Microsoft's Windows 7 could be gaining traction among businesses looking to upgrade their IT infrastructure, suggests a new survey. Despite the company's focus on the cloud and other new initiatives, traditional products such as Windows remain Microsoft's main revenue generator.
Windows 7 could be gaining traction among businesses looking to upgrade
their IT infrastructure, according to Computer Economics' "Technology
Trends 2010/2011" study.
Computer Economics, which provides research and metrics for IT management,
conducted a survey of more than 200 IT organizations during the first half of
2010 and found that, despite tightened IT budgets in the wake of the recent
global recession, administrators seemed more willing to invest in some types of
technology than others.
Windows 7 apparently proved one of those winners. Although only 3 percent of
the surveyed IT organizations had upgraded to the operating system at the
beginning of 2010, some 31 percent had apparently allocated funds for the
migration in their budgets.
"We were mildly surprised, given the slowdown in capital spending and
general lack of investment in new systems," John Longwell, vice president
of research for Computer Economics, wrote in a July 27 statement. "Companies
are beginning to migrate to Windows 7 in a big way."
Some 29 percent of organizations reported investing in desktop
virtualization, with 40 percent budgeting in their current fiscal year for
unified communications-making those technologies the other winners in the firm's
survey. Other areas, including data center consolidation and 10G Ethernet,
received more anemic funding.
Even though Microsoft has made several very public shows of embracing the
cloud, the company still depends on its traditional product lines-particularly
Windows-to drive the bulk of its revenue. During
its July 22 earnings call, Microsoft reported sales of 175 million Windows
7 licenses since the operating system's October 2009 release, helping propel
the Windows division's quarterly revenues of $4.5 billion and overall company
revenues of $16.04 billion.
"Microsoft's messaging around cloud is becoming increasingly
aggressive, but its execution in traditional businesses had revenue pouring in
during [the quarter]," Allan Krans, an analyst with Technology Business
Research, wrote in a July 22 research note. "Windows 7 and Office 2010
have generated significant growth despite the ongoing economic uncertainty."
Heading into the quarterly results period, analysts expected Microsoft to
benefit from increased spending, as both the enterprise and SMBs start to
refresh their IT infrastructure after several quarters of survival-driven belt
"We expect to see further evidence that an enterprise PC and server
replacement cycle is upon us," Katherine Egbert, an analyst with Jefferies
& Co., wrote
in a July 19 research note. "Recent reports by Intel and others
indicate that the much-anticipated PC and server upgrade cycle has begun."
The question for Microsoft is whether those same businesses will attach
themselves to its newer product lines.
Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air. He lives in Brooklyn, New York.