Microsoft sees slow but real take-off for Windows 7 in business

Independent surveys say most enterprises will upgrade -- but they're in no rush to do so

Despite Thursday's Windows 7 launch and hoopla, Microsoft remains cautious about corporate uptake of the operating system and believes 2010 will be the real start to the upgrade cycle that could run into 2012. Chris Liddell, Microsoft's CFO, said on the company's earnings call Friday that Microsoft is getting positive feedback from companies on Windows 7.

That information would seem to align with numerous analyst surveys, such as a recent report from Forrester Research that shows 66 percent of corporations plan to upgrade to Windows 7. In that report, however, nearly half said they did not have definite plans as to when that upgrade would happen.

[ Get the full scoop on the new Windows 7 with InfoWorld's "Windows 7: The essential guide" compendium and the 21-page "Windows 7 Deep Dive" PDF report. ]

Liddell, however, said Microsoft is building its own model. "We are staying reasonably cautious about the [business PC] upgrade cycle; certainly we expect it to begin next year, but we talk about it spreading maybe over a couple of years so I would like to think that we would start to see much better business PC numbers year-over-year next calendar year," he said.

Liddell was optimistic especially in the light of the company's 2010 fiscal first quarter, which showed only a 4 percent decline in revenue year-over-year when adjusted for $1.47 billion in deferred revenue mostly due to advance sales of Windows 7.

Liddell was congratulated repeatedly on a fine quarter by financial analysts asking questions on the earnings call. Windows license sales were the strongest in Microsoft's history for a single quarter, according to Bill Koefoed, general manager of investor relations at Microsoft.

But Liddell said the big variable for PC growth is tagged to businesses upgrading their machines. "[Business PCs] have been a significant negative in my mind," he said. "That has decreased double digits over most of the last few quarter and dragged down the numbers, but that can't last forever. Eventually those PCs wear out and have to be replaced."

Overall, IDC says PC shipments dropped year-over-year by 6.8 percent in the first quarter and 2.4 percent in the second quarter. The third-quarter numbers reported last week showed shipments were up 2.3 percent.

Microsoft is banking on that trend to continue and for corporate users to be in the driver's seat. "We feel pretty good about what PC demand is going to look like in the next calendar year," Liddell said

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This story, "Microsoft sees slow but real take-off for Windows 7 in business" was originally published by Network World.