Microsoft (MSFT) said yesterday that the code for the next version of its immensely successful operating system is done. Windows 7 will replace Vista as the company’s flagship operating system when it goes on sale in PCs at the end of October.
Windows 7 may be more important to the future of the world’s largest software company than anything it has released in years.
Vista was a very limited success. A number of customers, both individuals and businesses, elected to stay with Windows XP, an earlier version of the operating system. Vista did not work well on older PCs. It was different enough from XP that many people found it hard to adapt to new futures. It was expensive. Customers could stay with XP and save the cost of upgrades.
Windows 7 is supposed to be such an important improvement over Vista that current Microsoft customers will want to get the new OS. Microsoft has dropped its pricing below what it charged for Vista. It has worked with the global software development community to assure, as much as it can, that the product will be well accepted. Early reviews of Windows 7 have been positive.
A great deal of the recent media coverage about Microsoft has been about the success of its new search engine, Bing. Microsoft’s search business is tiny compared to its software franchise. Microsoft’s online efforts also lose money while its software business has tremendous margins. Bing may be exciting, but from an earnings standpoint it is a sideshow.
Google (GOOG) has launched a number of products meant to compete with Windows, but they have a very limited number of features. A successful launch of Windows 7 would set Google’s plans back, perhaps for years.
Bing can take Microsoft’s share of the search market in the US from 9% to 20%. It can even move ahead of Yahoo! as the No.2 search company. None of that will matter much if Windows 7 is a flop.
Douglas A. McIntyre
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