Microsoft Under Pressure for Timely Vista Release

Customers pay for software updates, but some feel they don't receive regular releases, analysts say.

Microsoft's business customers may have come to expect delays in product releases, but the company is going to be under pressure over the next year to deliver its Windows Vista operating system on time.

While the majority of business customers are unlikely to switch immediately to the new OS, the official release will start the process for those that are planning major hardware and software upgrades. It's estimated that businesses need about 18 months to test and deploy a new OS for users.

Businesses that subscribe to Software Assurance, Microsoft's program that allows free upgrades as part of its volume licensing programs, want to see new versions released to get value for their money, analysts say.

"The irritation for most enterprises is that they are not getting the new versions as part of their software maintenance agreement," says David Bradshaw, principal analyst at Ovum.

Presentations made by Microsoft officials this week indicated that Vista's release might be delayed.


Still Saying Second Half of 2006
Microsoft has said it has not determined when it will release Vista to manufacturers, but it has stated it is on track for the general availability of Vista in the second half of 2006, according to a spokesperson from Waggener Edstrom, Microsoft's public-relations firm. Vista's release date will be driven by the product's quality, she said in an e-mail response to questions.

Software Assurance also offers benefits such as telephone support, Web-based support, and classroom training, Bradshaw says. The program has become an increasing revenue source for Microsoft, he says.

While the number of complaints has been low, Gartner has seen a "decent" number of organizations that have dropped their Software Assurance agreements on Windows because they felt those weren't of value, says Michael Silver, a Gartner research vice president.

But by dropping those agreements, businesses could be left without certain features. Microsoft has said that some Vista encryption features will be available only to customers who have Software Assurance or Enterprise Agreement coverage on their Windows client, wrote Michael Cherry, an operating system analyst with Directions on Microsoft, in his paper titled "A First Look at Windows Vista."


Windows 2000 Users Go First?
Users of Windows 2000 are likely to be the first to move to Vista, as vendor application support dwindles for that OS, Silver says. Windows XP users have more time, as mainstream support from Microsoft will continue two years beyond the Vista release, which now would be 2008, Cherry wrote.

About 25 percent of the installed consumer OS base uses Windows 2000, Silver says. For businesses, including educational institutions and government, the figure is around 37 percent of the market, Silver says.

Organizations with Windows 2000 may opt for a total hardware and software upgrade, Silver says. Organizations using Windows XP may delay moving to Vista until they decide to buy new hardware, possibly coordinating a change with the release of Office 12, the code name for Microsoft's office suite currently in a technical beta release.


Sea Change
But over the next two to five years, the desktop business in the enterprise is going to undergo long-term challenges, Bradshaw says. The enormous cost of running heavy desktop clients may give way to less expensive, thin-client configurations, he says.

Windows Vista is likely to see strong competition from vendors such as SAP or Oracle offering hosted enterprise applications running within browsers, Bradshaw says. Google and Sun Microsystems are also working together on a software-as-services concept, which is another potential challenge to Microsoft's long desktop reign.

A widely publicized memo last month from Ray Ozzie, Microsoft's chief technology officer, emphasized the company's commitment to the software-as-services concept. But the question looms: With those services, "at what point do they begin to cannibalize their own desktop revenues?" Bradshaw says.

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