A number of businesses and government enterprises elected not to upgrade to Vista, the current Microsoft (MSFT) computer operating system. It was considered a flawed product and the cost of licenses was too high, especially given the perception that the earlier version of Windows, XP, was superior.
Microsoft may be facing the same lack of support from the business community for its Windows 7, the product that will replace Vista in the fall. The reason probably will not be concerns about the quality of the product. Enterprises may not have the money for the upgrades during a deepening recession.
A poll of 1,000 companies by research firm ScriptLogic Corp shows that “six in 10 companies in a survey plan to skip the purchase of Microsoft Corp’s Windows 7 computer operating system, many of them to pinch pennies and others over concern about compatibility with their existing applications,” according to Reuters.
Microsoft may be facing significant earnings problems if the survey is even close to accurate. They may be even more significant if individual consumers are also inclined to save money by continuing to use the current version of Windows.
Microsoft may be the victim of its own success and the success of the powerful processors that run most PCs. Windows XP, despite its age, handles almost every imaginable function that a business or consumer would need a computer to perform. When it is tied to dual core chips from Intel (INTC) and AMD (AMD) , the operating system and its components run with efficiency and speed.
Microsoft’s earnings may end up being well below analysts’ estimates in calender 2010. The world’s largest software company is facing a customer base that is saying “enough is enough” because the improvements the company has to offer are not worth the price of the upgrade.
Douglas A. McIntyre
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