Microsoft's 2009 was a pivotal year for the company, to say the least.
The economic recession that gripped much of the tech industry did not spare Redmond, which was forced to report a 17 percent decline in year-over-year revenue for the fourth quarter of fiscal 2009. Earnings came in at $13.10 billion, around $1 billion below Wall Street estimates. Much of that decline in revenue could be tied to sluggish PC sales, which in turn lowered demand for Microsoft's products.
In response, Microsoft cut many of its legacy programs, including Encarta, and embraced a corporate strategy of pushing the new versions of its flagship software, including Windows 7.
Microsoft CEO Steve Ballmer announced that Windows 7 had entered beta during CES 2009 in January. By throwing the beta version into the wild, Microsoft subsequently told eWEEK and a number of other tech publications, the company hoped that it could solicit a groundswell of feedback that would allow it to fix any issues with the operating system ahead of its October release. Microsoft has subsequently followed a similar beta strategy with a number of other upcoming products, including Office 2010.
It's easy to see why Microsoft would attempt to release a final version of Windows 7 that appeals to as broad a base as possible. Simply put, the company had quite a bit riding on consumer and business adoption of Windows 7, especially considering the reluctance of both those groups to embrace the operating system's predecessor, Vista. Although Service Packs addressed a number of user issues, Vista found its reputation soiled by the sheer scope of issues that had accompanied its retail release in January 2007-namely, that it was a buggy memory hog that lacked backward compatibility with many Windows XP applications and forced users into excessive authorization procedures related to the User Account Control.
As a result of these perceived issues, Vista adoption rates have historically been slow. According to Net Applications, which monitors the market share of operating systems, Vista occupied some 18.55 percent of the OS market by the end of 2009, while Windows XP continued to occupy some 69.05 percent. In the same survey, Windows 7 occupied around 4 percent. But even if its entire share came at the expense of Vista, it still means that Vista managed at best to take up less than a third of XP's total share.
On the eve of Windows 7's Oct. 22 launch, Forrester Research reported that Windows XP continued to run on 80 percent of all commercial PCs. Despite the aging of Windows XP, its stability and prevalence within the enterprise made it a system that many IT administrators were reluctant to give up, especially when the cost of a tech refresh and training workers on a new operating system were thrown into the mix.
Microsoft attempted to address those concerns early by highlighting Windows XP Mode, which runs XP-based applications within a virtual environment. Introduced to assist businesses running older proprietary programs in transitioning more smoothly onto the new platform, it is intended as a "last ditch" fix for any programs that managed to elude Windows 7's focus on backward compatibility.
The lack of a linear upgrade path between Windows XP and Windows 7, a point of potential stickiness for businesses that choose to upgrade, was something that Microsoft attempted to address on its Website with step-by-step instructions for making the transition. In theory, a clear upgrade path exists for Vista and Windows 7.