Windows 7 Migration in Businesses' Budgets: Survey

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 tightening.

"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.