WinXP faces muted launch, slow sales?

Microsoft is planning to go ahead with the launch of Windows XP in New York on October 25th, but will be discussing the matter with the mayor and city officials first, company CEO Steve Ballmer said at a software industry lunch in Chicago yesterday. The company had intended the launch to be the usual raucous, overblown tub-thumping spectacle, but subsequent to last week's events a far more sober event will be appropriate.

Nor does Ballmer have a great deal of choice. Cancelling or moving the event (unless New York requests this) would look like giving in, and mounting the standard hype-fest would be tasteless in the extreme, and would further diminish Microsoft's (already much reduced) chances of triggering a consumer-led XP feeding frenzy.

PC manufacturers are already taking orders for XP machines, and the first of these will roll out next week. The much hoped for boost to sales is however unlikely to happen. Analysts are now shaking their heads, and wisely intoning that "70 per cent" of consumers would need to upgrade their machines in order to run XP.

But the upgrade cost factor is likely to be a lot more important in the corporate market. Consumers tend not to buy operating systems independently anyway, so under current circumstances they'll consider XP, consider the cost of a whole new machine running it, then put off buying it. So no consumer boom. Business customers, however, have a more complicated decision to make, thanks to Microsoft's new 'shotgun upgrade' licensing model, due to be introduced at the beginning of next month.

The bottom line of this model is that it makes financial sense, as regards the cost of Microsoft software, for companies to move over to newer Microsoft products sooner rather than later, because if they delay the entry cost will be substantially higher. All other things being equal, a goodly number of companies might have gone for this, howling long and loud as they did so.

But the total cost for business isn't just the price of the software - many of the machines they currently have deployed won't be rated for XP either. Going for the upgrade would therefore mean a major hit on the hardware budget as well, and given the current uncertain climate, it seems doubtful that businesses will be willing or able to swallow this. It might, in a perverted sort of way, make fiscal sense to buy into the new Microsoft licences then not deploy the software; but actually businesses have been doing this for a while, in the sense that - say - they've been known to buy a stack of PCs with Win9x preinstalled and then shove NT onto them instead.

One upside for Microsoft is the likelihood that, although its early revenues from XP will be lower than it might have hoped, businesses' reluctance to invest will mute their inclination to defect from the Windows camp. It'd take a very brave IT director to propose rolling out a company-wide non-MS strategy under current circumstances; the vast majority will no doubt be sticking with mother, for the moment. ®