Is Windows Vista Out of Sync?

All the years in the making might hurt more than help the adoption of Windows Vista, Microsoft Corp.s next client operating system.

The release of the software giants new operating system will be one of Microsofts most important product launches this decade, when it goes live next year. But despite the products myriad new features and functionality, current market trends could inhibit initial adoption of Vista, PC industry analysts say.

The two main levers Microsoft can use to spur sales—preloading the operating system on new PCs and offering it as a software upgrade—may be compromised to some extent by shrinking PC unit shipment growth rates, which are predicted to slow to single-digit levels in the latter half of this decade, analysts say.

"It looks like the launch window for Windows Vista should have been [in] 2004 or 2005, and Microsoft missed it," said Joe Wilcox, an analyst with Jupiter Research.

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Originally, Microsoft had hoped to ship Vista (or, as it was known then, "Longhorn") by 2004, three years after it delivered Windows XP. But, as has happened in the past with other Microsoft operating systems, the target delivery date slipped. To keep the launch from slipping into 2007, Microsoft ripped the WinFS file system from it, a decision announced in August 2004. Now, according to the latest plan, Vista Beta 2, which is expected to be mostly feature-complete, will arrive in December. Microsoft is hoping to RTM or release the product to PC makers by next summer and allow them to ship it to end customers in the fall of next year.

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If Microsoft had made its original target of 2004, Vista would have arrived at the height of the PC boom. While PC unit shipments are projected to increase throughout the rest of the decade, the rate at which they will grow will slow, both IDC and the Gartner Group have predicted. The slowdown will come as corporations take a breather following a post-recession PC buying spree that peaked in 2004 and will tail off in 2006.

Even hardware improvements, including 64-bit addressing processors and the proliferation of dual-core chips in mainstream desktops and notebooks expected in 2006, arent likely to keep pushing up unit shipment growth rates, the firms said. Instead, growth rates are predicted to slow from a peak of about 15 percent in 2004 and about 14 percent in 2005 to just over 8 percent in 2009, according to IDCs latest forecast.

"Our position is that theres no reason for it [Vista] to have a major impact," said Richard Shim, an analyst with IDC. "The days when the OS has the sort of impact that Windows 95 did when it came out are gone. When that happened it was a major change to the OS—just the navigation of it—now you look at Vista and, even for all of its bells and whistles, theres no one thing that people say, I have to have it for that."

Thus, despite having a crack at a market that will grow from just over 243 million units in 2007 to almost 288 million in 2009, according to IDC, the year-to-year PC market growth seen in Vistas first two years on the market will be more sedate than in previous years.

Gartner analyst Leslie Fiering said that her firm expects Vistas initial impact to be in the consumer market, which may see a slowdown in the second and third quarters of 2006, followed by a pop in the fourth quarter and possibly the first quarter of 2007 as systems loaded with Vista come out. Businesses, however, are likely to allow at least six months for testing the final version of the OS. Most will wait 12 to 18 months, which gives time for continued testing as well as the arrival of a service pack update.

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"None of the clients that were talking to are planning to jump Day One. Most are planning to give it 12 months," Fiering said. "The very soonest I have heard from the most aggressive of our clients is adoption of [Vista] at the middle of 2007. This is only a couple of accounts out of all those weve talked to. Most have looked at end of 07 to the middle of 08."

Thus, major adoption may not come until the 2008 timeframe, when Gartner predicts businesses will begin a new wave of PC rollouts. However, the firm is still predicting slower growth for PC unit shipments in the 2008 and 2009 timeframe.

Gartner predicts that unit shipments will grow almost 13 percent to nearly 207 million units in 2005. But growth will slow to single digits between 2006 and 2009. During 2009, for example, growth will slow to 7.6 percent with the market total approaching 281 million, according to Gartners latest forecast.

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