Microsoft: Not enough XPerienced PCs

While Microsoft is pleased with robust sales of new PCs that come loaded with Windows XP, the company has been less than satisfied with the rate at which large companies are installing its latest operating system.

"In the area of deployment, I don't think that's met my expectations," Kevin Johnson, Microsoft's group vice president for worldwide sales and marketing, told CNET News.com in a recent interview.

News.context

What's new:
Windows XP is shipping out preinstalled on a lot of new computers, but Microsoft is unhappy with corporate reluctance to upgrade existing PCs.

Bottom line:
Microsoft thrives on customers coming along for the upgrade ride. To combat lethargic adoption rates, it plans sell XP's benefits more aggressively.

More stories on the upcoming SP2 upgrade

An executive at one Microsoft customer, computer security firm SecureMethods, explained that there just isn't enough in Windows XP to justify the time and costs of upgrading. Rather than pay for a companywide license to use the latest version of Windows, SecureMethods just takes whatever OS comes installed on new PCs.

"We don't actively upgrade computers," said CTO Paul Clark, adding that PCs have a life of three to four years. "When we buy new laptops, if they come with XP, that's great. We don't buy (new) licenses."

With more than 90 percent of the world's PCs running some form on Windows, Microsoft has long considered its chief competition to be its installed base--convincing customers that they need a new OS can be a tough sell. That's been especially true with XP, which after two-and-a-half years on the market is installed at about 62 percent of businesses with revenue of $50 million or more, according to Jupiter Research.

In addition, a study in December found that 80 percent of companies still have some machines running Windows 95 or Windows 98. And at firms running the older operating systems, an average of 39 percent of desktops were running either Windows 95 or Windows 98, according to technology consultant AssetMetrix.

Even more troubling for Microsoft is the fact that many corporate buyers who already have a license to install XP are remaining on the sidelines. "In the enterprise, it is not a situation where customers don't have license to it," Johnson said.

Microsoft faces a similar issue on the server side, with many of its customers clinging to older versions of the OS. Some analysts estimate that up to 40 percent of servers still run Microsoft's two-generations-old Windows NT 4.

It's not about the money
Even though Microsoft has already collected its revenue from businesses that pay for licenses but don't install the OS, it's still important to the software maker that more customers use its latest products.

"Microsoft doesn't work on the health club model, where they sell memberships and hope people don't use them," said Jupiter Research analyst Michael Gartenberg. "In order to generate success down the road, Microsoft has got to get people to use the licenses they have."

Otherwise, Gartenberg said, companies won't buy the next license, or the one after that.

"Microsoft doesn't work on the health club model, where they sell memberships and hope people don't use them." --Michael Gartenberg, Jupiter Research analyst

That's especially important as Microsoft tries to bring out Longhorn, which the company touts as a significant improvement over XP. Microsoft acknowledged on Friday that it hopes to deliver the software in the first half of 2006, a move it says will require it to scale back its grand ambition for Longhorn.

As for why XP has not received a better reception, Johnson suspects that many customers, like Microsoft itself, have been busy with security issues.

"Customers had to put a lot of their IT focus--and we've made that a priority as well--on how to create a more secure environment," he said.

The story inside large companies contrasts sharply with the strong overall sales of Windows XP, which has benefited from an upturn in the market for new computers. Strong PC sales, for example, helped boost Microsoft to record sales for the quarter that ended in December.

Johnson and Microsoft CEO Steve Ballmer expressed hopes that Windows XP Service Pack 2, a security-focused update set to ship in a few months, will persuade more businesses to make the switch.

"I think it might," Ballmer said. "What we will tell people is, 'Look if you are looking at an upgrade, this should be a thing that puts you over the top.'"

The harder sell
Microsoft is also looking at ways to make customers more aware of the benefits of Windows XP. The company has been considering a variety of ways to "add value to Windows XP" under a plan known as "Windows XP Reloaded."

Windows chief Jim Allchin said the company is looking at a marketing campaign that would tout XP, the service pack and some new additions to the Windows lineup, including updates to both the Tablet PC and Media Center editions of XP, as well as the portable media center devices that will debut later this year. Also under consideration is an update to the version of Windows XP that ships on new computers. The update would add a new version of Windows Media Player, among other enhancements.

Microsoft hopes the campaign does get customers to load XP. Even in cases in which it won't derive additional revenue from the upgrade, Microsoft benefits in a variety of ways when more of its users are on the latest versions of its software. Newer versions typically result in fewer support headaches and higher customer satisfaction, as well as offering better security.

"The irony is that Microsoft has a very good offering (with) Windows XP," Gartenberg said. "It's not a technology issue. It's a marketing challenge, and one they need to address pretty quickly."

[edge770]

XP can be an expensive proposition...

XP is a pretty smooth operating system, but having done an upgrade, I would not go through the dollars to upgrade an existing pc. Upgrading 100 machines to make sure they have 256 or 512 megs of ram on a machine so it can look "pretty" is not a good use of corporate IT dollars. I will be the first to admit that it is a very solid operating system. But, Microsoft fails to realize that most people have 750 mhz or 500 mhz speeds or lower. XP simply is not going to give the best performance with those kind of numbers. Windows 2000 is the best value for those systems.

Upgrading Could Be Easier...But, Still...

I think Edge Demon is right. Windows XP has been one of the most stable Microsoft products they have ever put out and any company that doesn't see the advantage to upgrading needs to new support team. While there isn't a lot in new features what is important is that Windows XP doesn't crash everytime you turn around.

Now as Edge Demon said the weak part of XP is the upgrading. One should not have to wipe out their system and do a fresh install to get the upgrade going smoothly. Everyone that has ever upgraded Windows knows that going over the old OS is a very bad idea. Microsoft I think needs to spend a little more time on the upgrade routine that you can reliably and with stability upgrade over older versions of Windows. This would sure make the whole process easier and more appealing to all customers.

That said any one that doesn't upgrade to Windows XP is a fool. If you like seeing the blue screen of death or having to reboot everytime you turn around then I guess Windows XP isn't for you.

Robert

Linux is a better operating system...

At the end of last year, I decided that I would
not update my Windows 2000. I looked around for
another OS. I downloaded and installed Red Hat 9,
dual booting with Windows 2000. My goal was to
replace all my windows apps with linux apps. My
goal is now 90% complete. Interestingly, my
linux apps only cost the time to download them
using Apt-get and Synaptic..There are hundreds of
free programs and I have multiple movie viewers,
sound players, editors, games, and office
applications. I use the Kde Desktop which offers
multiple desktops and an interesting taskbar.
Updating the system is easy and fast with many
kernels to choose from. I use Kopete for my
instant messengers...it does them all from msn to
yahoo and icq and lists all the contacts.

Windows 2000 is boring to me now. I want to get
off of it as soon as possible and get back to my
linux.

The only disadvantage: it is a different
operating system and you have to relearn the
basics. It took me about 3 months to learn, but
it was fun for me.

[JeffLewis]

Win2K is not WinXP

Windows 2K was a server/workstation system and was intended solely for professional work. WinXP is based on Win2K, but is targetted for professional AND casual users, providing a much more enjoyable experience.

As for lots of apps, there are tons of freeware and commercial apps for Windows - and I've used Linux freeware - most of it is pretty poorly written in terms of user interfaces, and have to be hand built for each platform. If that's ok for you, cool - but most of us have better things to do.

Still, if that's a breaker - Microsoft has release Unix Services for Windows 3.5 for free and that essentially adds a Unix/X-Windows compliant layer to Windows, letting you use most of the same apps you use on Linux directly on Windows.

For me, it's ease of use. I don't want to spend three months learning how to install and maintain Linux. With Windows, I don't need to. While it's not as elegant as MacOS (although it's getting closer by the day), it's way ahead of Linux/BSD in terms of maintenance and features.

I've been using WinXP since it came out and I've rarely had major problems. I've never been able to make Linux or BSD work as easily.

[iKenny]

Mac OS X too

I noticed in the article that the Microsoft representative said that
he thinks the main reason more people didn't upgrade is
because they were too wrapped up in dealing with security. Of
the three OSs, Mac OS X is the most secure. Linux is great, but I
prefer OS X because of its great GUI, Unix base, security, and
ability to run software also available for Windows, such as MS
Office or Photoshop, while retaining the Unix.

In addition, it is widely believed (but I'm not confirming this, just
saying its something to keep an eye on) that Mac OS X 10.4 will
have Linux APIs in it, making it almost like three systems in one.

Getting back to the article, security is Microsoft's biggest
concern, and despite what they say, there is much more they
could have done to prevent these attacks. The customers are
paying the price; hopefully, they'll figure it out and switch to a
better system.

[Citizen446]

fool me once, shame on you.....

I have lost faith in Microsoft operating systems. I keep hearing that XP is stable, stable, stable. I keep hearing that is is more secure than previous versions. I have purchased Win 3.1, Windows 95, Windows 98 and Windows ME. I gave the company five tries to 'get it right' I will never purchase another of their products again unless they go back and fix the products I have already paid for from them and this will NEVER happen. Research other operating systems -- there are several and ALL are more secure and stable than anything Microsoft has released.

Hmm... a little bit too drastic....

What I would like to say is that I was quite satisfied with MSDOS or even Win98SE. Since the advent of 98Millenium, however, things went totally bad... It is not rational to be forced to upgrade your computer just to be able to run an OS. All our company computers still run Win98SE with Office97. Runs perfectly on Pentium II/450. WinXP and OfficeXP only run quite badly on PIII/700 and are decent on more than 256 MB RAM.
Get real people! What for? I'm writing faxes, memos and filling spreadsheets. Why would I need a more than 1000USD computer and more than 500 USD worth of UPGRADE software to do that? My current AMD K6II/500 with 128 MB RAM and all on board that costed only 500 bucks back in 1999 and the 1998 edition software it sustains does that perfectly!
Nope! not for a money-aware individual this is! :))

[Jonathan]

Windows 2000 is just as good

I use XP at home but in the corp environment there are more important things to do then spend cash on XP. 90% of what XP offers can be found in Windows 2000. The rest, other then a few handly utilities, is pure fluff. There are very few business reasons to upgrade. Quite honestly the only way Microextort will get the business world to upgrade is to either discontinue support (Which is their usual tactic.) for Windows 2000 Professional or give us something in Longhorn that will release us from this hellish nightmare of patches and HIGH TCO. Billy boy can claim whatever he wants about TCO but the amount of work that has be done to stay caught up with the patch of the month is asinine. XP Sp2 will go a long way in convincing the enterprise to upgrade but its not going to be enough.

[Pascoli]

we replaced xp with nt!

At work, all workstation are nt sp6, and we have hundreds of them. Thet accomplish all business task, at least from the handusers point of view that we need. Although I am sure that win2k or xp will be easier to manage for the IT people. Any way, I think their good for productivity, since I does not have any of those games and utilities that we want to spend time with, away from actual work. The funny thing is all our machines originaly came with xp since we can see the logos on those dell pc's. They removed the xp's and installed the old nt on them.

Registration

We use all Windows 98se and Win 2000pro, in addition to our Macs in prepress. When I add hardware, reimage, or change hard drives, I do not want have to get Microsoft's permission to run the OS. We have found buying used PCs with W2K licenses much more affordable for us.

We also only have a couple of copies of MS Office for reading outside materials. We manage to get Corel's WordPeferfect Office (OEM) for under $50 when we buy hard drives and things like that.

The fine print of a Microsoft license is miserable. If it weren't for our client-server accounting app, I would work to drop MS altogether.

[dburry]

I too was afraid of that... but...

I too was afraid of registration, but I've found that I can even move the OS to a whole different machine, it seems to let me re-register it just fine.... Still not sure how many times it will let me do that, haven't run into a wall yet.

[Pascoli]

For one thing

For one thing, I not sure about the legality of using those oem's software from used hard drive. For another, ms fine print is by far not the worst in the industry. Try reading the one that came with a legit (legit from your business perspective) and you might be astonished. For last, there are companies's win xp licenses that do not require activation

[dburry]

missed the main reason

You've missed the main reason why people don't upgrade older machines to new Microsoft operating systems:

How could anyone justify the somewhat high price of upgrading just the OS... for what? to make my older machine run **slower**???? I think not!!! Anyone who's ever tried that will never try it again, even if they give away upgrades for free!

Nay, I convert older machines to run much more efficient (but slightly less user friendly) OSes like a certain open source one. It's the only thing those old clunkers are good for!

Corporate XP PCs

The corporation I work for will not undate PCs to Windows XP because many of them are old PCs and XP would not even run on them. For the most part the company uses their computers for communication ie: Email. Some of the important computers do run Windows XP.

winXP

I am a putzer, and I did put it on my wifes home made computer, but after the big hassel I had when
I installed a new mb with registration I desided to go back to my win98 se. This is the main resion I stopped buying from bruderbun programs. Don't want the damn hassel of registration befoe it will work I think that snail mail of the reg card should be suffient. I will not by programs that
roped you into a registration must to run an install, NO WAY
Richard

[bjbrock]

MS has lost touch with reality.

What a business needs in the way of IT and what Bill Gates has to offer, are too far apart in nearly all aspects. So far, MS has been able to force his ideas on the consumer instead of giving the consumer what is best for him. But now the party is over and businesses have got to start showing some real return on all the excess capacity the have purchased. But excess capacity is just that. And it is wasted resources. So now, the consumer is not only halting the spending, they are also feeling like MS took advantage of a relatively uneducated consumer who trusted MS.

The IT industry has reached a point where true improvements in IT's ability to produce have all but come to a stop. Small improvements hardly warrant the every 2 or 3 year upgrade plan that we have been forced to follow by MS. The consumer has been taken by MS in every economic sense of the word.

And still, MS keeps trying to strangle the consumer back into submission. MS percentages are going to come down a whole lot more before it is over. They will continue to drop until MS bows to the consumer as the King of the economic process. And the consumer does indeed have all the power in the economic process. It is only by defrauding the consumer has MS gotten where they are.

All of this boils down to economics. Every fact can be argued. But the shifting away from MS by consumers is a result of economic factors that behave the same day after day. The Balance Sheet is going to determine its "truth" and that is all that will matter.