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Issue Date: November 2006

Vista relegated to Enterprise Labs

1 November 2006
Rhonda Ascierto

Windows Vista Business goes on sale today, but enterprises likely will spend the next year and a half testing it before it appears on the desktops of most workers.
With Vista, Microsoft has developed a more robust, secure and better performing operating system compared to XP, which launched five long years ago - marking the longest pause yet between operating systems from the company.
But because Vista is such a major overhaul from XP, companies should expect to spend 18 months testing, planning and piloting before large-scale mainstream deployment, advises research firm Gartner.
"Application compatibility is probably going to be the single biggest gating factor," said Gartner analyst David Smith. "The critical element will be if your applications run then you can consider migration."
Any and all custom apps will need to be tested with Vista, Smith said. Companies should begin that process immediately, he added. "The big milestone [today] with the shipment of Vista for enterprises is that they can get started on that testing," Smith said.
Roger Kay, president of US research outfit Endpoint Technologies Associates, agrees that six quarters out is when most large and mid-sized companies will be adopting Vista.
His firm recently conducted a survey of a handful of enterprise CIOs and IT managers about their Vista plans and found even smaller companies, typically near-term adopters, will begin rollouts only in the second half of next year. The bulk of companies will wait for 2008 or Service Pack 2 (SP2), Kay said.
"Presently, we see no business value in deploying Vista given the cost and impact to our operation," said one of the survey respondents, who was identified only as the CIO of a major online brokerage with 10 000 seats. The CIO noted that his company's dependency on Windows was minimal outside of basic office automation.
In this scenario, the firm has more servers than clients, since most customers connect over the Web through a browser, and his intention is to shift the server plant to Linux over time, Kay explained.
"Most of these firms will adopt Vista, but virtually all of them groused about Microsoft as a partner, expressing mixed feelings about the software and something akin to anger at the price," Kay added.
More disturbingly, "Several seemed to be afraid to criticise the Redmond behemoth for fear of some sort of retribution, shades of the 'old' Microsoft," Kay said.
Seems the prospect of such long testing phases has not flustered Microsoft. The software maker's CFO Chris Liddell yesterday said, at a CSFB technology conference, that he still expects Microsoft to grow revenue 13% to 15% for the current fiscal year, which ends mid-2007.
And he forecast fiscal 2007 operating earnings growth of between 9% and 11%, with earnings per share growth of 13% to 15%.
Of course, consumers will help buoy Vista sales next year, once the mainstream version of the OS launches in January.
Even so, Kay reckons the launch timing of both versions of the OS is a bit of a disaster.
Kay said large and mid-size businesses, or ‘relationship’ customers, will adopt Vista over time, as has been the trend since the launch of Windows 95. Small businesses, or ‘transactional’ customers, however, will snap up Vista fairly quickly.
While Vista Business goes on sale tomorrow, the consumer version - which SMBs will buy - goes on sale in January. "This timing probably could not be any worse," Kay said, in a recent report.
"The relationship customers, who have the opportunity to buy first, will not be picking it up in volume for a number of quarters as they kick the tires, and the transactional customers will get their opportunity to buy right after the high season, when their interest is at ebb tide," he said.
What is more, Vista will be in the stores in January, but consumers will not show up until back-to-school 2007, which really is August, Kay pointed out.
Still, Vista is a broad improvement over XP. "It is really not if, but when, and Microsoft's poor launch timing belies the fact that over the next two to three years, hundreds of millions of copies will ship worldwide," Kay said.
During the first, second, third and fourth quarters next year, Kay expects to see adoption figures among relationship customers, or larger companies, of 5%, 10%, 15% and 20%, respectively. That means about 82 million Vista license shipments for the full year.
SMB and consumer customers will adopt the OS more quickly. Kay forecast, 25%, 50%, 75% and 100% adoption rates among these transactional customers next year.
Gartner expects Windows Vista Business will be installed on just 4% of all the world's PCs by the end of next year. In 2008, deployment will nearly quadruple to 15%, and then increase to 28% the following year. By 2010, fewer than half, or 39%, of PCs worldwide will be running the OS. That is more than the expected 28% share for Vista Home.
Within four years, a little more than half, or 52%, of new PCs globally will ship with Vista Business, according to Gartner.
A Microsoft spokesperson yesterday confirmed that the 2007 Office System and Exchange Server 2007 also launch worldwide for volume license customers of Vista and Office today. Exchange Server 2007 will be available in December, said the spokesperson.

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