Will Windows 7 Pump Life into a Dying PC Market?

Whether Windows 7 ships this year or the next, it will enter a PC market on life support.

A Gartner research report saying that worldwide PC unit sales in 2009 will decline to historic lows landed with a thud yesterday. And this on the same day the Dow Jones industrial fell to its lowest level in 12 years! Just another manic Monday.

For a little perspective: The low point for year-over-year declines in PC sales has always been the 2000-2001 economic recession. That year, PC unit shipments declined 3.2 percent. Gartner is forecasting they will decline 11.9 percent in 2009. Steep declines are predicted to take place in both mature and emerging markets.

Cheaper netbooks, which continue to sell like hotcakes, are forecast to nearly double in sales in 2009. But this does not help Microsoft because most netbooks run Windows XP Home, giving the company much less revenue than it would for Windows Vista running on regulation-size laptops and desktops.

Gartner’s numbers put Microsoft’s Windows 7 plan in a big hole. Businesses are bound to put off PC replacements and stretch the life of Windows XP and older hardware as the economy worsens and companies deal with layoffs, budget cuts and bankruptcies. When speaking to analysts last week, Steve Ballmer was quoted as saying: “Most people do, in fact, choose to get a new PC when they upgrade the operating system. It is the minority who upgrade the operating system in corporations without getting a new PC.”

So it’s not a good year to release a new operating system, but then again this is not a good year to do anything: sell a house, invest in the stock market, quit your job and start a new business. Hell, it’s hard buying groceries. But life and business must go on and Windows 7 will release sometime this year (we think).

But what will happen when it does ship? Will it get the cold shoulder from IT organizations that are content to get by in a bleak economy with Windows XP? Or could Windows 7 galvanize a slowing market by appealing to the many Vista shunners who have been planning for something new?

My take is that if the economy continues to worsen, Windows 7 will open with a whimper that could last well into 2010. It has to compete with too many unforeseen economic factors.

What do you think? Will Windows 7 collect dust as PC sales plummet, or will it spark a dying flame?