MS Makes Last-Ditch Push for Corporate Adoption of Vista

Microsoft Wednesday put forth its best case as to why corporations and large organizations should consider upgrading to the Windows Vista operating system, even as its successor Windows 7, looms.

In an interview, Gavriella Schuster, a senior director in the Windows product management group, urged businesses to move to the embattled operating system now, even if they plan to move to Windows 7 when it ships, as is widely rumored, later this year.

"If you're running Windows 2000, you should definitely move to Vista today," Schuster said. Those using the more than 7-year-old XP, which she described as being on "life support" due to Microsoft's plan to cut mainstream support in two months, should consider "how much money am I spending keeping XP alive, versus moving on." Microsoft also debuted a new blog called Windows for your Business to market Vista to its corporate customers.

She urged companies to check when their vendors plan to pull support for their applications on Windows XP and to start testing the Windows 7 beta today.

Windows 7's arrival by this year's holiday season could boost sales of PCs to consumers. But an earlier arrival, combined with the economic downturn, could hurt Vista's remaining chances with Microsoft's most profitable customer segment, businesses and large organizations.

Vista has been available to corporations for 27 months. Larger enterprises may take that long to test, prepare and deploy a major operating system upgrade like Vista due to the extensive application compatibility testing and employee retraining that is required.

Many corporate Windows users already have the rights to upgrade to Vista at anytime because of the multi-year Enterprise licenses and Software Assurance upgrade rights they buy. Many are resisting the move, though.

The government of Fulton County, Ga., for example, is a Microsoft enterprise customer and tested the beta of Windows Vista three years ago as part of Microsoft's Technology Adoption Program (TAP). The county's IT officials came away so impressed that they initially planned to roll out Vista in all 6,000 of its PCs by the end of 2007, or a year after its release.

Fast-forward to early 2009, and Vista is running on only a small slice of Fulton's computers. The county has put off PC upgrades due to budget cuts resulting from lowered property taxes due to the real estate downturn in Atlanta and surrounding suburbs. That has left many employees using PCs that are 5 or 6 years old and running XP.

"We're stuck, and it's no fault of Vista," said Jay Terrell, deputy director of IT for the county government. "We're going to wait for Windows 7, though it's not because we [want to] wait."

Papa Gino's Inc. also plans to skip Vista for its 160 corporate employees, according to Paul Valle, CIO for the Dedham, Mass., restaurant chain.

"We'll probably start testing Windows 7 when Service Pack 1 arrives and get serious [about upgrading] when SP2 comes," Valle said, taking a conservative approach to the deployment.

Smaller customers like Papa Gino's are arguably a bigger problem for Microsoft. Many of them buy the cheaper Select or Select Plus licenses expressly to avoid Software Assurance and don't want to be locked into Windows upgrades they might not ever install.

If a Select licensee belatedly chooses to upgrade to Vista and then, later, Windows 7, it would have to buy Software Assurance at a cost of between US$100 to $165 per PC, according to Paul DeGroot , an analyst with the independent research firm, Directions on Microsoft.

Schuster, however, argues that the benefits would outweigh the costs. Her rationale:

Companies that skip Vista are at risk of their software makers halting application support on Windows XP before they start to support them for Windows 7. "It's just traditionally how app vendors have reacted to the release of a new OS, going all the way back to Windows 98," she said.

Major operating system upgrades, whether XP to Vista or XP to Windows 7, typically take 12 to 18 months, due to all of the app testing, rewriting of custom apps and employee retraining. Due to Vista's and Windows 7's similar codebases, companies that bite the bullet and standardize on Vista today will enjoy a "smoother" upgrade later to Windows 7 compared to the "riskier" move of holding off and move straight from XP to Windows 7, Schuster said.

For the same technical reasons, deploying a new PC with Vista today is cheaper than installing XP on it and then expecting to later move it to Windows 7, she said. "If I make an investment in Vista today, will it pay off when I migrate to Windows 7? The answer is yes, it will pay off," Schuster said.

Companies that stay on XP will miss out on Vista's "modern" features, which include stability -- Service Pack 2 will arrive in the second quarter, Schuster said -- and improved security. "This is the most secure client OS we have ever released," she said.

Schuster's arguments flesh out the same ones made by Microsoft CEO Steve Ballmer earlier this month, who said enterprises that continued to hold on to XP would get "hell" from employees running Vista and Windows 7 in their leisure time.

"If you deploy a four or five-year old operating system today, most people will ask their boss why the heck they don't have the stuff they have at home," Ballmer said.

Nearly a third of companies are heeding Microsoft's call and deploying Vista, according to a survey of North American and European CIOs by Forrester Research Inc. released earlier this month. Another 27% of IT managers said they planned to deploy Vista this year or in 2010, according to the survey, which was done last August, before the economy tanked.

DeGroot, however, said that Microsoft's arguments are no different than the ones it routinely makes during every major operating system transition. However, in this economy, those reasons may not provide enough justification to get companies to step on the gas pedal for Vista.

For instance, Microsoft argues that companies will save money if they upgrade PCs en masse to Vista today and then later to Windows 7.

Even with Vista's improved deployment tools, upgrading the operating system on an existing PC, known as an "in-place OS upgrade," remains one of "the most costly and difficult projects that an IT department can take on," DeGroot said.

"A company with 1,000 employees will burn $40,000 an hour while employees twiddle their thumbs and spend two or three days getting back to work in an unfamiliar interface and rebuilding their custom desktops, so the cost can easily top $1 million just in salaries alone. Actual productivity losses (e.g., salary costs plus lost sales, customer service, etc.) may be much higher."

Those costs, DeGroot noted, don't include the $100 to $165 additional per-PC fee that non-Software Assurance subscribers would have to pay.

On the argument that companies that skip Vista could be stuck if independent software vendors (ISVs) stop supporting their XP apps before they release a Windows 7 version, Fulton County's Terrell agrees that is a legitimate concern.

But DeGroot remains unconvinced, saying he hasn't heard of any ISVs, including Microsoft, making such an announcement yet.

"I don't think that Microsoft has announced plans to pull Office support for XP," he said, "and Office 14, as far as we know, will run on XP, so there's a notable example that the rest of the industry is likely to follow."

DeGroot's conclusion is that most companies will do well either holding out for Windows 7 or moving to Vista only as new PCs are purchased.

"You spread the upgrade pain out over several years and no department ever gets closed down entirely," he said.

Only avowed early adopters, such as Franklin Covey Co., appear set to deploy both Windows Vista and 7.

"We've been running Vista everywhere internally for the better part of the year," said Wes Radford, director of infrastructure for the Salt Lake City productivity products maker, which has about 800 PCs. "We always adopt Microsoft very early. We will probably adopt Windows 7 as soon as it is available."

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