reduce consumer demand for traditional personal computers; competitors such as Mozilla offer software that competes with the Internet Explorer Web browsing capabilities of Windows products. User and usage volumes on mobile devices are increasing around the world relative to the PC.”
Hoping to stave off this competition, the software giant is optimizing its products for ultra-mobile “netbooks” and will include in Windows 7 a more cloud-friendly Internet Explorer 8.
The new OS refocuses the company on the burgeoning “mobile Internet device” market, which is likely to expand rapidly in the coming year. According to Citigroup, netbooks will make up a third of all PC growth this year, and shipments will grow at an annual average rate of 60 percent — compared to an 18 percent growth for laptops, according to BNP Paribas. Built largely on Intel Corp.’s (INTC) Atom processor, MIDs trade the substantial memory and graphics horsepower of a traditional laptop for lower price tag and a focus on Web applications.
Ironically, Intel has already taken a hit in its bottom line from a shift from notebooks to netbooks, to the tune of an estimated $1.14 billion in revenue in 2008, according to Rethink Wireless analyst Caroline Gabriel, and that could become a $2.16 billion loss in 2009. Nonetheless, the world’s largest chipmaker is looking to new markets as the traditional PC world withers, giving way to connected devices that take advantage of cloud services and mobile broadband.
Microsoft is doing likewise. But Windows Vista can’t operate on the lightweight devices. Aiming to address this, at a recent developer conference, Windows and Windows Live senior vice president Steve Sinofsky showed off Windows 7 on a Lenovo S10 netbook, touting the fact that the OS uses less than half of the device’s 1GB of RAM to run. He also talked about the Web-based version of Office that will help power Microsoft’s strategy to embrace anytime, anywhere mobile computing and the cloud.
“It’s all about personalization and putting you in control of the PC,” Sinofsky remarked.