Microsoft Will Offer Windows 7 Upgrade with Vista, Announces Server Launch

Microsoft announced June 3 that customers purchasing a system with its Windows Vista operating system will have the ability to upgrade to Windows 7 when the latter is released on Oct. 22. In addition, Microsoft also announced that Windows Server 2008 R2 will be widely available at the same time as Windows 7.

"There will be a Windows upgrade program available," Steve Guggenheimer, Microsoft's OEM division corporate vice president, said during a keynote address at Computex 2009 in Taipei. "Consumers can buy that new PC…and know they’ll get Windows 7 as part of the deal."

Guggenheimer also indicated that Microsoft is confident of the release dates for Windows 7 and Windows Server 2008 R2, stating, "We announce each milestone once we’re confident of where we are in the development cycle, and that it is ready to be shared with customers and partners."

Microsoft is suggesting that Windows Server 2008 R2 will support a typical network’s ever-increasing ecosystem of devices and virtual machines.

"With the release of Windows Server 2008 R2, companies of all sizes will get big improvements in virtualization, Web and management," Guggenheimer said. "These areas, along with several features that improve scalability and reliability, help deliver a strong value proposition on the server side to complement Windows 7."

Microsoft announced on June 2 that Windows 7, its latest operating system, would roll out to the general public on Oct. 22. Bill Veghte, senior vice president for Microsoft Windows, mentioned in a June 2 Wall Street Journal article that the company’s hardware partners were planning to "bet heavily" on the new operating system. 

Roughly a third of Microsoft’s revenue in 2008, or around $20 billion, came from sales of its Windows operating system. However, Microsoft currently finds itself challenged on two fronts, both by a global recession that forced it into its first-ever quarterly revenue decline, and by arch-rivals Apple and Google introducing alternatives into the competitive space. 

Analysts acknowledge that Microsoft needs a substantial OS hit after Vista, which rolled out in January 2007, failed to live up to expectations. In the wake of widely reported issues with that OS, vendors began exercising downgrade rights to install Windows XP on consumer machines. Early previews of Windows 7 suggest that many of the compatibility issues encountered with Vista have been dealt with in the latest version.

Rumors have abounded that Microsoft plans on adapting Windows 7 for mini-notebooks, also known as "netbooks," a potentially important strategic move considering that the percentage of Windows-equipped netbooks has jumped from under 10 percent of the market in the first half of 2008 to 96 percent in February 2009.

However, Microsoft also seems determined to install the new operating system on as many traditional PCs as possible, most likely because those devices represent higher margins.

Microsoft also finds itself competing in the netbook space against the increased threat of Google and its Android mobile operating system, which is being ported onto the devices by Acer – and possibly other manufacturers – later in 2009. While Acer will continue to provide Microsoft Windows as an OS option on its machines, analysts expect that Android will gain strength in the netbook arena into 2010.