Could Windows 7 Ship on Back-to-School PCs?

NEWS ANALYSIS: Microsoft plans to make Windows 7 Release Candidate available to testers this week. The timing puts Microsoft within striking distance of a late June, early July release of gold code. Early summer delivery would give some OEMs just enough time to get Windows 7 in market for some back-to-school PCs. Caveats: There are no delaying, major bugs and Microsoft chooses not to restrict when OEMs can ship respective to Windows 7's official launch.

On April 30, Microsoft plans to release Windows 7 Release Candidate to Microsoft Developer Network and to TechNet. The release candidate will be available to everyone else on May 5. April arrival means that technically, Windows 7 development isn't running behind schedule after all. Microsoft's Brendon LeBlanc revealed the dates in an April 24 post to the Windows 7 Team Blog.

On March 26, an accidental TechNet posting indicated the RC would come in May rather than the expected April. May delivery, particularly late month, would almost certainly have meant release to manufacturing - that is, gold code - after June 30. While not publicly stated by Microsoft, many analysts had speculated on June 30, the end of Microsoft's fiscal year, as target for RTM.

April 30 and May 5 releases give Microsoft time enough to hit end of June or early July RTM. The question then: What about the official launch date? Following past practices, Microsoft would wait until all, or nearly all, OEMs would be able to ship Windows 7 PCs. Microsoft released Windows Vista gold code in early November 2006. A business launch came weeks later, on Nov. 30. But no PCs shipped with Windows Vista until Jan. 30, 2007, or about 10 weeks later. Windows XP RTM was Aug. 24, 2001 and launch about eight weeks later. If Microsoft sticks to past practices, Windows 7 would launch six to eight weeks after RTM. If June 30 RTM, launch could come in late August or early September.

Microsoft's Client division is hurting and needs Windows 7's release sooner rather than later. A double combination of falling PC shipments (which sapped revenues) and rising netbook sales (which sapped margins) brought record Windows sales declines in Microsoft's fiscal third quarter, ended March 31. Year over year, client division revenue fell 16 percent to $3.14 billion and operating income declined by 19 percent to $2.51 billion. Declines were so steep, Server and Tools revenue exceeded Client for the first time. Windows 7 could give a badly needed boost to back-to-school PC sales and, of course, holiday 2009.

A new version of Windows also means lots of marketing from Microsoft and its OEM and retail partners. Already, Microsoft's "Laptop Hunters" series of commercials pushes Windows for premium priced notebooks, a market dominated by Apple. According to NPD, Apple's U.S. retail share of premium PCs - those selling for more than $1,000 or more - is about 80 percent. In two of the three Laptop Hunters commercials, shoppers have budgets of $1.500. Microsoft is sure to ramp up Windows 7 marketing, at least for the holidays, and with increased emphasis on premium laptops.

Microsoft can more than just prepare the market for Windows 7 PCs. Premium laptop sales help offset the negative effects of netbooks. The tiny, low-cost portables are selling well - perhaps to fault. Microsoft estimates the netbooks, or what analysts call mini-notebooks, accounted for 10 percent of PC shipments during fiscal third quarter. Mini-notebooks sap PC OEM and Microsoft margins.

There is incentive for Microsoft to keep and even increase its marketing efforts. Last week the company claimed that the recent "I'm a PC" ad campaign, which Laptop Hunters is a part, had increased preference for Windows PCs by 10 percent - and that's without any obvious Windows branding tie-in. The marketing campaign could perhaps have even more impact with Windows 7 branding.

Microsoft could begin realizing Windows license sales as early as fiscal 2010 first quarter, which starts July 1, if RTM comes by early July. Microsoft doesn't plan on making any major changes between the RC and gold code, which would give OEMs about two months to prequalify Windows 7 systems for back-to-school selling season.