Microsoft

There's a bit of a tempest in a teapot brewing over what one can and can't do with a Windows 7 upgrade disk.

My hope with this post is to help things simmer down as opposed to boiling over, but we'll see. So here goes.

The upgrade version of Windows 7 (as opposed to the higher-price full version) lets one move from any properly licensed version of Windows XP or Windows Vista to Windows 7 on that same computer. Only certain of these upgrades, however, can be done as a simple update--what Microsoft calls an "in-place upgrade." Users moving from Windows XP, switching from 32-bit to 64-bit versions, or moving from a higher-end version of Vista to a lower-end version of Windows 7 can use an upgrade disc but will have to do a more cumbersome upgrade, known as a custom, or "clean," installation.

The difference between an in-place upgrade and a "clean" installation, in this instance, means backing up one's data, installing Windows 7, restoring the data, and reinstalling all Windows programs. Windows 7 upgrade disks can be used to do this clean installation and will recognize the previously installed version of Windows. So if you don't have any previously installed Windows on the machine, you will want to get yourself a full copy of Windows 7.

While it might be technically possible to use the upgrade disks to do an installation of Windows 7 without a previous version, doing so, as Microsoft points out, is not properly licensed.

Some of the confusion has come after enthusiasts noted a way to get an upgrade disc to install on a fully erased hard drive.

Again, the main issue here is whether one is properly licensed to do so. If you have a licensed copy of Windows XP or Vista for that computer, you are good to go, and Microsoft technical support should be able to help you activate that machine. If not, you may be able to get it to install, but you could well run into technical or legal hurdles.

I think that ZDNet blogger Ed Bott put it well in his post on this topic:

The answer is really simple. If you qualify for an upgrade license, then yes, you can use any number of work-arounds to install the operating system legally. If you don't qualify for an upgrade license, then those same workarounds might technically succeed, but your license is not valid.

Will you get away with it? Probably. But if you're running a business, you run the risk that an employee will turn you in to the Business Software Alliance, which could lead to an audit, civil charges, and eventually some stiff penalties.

It should also be pointed out that beta test and pre-release versions of Windows don't count as a previously licensed version of Windows, but if you have the RC installed over a previous version, for example, you can do a custom upgrade rather than having to reinstall XP or Vista before installing 7. (The upgrade version can detect the previous versions used before Windows 7.)

Nor is it allowed to count the version of Windows that came installed on a previously bought PC, if that's not the machine you're upgrading. (Retail boxed copies can be transferred from one machine to another; ones that came pre-installed on the PC are licensed only for that machine.)

This is also relevant to Mac users who want to run Windows 7 on their machines. Such users also need to have a previously licensed full copy of Windows to properly qualify for upgrade pricing, whether they are using Windows in Boot Camp or using a virtualization product like Parallels or VMWare's Fusion.

I hope that this overview helps more than it adds to the confusion. Either way, please let me know.

Microsoft appears to be getting relatively strong early adoption of Windows 7 in the 10 days since its official launch.

According to Net Applications, more than 3 percent of PCs accessing the Web in the past two days have been doing so using the new operating system. Usage of the operating system has been growing strong in recent days, though Windows 7 already accounted for 2 percent of global Web traffic in the days ahead of its formal launch.

"The early adoption of Windows 7 looks very strong, and I don't believe Vista enjoyed the same early success," said Vince Vizzaccaro, an executive vice president at Net Applications. "Plus, we've seen surges the past two weekend days, and Windows has historically seen much higher usage market share on weekdays than on weekends."

However, weekends tend to see stronger usage by consumers. And consumers are more likely to move quickly to a new version of Windows than businesses, which tend to do extensive testing before adopting a new operating system.

The news is not all positive for Microsoft, though. As a whole, the Mac OS continues to gain on Windows. As of October, Windows had 92.5 percent of the worldwide operating system market, but Mac OS reached 5.27 percent, up from 5.12 percent in September. (Past numbers from Net Applications showed the Mac OS with significantly higher market share, though the market research firm says it has changed its methodology to better reflect the relative traffic of the countries from which it is getting data.)

Apple's recent anti-Windows 7 advertising has touted that if users are going to upgrade their Windows XP machines and have to transfer their data anyway, they might as well move to a Mac. Vizzaccaro said the early numbers suggest that the Mac might indeed be benefiting from such a trend but said it is too early to know for sure.

"We'll know much more in the months ahead," he said.

Apparently it's not only Apple that knows how to draw people in for a store opening.

Microsoft managed to draw more than 1,000 people to its Mission Viejo, Calif., store opening, although some were drawn less by Windows 7 and more by Canadian pop star Justin Bieber (above).

(Credit: Microsoft)

Thursday's opening of a Microsoft Store in Mission Viejo, Calif., drew some 1,000 people, according to the Orange County Register. The store is Microsoft's second, after a Scottsdale, Ariz., outlet that opened last week.

Aliso Viejo resident Stefanie Tran waited almost a full day for the opening, according to the paper, although that was mainly to score tickets to a performance by Canadian pop star Justin Bieber at 5 p.m. Thursday. Tickets were given to those first in line at the store.

Beyond the occasional pop star, the store features a video wall, several Surface tabletop computers, as well as the ability to buy Microsoft Signature PCs--computers from Sony, Dell, HP, and others that feature a clean desktop, no "crapware," as well as the complete collection of Windows Live software.

Microsoft Chief Operating Officer Kevin Turner, who oversees the retail effort, was among those on hand for Thursday's opening.

The "Microsoft Signature" PCs that are being sold at Microsoft's retail and online stores contain a bunch of extra Windows Live software, but also feature something rarely found on a PC--a clean desktop.

(Credit: Microsoft)

Although Microsoft isn't making its own PCs, the software maker is taking an active role in customizing just what goes on the computers it sells through its online and retail stores.

In its new role as PC retailer, Microsoft is loading computers with what it's calling its Microsoft Signature experience--a collection of Microsoft products, including the complete Windows Live suite, Security Essentials antivirus product, Zune jukebox, and Bing 3D Maps software, as well as Adobe's Flash and Acrobat Reader products. Internet Explorer 8 is the browser, with Bing as its default search provider.

(Credit: Graphic by Ina Fried/CNET News)

The computers are being sold at Microsoft's two retail stores--the Scottsdale, Ariz., store that opened last week and the Mission Viejo, Calif., outlet that is opening later on Thursday. The software giant is also selling PCs throughout the U.S. via its online Microsoft Store.

The goal of the Signature effort is to give customers what Microsoft feels is the best software experience they can have on a PC.

"Signature gives them a PC that is ready to run," Microsoft retail unit chief technology strategist Kevin Eagan said in an interview. "We think we're really unlocking the potential of Windows 7."

Microsoft isn't completely deciding what goes on the system. Computer makers can also add software that takes advantage of particular hardware features, but it's not allowing any trialware or "crapware."

"Much like other retailers would define (what goes on their PCs), we do the same working closely with our (computer maker) partners," Eagan said.

As part of the in-store experience, Microsoft staffers will also help customers install other software they might want--even competitor's products, such as Apple's iTunes. They can also change their browser or default search provider before they leave the store, Eagan said.

"We want to give customers what they are asking for, so they leave store 100 percent satisfied," Eagan said.

Eagan said Microsoft is just taking advantage of the customization options that other retailers also have available to them and said the company doesn't anticipate any regulatory concerns.

"We're absolutely confident that what we've done is added another choice for customers," he said. "We think expanded choice is good for customers."

Those who already have a PC, but live near one of Microsoft's stores, can bring in their PC and have the Microsoft Security Essentials software added at no charge.

My great aunt is 92 and, as of Friday, she's a Windows 7 PC.

Now, Hilda is already not your typical nonagenarian. She is frequently online, does her finances in Quicken and recently abandoned AOL for Gmail (something I still haven't gotten my parents to do).

Unfortunately, while her mind is quick as ever, her Windows XP PC had slowed dramatically over the past few years, becoming nearly unusable. It's one of those things that many find so irksome about Windows PCs.

In any case, Hilda (I'm sparing her some spam by not including her last name) decided she needed a new computer and I offered to help. It was just a day after Windows 7 had made its debut and we headed to a local computer store. I found her a basic PC, monitor, and printer for $450 after rebate. She didn't really need the monitor, but it helped me a great deal as I transferred all of her files from her old PC to the new one.

If it were still the Windows Vista days, I might have been tempted to downgrade her new computer to Windows XP, so she wouldn't have to adjust to the new operating system.

But, with Windows 7 working so well, I actually felt comfortable she could make the switch, even though she's at the other end of the age spectrum from Kylie.

It took me almost no time to set up the new computer, but several hours to transfer over her settings and documents and then re-install Quicken and her other programs.

Amazing techie that she is, it took her almost no time to adjust to Windows 7's new look and feel. It's a few days in and I'm glad to report that things have continued to be smooth.

"It really is not very different from the XP I used before," she told me in an e-mail this week.

Over the weekend, CNET ran an unscientific poll inquiring about the level of difficulty in your Windows 7 upgrade experience, and the response we received was undoubtedly strong. Nearly 11,000 people voted, and more than 50 percent of you said your Windows 7 upgrade experience was as easy as pie. (And who doesn't love pie?)

We asked people to rate their upgrade experience from one to five, with one being the easiest and five being the hardest. A total of 5,492 people evaluated the upgrade experience as a one, but the second-most popular answer, at 16 percent, was five, indicating an unnecessarily hard upgrade. Sticking with the pie analogy, that's basically having to do all the cleaning up without getting to eat any.

The third-most popular answer was two, indicating a fairly easy but not flawless upgrade process for 14 percent of voters. The three answer garnered 8 percent of the vote, with 927 votes, and four scored 809 votes, for 7 percent.

Combining the two extremes, then, we can see that more than two-thirds of voters said upgrading was easy or fairly easy, while less than a quarter said the process was hard or unnecessarily difficult. Compared to what most people remember from their Vista experience, that's a dramatic, if anecdotal, change.

If you're planning on upgrading but haven't yet, there are several tools and links that Microsoft has provided to make the change easier. Microsoft has published guides to upgrading from XP to Windows 7 and from Vista to Windows 7, and it has also rounded up its upgrade and installation FAQs onto one convenient page.

The Windows 7 Upgrade Advisor is a useful tool for evaluating your current hardware situation, and it gives you a "Windows experience" rating so you can decide whether it can handle Windows 7 before you buy. Windows Easy Transfer will help most users migrate their files and settings, though there have been reports of not all settings getting moved smoothly. It won't migrate programs.

Although some scoffed at the notion of Windows 7 house parties, Elliott Minor of Albany, Ga., said his event was a hit.

Roughly two dozen people showed up to the event, which was held at his church. Although not a huge gathering, the event seemed to be one of many that served Microsoft's purpose--helping spread the word about its just-launched Windows 7 operating system.

Two techies from the area teamed up to highlight Windows 7's key features and answer questions.

"Judging from the oohs and aahs of guests, I'd say they were favorably impressed," Minor said in an e-mail interview.

Photos: A Windows 7 launch party, Georgia-style

Minor said he and the organizers tried to get in the Windows 7 spirit. "We served Windows 7 cake and cupcakes--all with green icing topped by a red 7--pimento cheese sandwiches on 7-grain bread, and we gave 'em 7-Up to help wash it down," Minor said. (Pimento-cheese? Well, at least it's healthier than Burger King Japan's seven-patty Windows 7 Whoppers.)

Anyway, rather than keep the party pack given to party hosts, Minor raffled them off, generating $77 for a local soup kitchen. (That's in contrast to the many folks that tried to put their swag up for sale on eBay.)

In all, Microsoft expects the house parties and meet-ups to reach some 800,000 people. Events are taking place in the United States, United Kingdom, Germany, France, Canada, Australia, Mexico, Hong Kong, Japan, Spain, Italy, India, and China. Microsoft employees have been having events for a little while now (such as this one), while the customer-hosted parties kicked off last Thursday on launch day.

For a look at other Windows 7 launch parties, check out this feature from Gizmodo. Meanwhile, I doubt this is what Redmond had in mind, but some folks in the UK did a funny video suggesting people have a Windows 7 torrenting party (Warning: some f-bombs and references to drug use).

Seth MacFarlane

Microsoft said Monday it has canceled its sponsorship of a planned variety show with the creator of the "Family Guy."

In a statement, a Microsoft representative said the show--a variety show to be done by Alex Borstein and Seth MacFarlane--was not "a fit with the Windows brand." Microsoft had hoped to use the show to tout its just-released Windows 7 operating system.

"We initially chose to participate in the Seth and Alex variety show based on the audience composition and creative humor of 'Family Guy,' but after reviewing an early version of the variety show it became clear that the content was not a fit with the Windows brand," the representative said.

Microsoft had announced plans earlier this month to present the Fox TV special.

Now who didn't see this coming?

Microsoft said strong demand for Windows and Xbox buoyed the company's financial results in the past quarter.

The software maker said Friday that it earned $3.57 billion, or 40 cents per share, on revenue of $12.92 billion for its fiscal first quarter, which ended September 30. Microsoft also deferred $1.47 billion in revenue ahead of the launch of Windows 7. Adding that back in, revenue would have been $14.39 billion and per-share earnings would have been 52 cents.

Those results topped forecasts, although sales are still down from a year ago.

"We are very pleased with our performance this quarter and particularly by the strong consumer demand for Windows," Chief Financial Officer Chris Liddell said in a statement. "We also maintained our cost discipline, which allowed us to drive strong earnings performance despite continued tough overall economic conditions."

Chris Lidell,
Microsoft CFO

(Credit: Microsoft)

On the Windows front, Microsoft saw the number of PCs shipping with Windows grow 6 percent in the quarter even though PC sales overall were anywhere from flat to up 2 percent. Microsoft cited, among other reasons, the fact that more Netbooks are using Windows compared with a year ago.

Overall demand for Windows was strong, the company said, with the software seeing its highest first-quarter unit sales ever and September being the strongest overall unit sales in the company's history.

The company sold 2.1 million Xbox consoles in the quarter, according to a PowerPoint chart posted on Microsoft's investor Web site. That's just slightly down from the 2.2 million units sold in the same quarter a year ago, but up from the 1.2 million consoles sold in the previous quarter.

In a conference call, Liddell said that the company sees the economy remaining tough during the current fiscal year, but noted some potential for improvement.

The earnings report came a day after Microsoft launched Windows 7 and followed the disappointing previous quarter when the company reported weaker-than-expected results.

The company said Friday it is continuing to cut costs. In the current fiscal year, which runs through the end of June, Microsoft said it now expects operating expenses of $26.2 billion, a drop of $300 million from its prior forecast.

Microsoft normally releases its earnings in the afternoons, but it moved the report from Thursday afternoon so it wouldn't step on the toes of the Windows 7 launch.

The company continued to lose a significant amount in its online business, with the operating loss growing to $480 million from $321 million a year ago. Revenue for its online business, which includes Bing and MSN, dropped to $490 million from $520 million a year ago. However, Microsoft said it has seen a mid-single-digit increase in U.S. search revenue.

Looking ahead, Liddell said that Microsoft sees some signs that more businesses will buy new PCs starting next year, though the upgrade cycle will probably stretch over several years.

For the current fiscal year, Microsoft said it expects Windows sales to roughly reflect the PC market, while Office unit sales will lag. It expects its server unit to slightly outpace the overall market, while entertainment unit sale should be roughly flat. For its online business, Microsoft said it expects to outperform the broader market, excluding its MSN Internet access business.

Liddell said Microsoft continues to be hopeful that its search deal with Yahoo will gain needed regulatory approvals and be completed early in calendar year 2010. Liddell said to expect $100 million to $200 million in costs related to that deal, if it closes.

Here's a chart of last quarter's segment-by-segment results, though keep in mind that the Windows numbers are affected by the amount that Microsoft deferred because of the coming launch of Windows 7.

(Credit: Microsoft)

Update at 6:45 a.m. PDT: More details added throughout.
Update at 7:55 a.m. PDT: Added details from conference call with analysts.