by Shane O'Neill

Windows Vista Fights for Relevancy Against Sluggish Sales, XP and Windows 7

Oct 30, 20085 mins
Small and Medium BusinessWindows

Windows Vista continues to struggle against low adoption rates and a bad reputation, despite optimistic reports from Microsoft and independent research firms.

Recent sales numbers for Windows Vista paint a somewhat dreary picture for the OS as consumers and enterprises try to save dollars in an economic downturn.

While Microsoft cited strong overall year-over-year growth in revenue in its fiscal Q1 2009 earnings report last week, the numbers for Windows Vista fell short of expectations, with year-over-year growth of just 2 percent.

The software giant expressed disappointment in Vista’s lethargic sales growth, pointing to growth in inexpensive netbooks that use Windows XP or Linux and flat PC sales in developing countries as the two main culprits.

Vista moved only slightly in a quarter that saw 10 to 12 percent growth in overall PC shipments. Meanwhile, Microsoft has been hyping Windows 7 while barely mentioning Vista at its annual PDC (Professional Developers Conference) in Los Angeles. Is Vista being unduly neglected, and is too late for a significant turnaround?

The answer is probably yes to both questions, says Roger Kay, president of research and consulting firm Endpoint Technologies.

Kay says that although Vista is “getting a bad rap,” it never generated enough momentum when it launched. “It didn’t make the big splash it should have in early 2007. And that window has pretty much closed,” he says.

Microsoft’s claims that skyrocketing sales of cheap netbooks and flat foreign sales are Vista killers left one Computerworld reader unconvinced.

“Microsoft blames the low uptake of Vista on ‘netbooks and foreign sales of less expensive versions of Vista’….That is pure 100 percent unadulterated BS …. There are IT enterprise customers who wouldn’t deploy Vista if their life depended on it. The real reason that MS is sucking air on Vista sales is that the consumer market is drying up due to the economy and the enterprise customers (even those with upgrade rights) are staying at Windows XP.”

Kay asserts that Microsoft is not hiding anything and that netbooks and flat foreign sales are absolutely hurting Vista. But, he added, “Vista adoption has been at historically low rates. The learning curve is too great and the transition costs are too high for the perceived benefits,” he says.

“Meanwhile, Microsoft is greatly affected by the PC lifecycle. If customers delay purchases for financial reasons, as they’re doing now, then fewer units go out, affecting license shipments. Add to that a higher proportion of discounted developing world licenses and XP Home and embedded licenses and you have a recipe for slowing revenue growth.”

Microsoft, for its part, remains confident that Vista is building momentum, and it stresses that those who have deployed Vista are satisfied.

“We are pleased with Windows Client momentum,” says Ben Rudolph of Microsoft’s Windows Business Group. “But success isn’t measured just by sales—it’s also important that our customers are deploying and using the product, and that they’re satisfied with the experience. Based on our latest internal research, nearly 90 percent of Vista users are very satisfied or satisfied with the product. Across all of these metrics, we’re pleased with the progress we’re seeing.”

Marginal 2 percent growth notwithstanding, it hasn’t been all bad news for Vista over the past six months. Kay of Endpoint Technologies emphasized that “Vista has made improvements, notably with security and interface” and is “an overall good experience these days.”

An IDC report from March 2008 predicts a “much stronger adoption curve for Vista on the business side now that Windows Server 2008 has launched.” Similarly, an April 2008 report from Forrester Research entitled “Building the Business Case for Windows Vista” lays out the potential “harsh realities” for businesses that skip Vista.

A common Microsoft defense about Vista is that it has been unfairly battered by the press and that Vista adoption among businesses is actually outpacing what Windows XP did in the same timeframe.

Indeed, numbers from an April 2008 research report from Gartner show that both Windows XP and Windows Vista started at the same installed base percentage (4.7 percent) in 2002 and 2007, respectively, and the Windows XP business installed base figure was 16.9 percent in 2003 compared with a projected Windows Vista business installed base of 21.3 percent in 2008.

However, these Vista growth measurements were held up to scrutiny and Microsoft was accused of spin because Windows XP had to compete with Windows 2000 Professional upgrades during its early years, and Vista did not have to deal with such obstacles. In fact, six years had passed between XP’s release and Vista’s release.

So as we head into the holiday season in an uncertain economy, Vista is getting bounced around between Microsoft’s proud claims of widespread customer satisfaction, conflicting research reports of success and failure and screams from industry watchers that Vista is dead.

Kay says that regardless of improvements in Vista and reports of continued growth, Microsoft’s mind’s eye is set squarely on Windows 7.

Adds Kay, “Microsoft has a history of being more excited by future products than current ones, and that has taken some of the wind out of Vista’s sails.”