Windows XP: The Microsoft OS That Just Won't Die

Users' desire to stick with Windows XP combined with Microsoft's strategy of charging XP downgrade fees are keeping the software giant from moving forward, say industry analysts.

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Fri, December 12, 2008

CIO — Phasing out an old operating system is nothing new for Microsoft, but Windows XP is unique in that it may be too good to die.

This week, Dell announced it will offer systems with the aging Windows XP for a surcharge of $150 over the newer Windows Vista—this only five months after it stopped offering XP on its Inspiron consumer desktop and laptop PCs.

[Editor's note: CIO.com was contacted by a Dell representative who clarified that the $150 is not a Windows XP downgrade fee, but is the total cost buyers must pay to upgrade from Vista Basic to Vista Business or Vista Ultimate and then downgrade to XP. Microsoft mandates that customers who want to downgrade to XP must first purchase the license to Vista Business or Vista Ultimate.]

The deadline for Windows XP downgrades has been pushed back twice now, remaining in effect until July 31, 2009—a strong indication that enough users want to stay with the aging XP rather than give Vista a chance.

Though market share for Windows XP dropped nearly 10 percent in 2008 as Vista slowly made gains, XP still has a market share of 66 percent, according to Web metrics company Net Applications.

XP downgrade fees from Dell and other OEMs will no doubt continue to irk customers in 2009, while businesses that want to stay with Windows XP will do the downgrades themselves. Industry analysts agree that Microsoft's downgrade fees are a minor problem compared to the bigger problem of so many users still wanting an older, now discontinued OS on hardware that it wasn't designed for.

Don't Penalize XP, Incentivize Vista

Industry analyst Rob Enderle, president of tech consulting firm the Enderle Group, says the XP downgrade fees will ultimately be counter-productive and possibly disastrous for Microsoft because they trade off short-term revenue for long-term customer loyalty.

"The fix for this should be to focus like lasers on demand generation for Vista but instead Microsoft is focusing aggressively on financial penalties," Enderle says. "Forcing customers to go someplace they don't want to go by raising prices is a Christmas present for Apple and those that are positioning Linux on the desktop."

As the economic recession deepens in 2009, the price of laptops and desktops, as with all retail items, will be closely watched by consumers and businesses. A recent IDC report predicts that the price of PCs will drop by close to 10 percent in 2009.

Enderle said the XP downgrade charge and the resulting pressure to move to Vista will put a magnifying glass on Microsoft in the coming year. "Instead of charging a penalty for XP, Microsoft should provide incentives for Vista," he says. "They are too focused on margins for one product and are forgetting the damage they are doing to their brand."

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