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June 8, 2009 7:54 AM PDT

Windows 7 not likely to jolt PC market

by Ina Fried
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Microsoft's top Windows business executive said Monday that for all his excitement about Windows 7, he doubts the release of the operating system will lead to a significant spike in PC sales.

Bill Veghte

(Credit: Microsoft)

"History would tell us that generally as you ship a Windows release into the market...the bump is very modest," Microsoft senior vice president Bill Veghte said in a "fireside chat" at the UBS Global Technology and Services Conference. "You will see a little bit, but it is modest."

Veghte announced last week that Microsoft plans to ship Windows 7 on Oct. 22. The company will also have a program in the coming weeks through which those who buy a new PC with Windows Vista will get a free or low-cost upgrade to Windows 7. A leaked memo from Best Buy suggests that the program will kick off at the end of this month.

On the business side, Veghte said that there is "very good enthusiasm around Windows 7," but that will not be the biggest factor in the decision by corporations about when to upgrade their computers.

"It will get drowned by the macroeconomic environment," he said in the speech, which was Webcast on Microsoft's investor Web site. "As the macro environment comes back, people will have to buy new PCs. People aren't using PCs any less."

Veghte was pressed on whether Windows 7 will help Microsoft see improvement in the average selling price of Windows, which has taken a big hit because of the rise of Netbooks, a low-cost notebook PC variant.

"It's pretty hard to tell," Veghte said. "I think in this economic environment it is very hard to see us at the mix we had (during Windows XP and the beginning of Windows Vista). As we come out of the economic downturn it's a very interesting question."

Veghte was also asked about Microsoft's recent cost-cutting effort and said it is something the company hasn't done in the 19 years he's been there. He said every expense has been questioned as to whether it is essential.

"It has been line by line," Veghte said. "As a culture we've got to go through and really make the hard trade-offs. I think it's a wonderful thing for the company, for the culture."

As for whether Microsoft will offer a cheaper upgrade for Windows Vista users, Veghte didn't give a specific answer, but did say Microsoft wants to make sure that the upgrade path is "very smooth" from a pricing perspective.

During her years at CNET News, Ina Fried has changed beats several times, changed genders once, and covered both of the Pirates of Silicon Valley. These days, most of her attention is focused on Microsoft. E-mail Ina.


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Add a Comment (Log in or register) Showing 1 of 2 pages (49 Comments)
by The_happy_switcher June 8, 2009 8:04 AM PDT
These guys must have hired the same bar-lowering expectations PR group as Palm did with the Pre.
Reply to this comment
by Mr. Dee June 8, 2009 8:34 AM PDT
Why can't you see that the Apple that have been thrown at you like a rock are is no league with a Windows PC? Geez, how can you compare a Mac with a 25 million user base with a Windows user base of over 1 billion? It just does not compute! If you read the Twitter feedback, the majority of Mac users keep saying 'Wow, Windows 7 is great'. I predict by October 22nd 2009, the majority of Intel Macs, including your Mac Mini AppleRocks will be running Windows 7.
by monkeyfun14 June 8, 2009 9:08 AM PDT
@kcotham

Are you serious right now?

Your going to say something to Dee but not say anything to AppleRocks who made a baseless comment as well?
by Random_Walk June 8, 2009 9:20 AM PDT
@Dee:

Apple has a ~10% marketshare, and 10% of 1bn certainly isn't "25 million". (In fact, IIRC Apple sells 25m machines each quarter or year, can't remember offhand which). You may want to at least get your math correct, eh? ;)
by Vegaman_Dan June 8, 2009 9:25 AM PDT
@monkeyfun14:

"our going to say something to Dee but not say anything to AppleRocks who made a baseless comment as well?"

I doubt it, that would mean having to acknowledge the double standard that they have.

Remember, everying pro your choice of OS is holy. Everything con your choie of OS is evil. That's all you need to know about OS zealots like this.
by protagonistic June 8, 2009 9:39 AM PDT
@Mr. Dee

A bit touchy this morning, aren't we? I must have missed the part in AppleRocks1963s post where he mentioned Apple. Or are we to the point where someone's user name is enough to set off a rant? I have to agree with his comment. The article does seem to indicate MS is trying to lower expectations about Windows 7 leading to a big spike in PC sales. It is an old PR trick. Lower everybody's expectations and then you can claim to have greatly exceeded what was expected of you. Of course just about every company uses it. How about chilling out and quit trying to find an insult just because of a user name...
by kcotham June 8, 2009 10:02 AM PDT
Dee, Vega, Monkey, all of you need to grow up and try a tone other than sarcasm. It's the hobgoblin of little minds and you guys aren't any good at it anyway.

(I didn't mention AppleRocks because he didn't say anything controversial or adversarial this time. He merely commented on the poor PR.)
by The_happy_switcher June 8, 2009 10:11 AM PDT
Wow, some of you really need to switch to decaf.
by Seaspray0 June 8, 2009 3:55 PM PDT
@randomwalk. You are correct on your maketshare statement according to this...
http://marketshare.hitslink.com/operating-system-market-share.aspx?qprid=8
by viper396 June 8, 2009 5:32 PM PDT
Interesting how every Apple Zealot continues to use obsolete marketing predictions to back their arguments. Apple's market share fell to 7.4% in Q1 2009 and has never actually hit 10%. How convenient that you all round up to the nearest 10 percentile.

The economy is bad, do you think you're helping Apple by pretending their marketshare is growing?
For Apple to even pretend they are having growth in this economic climate would only alienate them. People like to vilify Microsoft for making money during good times, what do you think they do to companies with expensive high profit margin products that appear to grow during bad times? Expensive products vs bad economy don't mix and even Apple is feeling the pinch.
by seven7dust June 9, 2009 2:06 AM PDT
why does marketshare matter ?
plus you MS fanboys don't seem to understand the fact that Apple sells hardware and Microsoft sells software
yet another Apples to oranges comparison to suit your needs !
compare Apple to likes of dell etc they are faring much much better actually !
See more comment replies
by Perry_Clease June 8, 2009 8:07 AM PDT
Maybe they should try getting a "Colbert Bump." Bring it on the Colbert Report's segment "Better Know an OS," it works for politicians. http://www.wikiality.com/The_Colbert_Bump
Reply to this comment
by Random_Walk June 8, 2009 8:21 AM PDT
Veghte is right, so long as he's not trying to pull a 'lower the expectations to celebrate mediocre results' job.

Corporate usage will take way longer than October... you have to test the thing first, then set up and implement training, then implement the new product slowly and cautiously (especially in a production/live environment). I doubt that they see any overall Windows growth at all from it.
Reply to this comment
by Austin_Mike June 8, 2009 8:42 AM PDT
Eh, yes and no. I run the infrastructure for a mid-size company and we're looking at rolling Windows 7 out in Q2/Q3 of next year. Testing to begin in Q4/Q1. But I've been running 7 at home for quite some time now, from beta to RC1 as I suspect a great many sys admins have and I know it's unbelievably fast and reliable.

I imagine that Veghte is right in that MS won't see a large bump in Q4 or even Q1 with Win 7, but starting Q2 of 2010 I'd be willing to bet there's a fairly large bump as companies that had held off on upgrading to Vista and are still running on XP make the leap to 7.

Training on 7 really won't be a big deal. It's very intuitive and easy for people to pick up.
by Random_Walk June 8, 2009 9:16 AM PDT
You're looking at the same time-frame that I am. ;)

I wish I could agree with you on training, but after seeing how people react to the bump from Office 2k3 to Office 2k7 (larded with commentary that can be summed as: "where the hell did everything go!")? Not so sure that training will be a small thing, especially to a crowd that is still used to XP (Vista got skipped for compatibility reasons - it's taken 8 months so far just to untangle the legacy VB/Access-based biz software crap, but I digress).

Anyrate, I know that I'm not alone. Intel (the company - they have a couple of huge facilities down the road from me) is still all XP, all the time... getting an organization of 95,000 employees to pick up on Windows 7 will be a chore, to put it charitably.
by Vegaman_Dan June 8, 2009 8:55 AM PDT
No OS release has ever made more than a bump in the sales of the industry. It doesn't matter if it's Ubuntu, Red Hat, OS X or Windows. This is not news.

It will take the enterprise market to make any real change in figures and while the standard business model of a three year product cycle is coming to the renewal date, it's not clear yet if those companies will go with Vista or Win7. From the scuttlebutt going around in the IT blogs online, it appears that many were just waiting for Win7 to be ready before moving on to the next system.

Time will tell.
Reply to this comment
by Random_Walk June 8, 2009 9:30 AM PDT
"No OS release has ever made more than a bump in the sales of the industry."

-The Macintosh Classic (MacOS)
-C64/Amiga
-Windows 95 (which devoured OS/2)
-OSX (which shot the total up from ~2% to 10% marketshare for Apple over the past 9 years, and devoured the marketshare of Windows Mobile/CE)
-Linux (which devoured the marketshares of Solaris, AIX, HP-UX, OS/400, the entire embedded OS market, and took a huge bite out of Windows NT, FreeBSD, and etc).

...shall I go on? :)
by viper396 June 8, 2009 1:25 PM PDT
@Random_Walk, he's talking about the initial release of the OS, not it's lifetime performance. Most of the OS's you mentioned were in fact slow to gain momentum. You said so yourself, it took 9 years for OSX.

Pay attention.
by Seaspray0 June 8, 2009 4:01 PM PDT
A good list, Random Walk, and all those did make a big impact in the sales of the industry. But they did take time and not on the initial release.
by flickrz June 8, 2009 10:25 PM PDT
@random_walk:
The 10% number you keep citing is for US only. Apple market share is only 2-3% world wide. Also, going from 2% - 10% in US in 9 years isn't that huge in terms of market share gain. Compare that to 0-98% for microsoft in 20 years 1980-2000.
by Random_Walk June 9, 2009 8:36 AM PDT
@flickrz: wrong post (otherwise, I'm still interested to see where your numbers came from). :)

@ others: While I can agree that time was a factor in most of them (time-span wasn't initially mentioned), some dominated in very short order, enough to qualify even under your definitions. Consider:

* Windows 95 was the first (and ironically, last) Windows version that had large masses literally lined up on the street to buy it. OS/2 was a somewhat competitive product until Win95 came out... then OS/2 suddenly choked on its own blood.

OSX Mobile shot from nothing to #3 nationally (US market) in its first year. It then shot to #3 globally in just two years after initial launch. in the interim, it displaced Windows Mobile, scared the crap out of Nokia(Symbian), and drove RIM into making a touch-screen phone/OS for the first time in its history.

These two managed to have an effect in a time span short enough to qualify as a "bump" in any reasonable definition.
by Genjinaro June 8, 2009 9:01 AM PDT
If PC manufacturers make a bigger move to create more tablet-pc, net-vertibles & PC's much like the HP touchsmart & Eee Top then yes, at reachable prices, then sales would spike in advent to Windows 7.

Its a great os in its RC stage & its more than a pat on the pat for Microsoft for actually delivering a quality OS since Windows Xp.

It'd be smart to compete with pricing & OEM pricing and keeping to the theme of affordable & good.

Windows 7 is a clear winner & for someone who has had a distasteful 1st expirence from Vista. I will be buying a copy of this.

Please try the RC, you might like it. While you are at it, don't bring your Over Apple, Pro Linux, Blind Windows fanboy to ruin your expierience. Useless OS fanboy loyalty is unhealthy anyway.
Reply to this comment
by Vegaman_Dan June 8, 2009 9:30 AM PDT
I don't think any OEM could have predicted the explosion of popularity for the netbooks. That will be the next sales leader and growth area I think. All the OEM's are trying to jump on the bandwagon there.
by tm_anon June 9, 2009 12:50 AM PDT
Linux was on netbooks from the beginning, not OEM specific distros either, actual, full featured, sponsored versions. Some of the OEMs set them up very strangly, to say the least.

@Genjinaro

I'd like to see your portfolio of OS' you've tried. I'm on to number 3 at the moment. Personally, I've gone through almost every incarnation of Windows through XP, OS9 and Ubuntu. I did use Vista one time only to look through someones digital photos, for some reason it kept losing the photos. Just seems like too much for software that can't even keep track of photos but maybe it was just that one machine.
by anonymuos June 8, 2009 9:02 AM PDT
I am eager to know the reactions of real Joe Average. Right now only the geeks have been exposed to it.
Reply to this comment
by Genjinaro June 8, 2009 9:13 AM PDT
Too true, as a "geek" I like it but Joe probably has little clue it exists...
by ppgreat June 8, 2009 9:29 AM PDT
I think this story and Bill's comments have more to do with the hopes that Vista SP2 aka Windows 7 will offset all the bad karma generated by Vista.
Reply to this comment
by TimGray--2008 June 8, 2009 10:07 AM PDT
Meh, they screwed it up with Vista bad. Now they will have a hard time getting all those Vista Burned users to shell out the money for yet another OS that does nothing more for them than the old XP did.

I like Windows 7 ,it's what vista should have been, but it's gonna be a hard sell.
Reply to this comment
by Synthmeister June 8, 2009 11:12 AM PDT
I think MS will have problems with this upgrade. Over the last decade, MS has been able to sit back and watch the computer OEMs beat the crap out of each other with razor thin margins while MS has rolled in OS fees with no competition.
But now, with the price of computers less than $500, OEMs don't want to pay the old license fees and for the first time in over a decade, OEMs are seriously considering altenative OSes like Android, Symbian, Linux and the fastest growing segment is netbooks which will force MS into much smaller profit margins than previous OS releases.

Second, consumers definitely don't want to pay the old >$100 fee for upgrading their <$500 computers to Windows 7. Ironically, MS advertising the ability to buy cheap PCs doesn't help them or their OEMs in this regard. Plus, if consumers do bother to upgrade their cheapo machines, they will just get mad when they don't run any faster after the upgrade or the promised eye candy doesn't really work so hot and various hardware and software incompatibilities crop up.

Will MS still sell boatloads of Windows 7? Of course. Many businesses and OEMs are still locked in. But the boats are gonna be a little smaller and there is going to be at least as much push back from OEMs, businesses and consumers as there was with Vista.
Reply to this comment
by babystars_13 June 8, 2009 11:16 AM PDT
Netbooks are popular because there dirt cheap. Then agin with Netbooks you end up sacrificing performance among other things.
Reply to this comment
by viper396 June 8, 2009 1:21 PM PDT
It doesn't take alot of performance to surf the internet and do your e-mail. These aren't intended for heavy gaming. For the pusposed most Netbooks are designed for you really aren't loosing much compared to a full blown laptop.
by tm_anon June 9, 2009 12:55 AM PDT
1)Get a netbook with Ubuntu or another distro installed properly.
2)Turn on all the Graphical effects
3)Wonder why Linux can run full graphical effects, a dozen apps including Firefox and Skype (both memory hogs), a Firewall and the OpenOffice equivalent of MS Word.

Yes, Netbooks are popular because they are cheap. You don't have to sacrifice nearly as much as you think you do when you get one.
by jbelkin June 8, 2009 12:38 PM PDT
He's lowering expectations because consumer PC owners for the most part will NOT pay for a WIN OS upgrade as evident by the ASP of a PC - @$500 - unless the OS upgrade is around $25, versus what Ms wants to charge - $150 to $300. THat is why WIN7 will sell about the same amount of Vista - people had a buit in excuse with Vista that there were driver & stability issues - with WIn7, there will be less built-in excuses but people won't care.

Of course, MS will still sells lots - including OEM versions and of course, some corporations have to upgrade but MS basically makes $10-$25 per upgrade - while they count those as raw numbers to make it look good, they make less on those OS sales per machine than Fisher Price does on MYFIRSTLAPTOP.

The bottom line is that a MS WIN upgrade is like a cable box upgrade - yes, sure, it's nice but does anyone really care? No. Because it has been so devalued, PC users figure it's a workable OS as long as it's "free" with their PC. That is why they are desperate to buy the cheapest computer possible icluding trading processing speed and screen space for the CHEAPEST possible ... to most PC users, a PC is NOT wirth more than $500. Smarter users or those with more needs have tried to shoehorn Linux and now Android on it ... while others who value the personal computer experience to a higher degree have turned to the Mac - that is the true difference. Mac users value their personal computing experience at $1,000 more than WIN PC users, that is why they have looked at the Sunday ads, looked at the typical PC buyer "Lauren" ad and have moved to a Mac. The debate about Mac or Pc is simply what value you place on the personal computing experience. Both Pc and mac users have made their decisions.
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by tm_anon June 9, 2009 12:59 AM PDT
Except for your asinine comment about "shoehorning" Linux onto a machine, good comment.

My problem with that particular section? Linux takes less system resources yet can use higher end machines as well. Nobody has to "shoehorn" Linux into anything. We use it, you don't.

Otherwise, good post.
by Hellcat June 8, 2009 1:24 PM PDT
Windows 7 will sell well. Microsoft doesn't care if you buy a new computer or not, as long as you buy Windows 7 and put it on a computer. They don't care if its a Mac, a new computer or a 3 year old computer, as long as you buy Windows 7. Thats the good thing about Microsoft and the bad thing about Mac, Apple does care if you buy a new machine. Apple makes money off the hardware and Microsoft makes money off the software. More people would rather buy a $200 piece of software than a $1400-2000+ piece of hardware. Thats also why netbooks are doing so well because they're cheap and they'll run Windows XP and soon Windows 7 and they only cost $200-300.
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by Hellcat June 8, 2009 1:32 PM PDT
Oh and I forgot to add. Apple doesn't care they only have 10% of the market because 10% is still a big hunk of change. But one thing, out of that 10% of people who use Macs how many of them buy Windows to run on it as well? Which is a WIN for MS because they're a software company and not a hardware.
by Zaunto June 8, 2009 1:39 PM PDT
There had better be a "smooth upgrade path" for Windows Vista users that is "affordable". I've got two computer with Vista on them and I'm not upgrading them to make Microsoft richer. I replace things when they no longer function properly. Everyone else can beta test Windows 7. I didn't touch Vista until Service pack 1 and I'm not touching Windows 7 until there is a Service Pack1
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by mtoc June 8, 2009 1:43 PM PDT
I dont think new win 7 sales will be great to start because many users find present OS work well and do not want to spend money to switch! also true of business users. eventually many win7 OSs will be bought with new PCs. am considering I Mac style configuration in a PC as I will not change interior hardware.
will want to have easy access to inards, though. maybe MS has got it right this time. hope PC makers do a good job, too. I liked new Assus,Sony and Lenovo models all in ones. big boxes are out for many.
Reply to this comment
by guest86 June 8, 2009 9:28 PM PDT
Windows Vista and 7 still eat a lot of memory ram! What a waste money! People still upset on Microsoft! Vista and 7 must kick off! Nobody beat Windows XP!

Hey guess what! Someone release DirectX 10 for Windows XP! Soon will be full version to allow Windows Vista games to pull off toward Windows XP to play without problems! Get Vista games on XP now!!!! TOSS VISTA OUT NOW! Someone who are very clever to hack Vista files then put on XP machine to make more powerful application allow play DirectX 10 like PC game and latest applications(programs) to running on it without problems!

Be honest! DirectX 11 beta and RC will begin on Year 2010 and will be full version around late 2010 and 2011 for Windows XP! No more fuss for new operating system to get headaches!!! Get move on XP and save your money and make you more happier! Forget Vista and 7. XP is too powerful and stable! But have secret weapons to unlock it! If passed test will become official! This is truth, no fool! Serious! 100% REAL!

WARNING: You must have Nvidia (Nvidia Geforce 8 series to 300 series) or ATI have DirectX 10 and DirectX 11 video cards come with it so program will allow you install latest DirectX 10 and DirectX 11 program for Windows XP to work on it.

Which Windows type had been gone to GOLD winner is: Windows XP

Windows XP WINNER! Windows XP WINNER! Windows XP WINNER!


Windows Vista SUCKS! Windows 7 SUCKS!

SAID NO TO Windows VISTA AND Windows 7 will stop making being waste from Microsoft! Shame on Microsoft! People compliant fill against Microsoft! We give up on Vista and 7 to roll back to Windows XP to keep us cool down and PEACE!

WINDOWS XP RULES!!!



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Reply to this comment
by ZetaZeta_ June 8, 2009 11:12 PM PDT
Not using all my RAM is the waste of money.
I might use XP or Ubuntu because they use less processor/video (bump up my FPS on games; I'm still not entirely sure exactly why Vista/7 run games slower, but I'm pretty sure that's the reason) but otherwise RAM is so cheap and computers are powerful (specifically for non-gaming) enough that I wonder what you're running that would even make you complain about performance. Sure, one would think you'd want to eek out as much power as you can on your applications, at some point it almost seems irrelevant, especially with all the security you are forgoing by sticking with the ancient XP.
by Jerry_In_Detroit June 9, 2009 4:01 AM PDT
The big problem is that operating systems don't sell by themselves. It's the applications that run on the operating system. For years, Photoshop would only run on Apple. AutoCAD was DOS/Windows. You bought the application you needed then bought the operating system to run the software. The question is, what applications strictly run on Microsoft and are there alternatives? In that regard, Microsoft has neglected, even abused their customers. What's their latest offering; the "clown version" of Office? Yes, we have choices other than Microsoft and, unless Microsoft gets rid of the attitude that customers are thieves & pirates, Microsoft is going the way of GM.
Reply to this comment
by biffhenerson June 9, 2009 7:34 AM PDT
Microsoft is doing their best. But it will take more than a single operating system to offset the mess that Obama and the media have created. Its pretty sad to have a nice product to sell but all of your Customers are distracted by "the sky is falling" self fulfilling propaganda.
Reply to this comment
by NervClaX June 9, 2009 11:11 AM PDT
A modest bump sounds about right. The Vista upgrade program will be perfectly timed for back-to-school. Buy a Vista PC with the knowledge you will be upgrading to Windows 7 in a month or so? Awesome.

Microsoft is saying the bump will be modest because they want to under-promise and over-deliver.
Reply to this comment
by electromanvern June 9, 2009 5:50 PM PDT
I don't get it. So many here think they have all of the answers. You can predict the future. So many here think they are using a superior operating system when actually all they have done is make a choice.

After spending my whole life in IT, I find it interesting how OS has become a religion.

Windows, Mac OSX, and Linux each have a place in the huge worldwide user community. Neither is perfect at everything --- and in so many cases perfect is subjective so who cares.

And each of these products relies on different business/development models. Those models impose limitations. Example, Apple will likely have limited market share unless they are willing to give up on the hardware part of the biz. Why? Because many people find limited hardware choice to be a big problem.

Linux and Windows give you big range in hardware choices. You can run on a crappy $400 PC or spend many thousands.

Neither is superior in all ways. And I use all 3 but I'm not in love with either. Writing this from a Win 7 RC laptop I can say I like the improvements with Win 7. Does it destroy OSX? No, but some things are better. Still some things in OSX are better. Some distros of Linux are nice too.

Anyway, PCs are great tools for work and entertainment so I'm glad the vendors battle it out. Back in the old days I was happy to get a computer to run any OS at all. Now its become a religion. Go figure.
Reply to this comment
by typeA911 June 10, 2009 4:12 PM PDT
ZetaZeta, if u don't know, you not going to use more than 4GB of ram with 32 bit system
you need to run the X64 bit system to use more ram than 4GB. I run 4 X 2GB stiks of ram and use all 8GB of it. Thats why serious gamers run the X64 systems, "speed" I'm running a dual boot PC X64 Vista Home Premium and Windows7 Ultimate RC, the Windows 7 is a lot faster and uses less ram than Vista. .
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About Beyond Binary

During her years at CNET News, Ina Fried has changed beats several times, changed genders once, and covered both of the Pirates of Silicon Valley. These days, most of her attention is focused on Microsoft.


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